Rick Maher

I just came across the video below lauding the WP Carey School of Business at Arizona State University and in particular the Supply Chain Management program. I happen to have a Bachelor of Science in Supply Chain Management from this very program. Of course it is good to hear that the program is maintaining it’s top rankings that existed while I was in school!

I’m also happy, and not in the slightest concern to be going against the trend, that top B-Schools admittance rates are nudging up a tad – I’ll be applying in the next few weeks.

If you’re like most and think “supply chain management” sounds like some corporate mumbo-jumbo, click the link below to read a little more and see some quick clear videos on what it means.

What is Supply Chain Management?

I think one of my former professors sums it up best in this video:

While I earned – and very much value – the specific degree of Supply Chain Management, my work since school has been more of a mix of a slice of SCM mixed with a healthy dose of business management fundamentals. The slice of SCM that I use most, I generally refer to as “Operations Management.” Think of it more in terms of optimizing the processes that businesses use to make sure they are able to convert all the materials into sell-able products. That is, as opposed to negotiating the contracts with vendors for the materials or arranging the transportation of materials to the factory or distribution to sales channels.

I have put together some posts (rather lengthy start here: Part I – 3 Pillars of Operations Improvement – Introduction) that try to summarize the work I do, but here is the closest video to what I do for my clients:

If you want to be up on the latest in management trends and buzz, the place to be is at MIX, Gary Hamel’s latest website – a derivation from MLab I think. For those not aware of who Gary Hamel is, think modern day Drucker.

MIX stands for Management Innovation eXchange, and the website is pretty quickly building up a lot of good management content.

The premise of the site is that management in its current form is getting stale, if not already outright rotten. Taking on the 25 Moonshots for Management, MIX aims to leverage its users to collaborate openly on how to reinvent management.

I love the idea of reinventing management. However I sometimes wonder if part of the problem with management is that us management nerds think that every leader in a business needs to be a good manager. What I mean is – when I work with my clients, often they are experts at their craft and captains in their industry, but I show up and immediately try to transform them into good business managers.

I could certainly argue both sides of this concept, but MIX could argue it better! Check it out…

Thanks,

Rick Maher

Booz & Co (top tier global strategy consultancy) runs one of my favorite websites, Strategy + Business, where they share their latest thinking and tons of great business and industry analysis.

Recently they published an article entitled Putting Strategy into Practice which is good in and of itself, but it has an amazing bonus! Click the link just below the byline of the title to download Harvard Business Review’s “Must Reads on Strategy” anthology as pdf.

If I’m not mistaken, this anthology would normally cost a decent chunk of change, and until June 15, 2010 Booz is picking up the tab!

While I’m at it, here are a few more plentiful business management websites:

• McKinsey Quarterly – by McKinsey & Company
• Knowledge @ Wharton – publishings from Wharton School at University of Pennsylvania
• Focus – Ideo’s “thinkings” – if you don’t know who Ideo is, I suggest you learn – NOW.
• Manager Tools – by the firm of the same name which has mastered executive coaching with a twist – it’s unbelievably practical. I HIGHLY recommend downloading and listening to their entire Manager Tools Basics podcast series.

What else is out there?

A friend and I were talking about an experience he deals with in his business. Basically he finds that his customers fall into three categories:

1. Happy Customers
2. Unhappy Customers Effective at Rectifying their Unhappiness
3. Unhappy Customers Ineffective at Rectifying their Unhappiness

We were analyzing how customers control their own destiny in achieving their category, but that the behaviors that lead to achievement of the categories are not behaviors that are taught in any classroom either of us had ever been in.

Some call these behaviors “people skills,” others call it “savvy,” but I call it “social engineering.”

It’s the behaviors that a person uses to interact with other people in order to get what they want.

I witnessed a situation at the airport this past weekend that I think demonstrates the key principles:

My flight was delayed and after boarding and sitting on the plane for an hour, all the passengers were forced to get back off the plane and arrange a new schedule with the airline representative.

The first few passengers worked quickly, and methodically through their options with the representative. Then the next passenger took a different approach.

When he was told his flight options, he began screaming at the representative that her airline was causing him a terrible inconvenience, not to mention lost money, etc.

As you can imagine, he had a very difficult time arranging for a new flight schedule.

I am asserting that his difficulty in arranging a new flight schedule was not primarily due to his particular needs being greater or more difficult than the other passengers, but rather due to his inability to engineer the social interaction between himself and the airline representative.

