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How well do you know your customers?
Sunday, April 20th, 2008

The other day, a potential vendor wanted me to participate in a discussion group.  My guess is that the vendor was engaging in one of those ill-disguised attempts to market services and products.  Either way though, my immediate reaction was, “when in the world do I have time to participate in a discussion group?  In the last three months, I have been fully engaged with annual maintenance, planning menus, developing marketing material, starting vegetable plants so they can be put out when the weather warms up, and…”

On another note though, it shouldn’t come as a surprise that the vendor had so little knowledge about my business.  The firm has never asked or expressed a dime’s worth of interest in what I do.  All of which made me wonder…

How well do most vendors know their customers?  As I started thinking about this question, it seemed like some vendors may not need to know their customers very well.  

I have to know my customers well.  But, maybe my businesses are unique.  I operate a small lodge on the Rogue River and help clients solve challenging business problems.  Let’s talk about those two businesses a bit so that you can judge for yourself.

Illahe Lodge.  Meals at Illahe Lodge are served family style and all members of a group typically eat at the same time.  Our guests may be vegetarian, diabetic, practice certain religions, or have other food requirements.  Their activities affect the time that meals need to be ready and the calories/content of the meals.  Without talking with guests, we couldn’t meet their expectations. 

Consulting.  When I help clients solve the problems they are facing, I have to know what the problem is.  One client may be trying to find a supplier who can provide a particular product or service.  Another might be trying to find a way to reconcile its business needs with the needs of its customer or supplier.  Some clients are trying to build internal relationships so that their employees can work together more effectively.  Others are trying to develop processes.  Imagine what would happen if I assumed that every person coming to me for advice had the same problem! 

What does this mean for your business?  How well do you need to know your customers?  Also, consider what it means for your suppliers.  Think about how well they need to know you in order to save time, provide meaningful suggestions, and help your business meet your objectives.

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How important is attitude?
Sunday, October 28th, 2007

The other day, Joe wanted his supplier to give a discount because part of an order was defective. Joe started with a friendly approach. When the supplier wanted more information to understand the problem, Joe became hostile and accused the supplier of unethical behavior.

At this point, the supplier became frustrated and said, “Joe, you have been a good customer for several years. I think that I have been a good supplier for your business for several years. That said, your business isn’t worth the insults and abuse. Joe, I am going to eat the cost of your order. In the future though, please take your business elsewhere.”

To this comment, Joe replied, “You mean that you are going to give up my business that has brought you several thousand dollars a year?”

The supplier said, “Yes, Joe. That is exactly what I mean. The cost of having you as a customer outweighs the benefits. I hope that you find a supplier that better meets your needs.”

What steps might have enabled Joe or the supplier to avoid this situation? How could the issue have been defused in the conversation? Are these issues that you have encountered in your supplier or customer relationships? If so, what steps did you take? What would you do differently, if you faced this issue today?

In short, how important is attitude in your business (and what action do you take to manage it)?

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Negotiation Scenarios: Disparity of Bargaining Power
Thursday, July 12th, 2007

Suppose that Sam Supplier is with a small firm that is providing products and services to a large customer.  In this situation, Sam’s firm and the large customer are likely to have differences in their relative bargaining power.

Often, small firms are so anxious to win business, especially from large companies that they are likely to agree to provisions that can cause challenges for them. At times, the customers pressure the small firms to do more. In many cases though, the small firms pressure themselves to do so.

Whenever there is a difference in bargaining power, it is a good idea to talk about the small firm’s ability to meet the big customer’s needs. 

Think about what this scenario means for your business.  Specifically, consider questions like:

How could disparity of bargaining power arise for your business?

Are there certain signs that would lead you to think there is a disparity in bargaining power?

If the parties have disparity in bargaining power, what are some steps that you might take to deal with the issues?

What are some communication techniques that might help you identify and deal with disparity in the parties’ bargaining power?

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Where does one buy steelhead salmon?
Wednesday, July 11th, 2007

Reading the food section of today’s Dallas Morning News, I had a WTF moment when I read Tina Danze’s article about fish. 

One of the recipes is called Evita’s Dilled Steelhead Salmon.  Sure enough, the recipe calls for six one-inch thick steelhead salmon fillets with skin on.

I dare Ms. Danze to find a steelhead salmon.  Is that like a turducken?   

Steelhead and salmon are different fish.  Steelhead is a type of trout that goes into the ocean, but reproduces in fresh water.  It has a light flavor.  In contrast, salmon has a rich, full-bodied flavor. 