What I learned from the effective social engineers (first few passengers in line):

• Asking pointed questions politely allows the representative a guilt-free opportunity to add on options that she previously failed to identify
• Offering empathy toward the representative’s stressful task of having to reschedule an entire plane full of passengers without any help was quickly reciprocated in the representative being empathetic to the inconvenienced passengers social engineers
• Openly disclosing to the representative that the social engineers were also leveraging the assistance of their travel agent via phone put the representative slightly at ease, and simultaneously sparked a sense of urgency for the representative – almost as if the rep wanted to beat the travel agent to the solution in a little race!

What I learned from the ineffective social engineer (the screaming passenger):

• Speaking loudly and rudely to the representative drew attention from all sorts of people in the area, and caused the representative to become openly / loudly defensive, distracting her from the ultimate task of finding the best alternative flight schedule
• Hiding efforts to identify a solution with a travel agent from the representative led to confusion by the representative and hesitation to pull the trigger on booking the best alternative flight selection
• Making big body movements such as dramatic paces to and from the representatives station tempted the representative into moving on to service the next passenger in line who looked to be less intimidating and therefore more appealing as someone to serve, again slowing and hampering progress of finding the best possible flight schedule.

These lessons learned I think really boil down to a few key principles that you need to know and understand in order to be effective as a social engineer.

1. Recognize what is flexible and what is rigid – in this example, flights around the world are not going to reschedule themselves to accommodate one passenger.
2. People like being a part of a solution, but hate being a part of a problem – the representative wants to be the one that saves the day by finding a flight schedule that you are happy with, but hates to be the one drawing attention at the center of an angry screaming person
3. People operate within their normal constraints unless shown how not to – the representative assumed that everyone’s final destination was that of the final destination in her airline’s reservation, but when a customer said “I can fly to XYZ instead of ABC if there are good options,” the representative was able to open up a whole new set of potential solutions

Social engineering can do a lot more than minimize your travel delays in case of a flustered airline representative. Here are a few other recent instances of how I think being an effective social engineer has helped me:

• Politely thanking an administrative assistant by name evoked her to offer “next time you need xyz, just let me know I have access to the calendar!” Had I not thanked her, she would most likely not have even verbalized a goodbye as I walked past.
• Surprising my fiance with a small bouquet of flowers seemed to buy me some lee-way in chowing down on sweets which she normally would harass me about.
• Asking “is everything ok?” of someone who forgot about a scheduled appointment (instead of getting angry at them over it) spurred them to fit me in quickly rather than just cancel the appointment.

Although, sometimes social engineering requires being stern, perhaps even loud and borderline rude:

• As a soccer referee, if a tactical foul was made early in the game I would purposely establish my presence and control by exclaiming loud enough for all the players to hear, “NOT TODAY!” in attempt to proactively prevent repeated offenses.
• On many consulting projects I rudely pointed out errors in peer’s work in order to embarrass my peer into fixing the errors prior to the client seeing them and discrediting our collective efforts.

Here’s the bottom line: consciously considering multiple behavior options in interpersonal communication can yield great results. Social engineering FTW!

I want to start a business. Usually that statement evokes one of two responses:

1. Why don’t you?
2. So do it!

I respond similarly for both:

• I have a ton of business ideas that I think are viable and could be lucrative, but I don’t love them, and can’t imagine dedicating myself to them at this point
• I don’t have or don’t want to risk the cash that would be necessary to start the business

Those that know me, know that I’m a big proponent of transparency, and in that nature I’m going to risk riches by posting a few of my Big Ideas for businesses here for the world (honestly I get about 10 visitors per day to the site…) to read.

I’ve mentioned before that I believe there to be an opportunity to revolutionize postal service by implementing a scan & email alternative in order to slash physical transport of mail therefore smashing down costs.

Another idea that I’ve been kicking around for a long time is that of revolutionizing wallets – specifically all the plastic within them. I mean ALL the plastic within them.

UPDATE: Cool! I just used PlanCruncher to create a simple business plan for One Card (pdf).

Here’s a list of all the plastic in my wallet right now:

• Driver’s License
• Old Student ID (for scamming student discounts out of various vendors)
• Debit Card
• Credit Card 1
• Credit Card 2 (I would imagine that many people have more than 2)
• Hotel Room Key
• Frequent Flier Card (I actually have about 15 of these things, but only one in my wallet at this moment – the rest are in my brief case)
• Grocery Store Discount Card (grocery store clerks finally cracked down and stopped letting me use one they had handy)

That makes 8 cards currently in my wallet. On each of them is a magnetic strip that contains some amount of information about me.

Other people have different / more cards:

• gift cards
• employee id & office security access cards

Here’s the crux of the business idea – sell a card that allows people to compress all of these cards into one card. When you open an account with a credit card / bank, get a room at a hotel, sign up for a frequent (flier / diner / shopper) account, join a club, etc. you would be able to add that information to your “one card”. Maybe via a magnetic strip reader that you hooked up to your computer via usb, maybe via a web interface that you could access with your iphone…

How to Make Big Bucks!

I think there are a few ways to generate revenue in this business.

1. Subscription Charges
2. Credit / Interest
3. Vendor Transaction Charges
4. Vendor Credit Account Manager
5. Arbitrage
6. Concierge
7. Analytics

Subscription charges

This seems to be the simplest and cleanest way to generate revenue. The idea being that you charge “one card” holders some amount per year. Basically this is emulating a credit card annual fee.

Credit / Interest

Again, emulating current credit card revenue channels, grant “one card” holders a line of credit and charge interest greater than the cost of capital on their balance.

Vendor Transaction Charges

Noticing a pattern? In the same manner as credit card companies, charge vendors a percent of every transaction.

Vendor Credit Account Manager

Here is a new revenue channel idea! Sell a service to small businesses whereby you allow them to use your account with each of the major credit card companies (visa / mc / amex / etc). Scale a large enough network of vendors and earn profit by offering these vendors transaction rates lower than they are able to get from the cc companies alone.

Arbitrage

This is my favorite – albeit possibly the most far-fetched idea. It mostly centers around gift cards and affinity points / miles. Let me illustrate the idea using a possible scenario:

Christmas Day – John gets a $50 Best Buy gift card and loads it into his “one card” account

December 26 – Sue charges a $100 Best Buy purchase to her “one card” account

December 26 – “one card inc” pays best buy with john’s $50 gift card and $50 cash transfer

December 26 – “one card inc” bills Sue for $100 cash

Eventually – Sue pays off her $100 balance, and “one card inc” accrues interest on the $50 that came off the top from John’s gift card

Eventually – John uses some / all of his Best Buy gift card credit and “one card inc” loses the ability to accrue interest on the cash paid by Sue

Possibly – John never uses some / all of his gift card, one card enjoys accruing interest forever!

Inevitably – Retailers (e.g. Best Buy) would revolt! You’d be stealing their game! This arbitrage is exactly what they do! This arbitrage model would be hitting them from both sides: gift cards would be redeemed much sooner, and in full. A friend well versed in the retail industry tells me that gift cards on average still have 30% of their value after one year.

Also – run a similar scheme with frequent flier miles!

Concierge

Back to the old credit card revenue stream model – offer “one card” holders a service to purchase anything through “one card”. Ideally “one card” adds value beyond what is available through other channels – faster service / delivery, access (e.g. tix to sold out events), cost (e.g. through scale – credit card companies are doing this now with services such as credit monitoring).

Analytics

Credit card companies are trying to do this now, but seem to really suck at it. The idea is that as a hub of consumer activity, you would know a LOT about consumer preferences and tendencies, and that this knowledge is valuable. The key would be making it saleable beyond the junk mail machines that are currently at work. For example, waive the card holders’ annual fee in exchange for them linking their facebook / foursquare / etc. accounts to their “one card” account thereby adding an additional layer beyond pure purchasing and demographic info. Or allow customers to pay off their balance through viewing (targeted) advertisements on their account webpage.

In Response to the Haters:

Here are a few of the arguments commonly puked out by haters when I tell them this idea:

• What if you lose the card? You’re screwed!
• Actually, if you lose your wallet with all 8 cards in it you’d be screwed. Do you have all 8 card issuer phone numbers on speed dial to cancel quickly? I bet if you only had to make one call you’d be happy.
• While you try to build a credit card transaction network large enough to make this profitable, one of the big players will smash you!
• Indeed this is one of my fears, but if you launch with a compelling enough value proposition, I think you could carve out a nice segment then put up targeted fights with the big guys… or maybe even sell out to a big guy and hit the links!
• Credit cards are a dead media! Haven’t you ever heard of “cube”????
• YES!!! One thing I would love more than going from 8 to 1 pieces of plastic in my wallet would be going from 8 to 0! If you created “one card inc” you would be exceptionally positioned to transition to “consolidated accounts and virtual payments inc” – I promise
• Retailers / airlines / etc. would never allow the arbitrage idea
• Maybe not verbatim in the manner that it was presented, but what if as “one card” you gave Best Buy $50 gift card plus $50 cash plus $x for the gift card acceptance enticement. So long as you were confident that you could earn greater than $x in the interest, it’d still be worth trying. Perhaps eventually “one card inc” could become a “gift card administrator” with strategic partnerships with retailers.