Have Ms. Danze or the editors ever eaten real steelhead or real salmon?  Stores usually sell farm raised varieties and that is what most restaurants serve.  It is about as much like the real thing as “pinks” are like real tomatoes. 

Sadly, people don’t realize though that there is a difference.  That is one of the problems with modern life.  If customers don’t know what the real thing tastes like, they have no way of evaluating what suppliers provide.  This is why it is so important to do what we know and to share what we know with others. 

 

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Rained out! Monitoring weather risks
Sunday, July 8th, 2007

In baseball, games can be rained out.  At my family’s fishing lodge in Oregon, we sometimes have fishing trips that are rained out as well. 

In the early summer, it is a bit unexpected to find businesses in North Texas rained out.  The unusual amounts of rain this year - sometimes more than eight inches over the normal amount - have left many businesses rained out and disrupted a lot of transportation.  Case in point, Lake Lewisville in Texas was high enough that it closed the southbound service road to I35 and could have easily closed I35 itself with just one more day of rain.  For more on the flooding, this search on Yahoo will provide a lot of information.

We have little ability to control weather like this.  Instead, it is important to identify weather risks, develop contingency plans, and execute the contingency plans if they are necessary.  One tool for monitoring weather related risks is the National Weather Service. 

One tool for executing the contingency plan is the telephone.  Make sure the other party to the relationship knows that the plan is being executed.  This allows them to prepare for risks.  Sometimes, products may arrive early and require storage space.  In other cases the situation escalates and performance becomes impossible.  If people know about the situation, they can deal with it.  If they don’t know, how can they prepare?

[t_targets:  flooding, business, communication, water risks, negotiation, contingency plans]

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To outsource/offshore, or not to outsource/offshore?
Saturday, July 7th, 2007

In my opinion, there is no one right answer to the question of whether or not to outsource/offshore.  The right answer is specific to the people and the context.

Three factors to consider in assessing the situation and determining if outsourcing/offshoring will reduce costs are: (1) business impact of outsourcing/offshoring, (2) resource requirements, and (3) firms’ compatibility. Here is a bit more information about these three factors.

Issue 1. Can the function be outsourced without adversely impacting the business?

Recently, I looked at the issue of promotional products for my family’s fishing lodge. While we could create the items internally, this would involve reallocating time from primary revenue generating activities to an activity that was unlikely to yield much revenue. In addition, our customers were most likely to want their souvenirs shipped to their houses so that they did not have to deal with breakage in transit.

Issue 2. What resources will be required to make the outsourcing/offshoring successful?

It takes time to build successful business relationships. The people involved have to understand each other’s expectations and build a common language. Even though people may be using similar words, their expectations may be so different that the words themselves cause confusion. If different nationalities are involved, the issue often grows.

Issue 3. Are the parties and their processes compatible?

Compatibility issues relate to many factors including size of the firm, responsiveness, priorities, organizational culture, and the method in which the firm does business.

In the case of my family’s business, I chose to work with a friend who provides promotional items because it was a better fit with how my family’s business operates. Relationships matter to my family and the customers of my family’s business. Smaller firms typically value relationships more.

It is helpful to walk through the processes that will be used and to ask if each party understands and can meet the expectations of the other parties.

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Politics, Contracts, Ethics, and Texas Governor Rick Perry
Friday, June 29th, 2007

Governor Rick Perry is backing Robert Scott to replace Shirley Neeley at the Texas Education Agency (TEA).  Currently, Mr. Scott is second in command.  In the normal course of events, this would not attract very much attention. 

As reported in today’s Dallas Morning News, an internal investigation by TEA found that Mr. Scott and others may have violated TEA rules in several contracting decisions.  In one case, Mr. Scott allegedly extended a one year $100,000 contract without consulting other TEA officials.

This is an important issue for a variety of reasons.  When contract decisions are made, state agencies spend your tax dollars.  Now, maybe Mr. Scott did something wrong.  Perhaps, his actions were appropriate.  In light of the investigation and report, should the Governor be backing Mr. Scott at this point?  

When the leaders act in questionable ways, it sets the standard for others in the organization.  I am wondering about consistency.  Suppose a lower ranking employee engaged in the same conduct that Mr. Scott did.  Would the person be getting the Governor’s support, or would the person be given a pink slip? 

What is the message that people wishing to do business with the Texas Education Agency are hearing from this situation? 

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