Principled Profit: The Good Business Blog

Musings on the world-wide movement for ethical business, frugal marketing, and how honesty, integrity, and quality combine with deep relationship building to create business success. By the originator of the Ethical Business Pledge campaign and award-winning author of Principled Profit: Marketing That Puts People First and five other books

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Tuesday, November 29, 2005

Cunningham: "I broke the law, concealed my conduct, and disgraced my office"

That's what 8-term Republican Congressman Randy Cunningham said in his resignation speech, after pleading guilty to taking $2.4 million in bribes. Oh yes, and then talk about chutzpah, listen to this:
The tax evasion charge came after Cunningham reported joint income with his wife of $121,079 for 2004 and claimed he was due a refund of $8,504. Prosecutors said his income was $1,215,458 and he owed $385,077 in taxes.
(You won't find that in the above link, but it's in the copy of the AP story a friend sent me.)

Hmmm, yet another GOP Congressional scandal--this makes the fourth one (DeLay, Frist, Bob Ney), not counting Plamegate and other White House scandals. One Democrat, William Jefferson of Louisiana, is also under investigation.

The Washington Post reports,
Democrats have vowed to make what they have called the GOP's "culture of corruption" a major theme of a 2006 congressional election campaign already unfolding under the twin clouds of the Iraq war and high energy prices.
The Post kept a sense of humor in its report:

For a gruff war veteran, Cunningham emerges from the court documents as a man with surprisingly delicate tastes. Among the gifts he accepted were a $7,200 Louis-Philippe commode, circa 1850; three antique nightstands; a leaded-glass cabinet; a washstand; a buffet; and four armoires. After paying $13,500 toward a Rolls-Royce in April 2002, one of Cunningham's benefactors tossed in $17,889.96 toward the car's repairs less than a month later.

Rep. Randy
Rep. Randy "Duke" Cunningham (R-Calif.) talks to reporters in San Diego after pleading guilty to conspiracy and tax evasion. (By Lenny Ignelzi -- Associated Press)
Now he's forced out of not only the House but his ill-gotten house, and will probably go to jail. You'd think these people would figure out by now that crime doesn't pay--unless, perhaps, the President calls you "Kenny-boy." Lay's trial was supposed to start over a year ago, and even that was years late. Why are they waiting?

And whatever happened to the days when public office was a public trust, and CEOs saw their mission as stewardship of shared resources rather than feathering their own nests? It's important to note that those who paid the bribes, and received vast return on their investment, are just as tarnished as the fallen Cunningham.

Sunday, November 27, 2005

Trendwatching and Marketing, Part II

3. New Business Ideas are Everywhere
It seems there's no shortage of unfilled needs that could become the core of wildly successful businesses. Here are a few I noticed:

Ralph Stevens turns 100 (See #4, below).

(Photo by Alana Horowitz Friedman)

A. Mail-back kiosks and/or check-this-as-luggage containers at airport security checkpoints: My 13-year-old son brought his oboe on the trip, including a set of four tiny screwdrivers, like the sort for tightening eyeglass frames. TSA confiscated three of the screwdrivers. (I offered to let each of the four of us take one screwdriver, but this was not acceptable.) Apparently there was some rather inconvenient way we could have mailed it to ourselves for $10, but it would cost less to replace them. We could have also sent the whole bag through checked baggage, but the risk of damaging or losing the instrument far outweighed the convenience of keeping the screwdrivers.

There must be thousands of items per day that are confiscated, causing great inconvenience to the owners of the objects, and also a substantial disposal problem for TSA. Someone should come along and contract with the postal service and TSA to set up a self-service mail kiosk at each security checkpoint, with a selection of small padded envelopes and the ability to type an address label and take credit cards. Charge actual postage plus maybe a $3.00 or $4.00 service charge, of which two-thirds would be profit. Someone would need to refill the envelopes and be available for maintenance problems, but the post office would collect the packages for free.

Another possibility: rent small suitcases big enough to go through baggage without being lost or crushed, with drop-off at any airport in the U.S.

B. Travel planning website for fixed dates, open destination: We've been trying to plan a trip for our next vacation, over Christmas week. But we have to try one destination at a time. The truth is, we're not so fussy about where we go. I'd like to be able to select a date range of two or three days on each end and see destinations ranked by fare within broad categories of U.S., Europe, Asia, Africa, Pacific. Then we could quickly narrow it down and click for more information/booking. I checked with two prominent travel experts; neither knew of such a site.

C. Urban compost centers: In my brother-in-law's food-co-oping, Prius-driving, recycling Minneapolis neighborhood, a lot of food scraps end up in the municipal garbage system. If someone could figure out a way to create a business model around composting, while still keeping the disposal a free community service, it wouldn't be hard to generate a significant quantity of waste. I live on farm and my neighbors sell composted cow manure for $5 a bag, but my guess is they sell only a few bags per week. Still, there surely must be people who would pay for high quality compost; it's just a matter of figuring out who has the need, wants to pay, and can generate enough orders to be worthwhile. Garden centers, perhaps? They're already selling fertilizer. Or maybe the garden centers should operate the compost operation.

4. Aging Populations Have Different Needs
My sister-in-law's grandfather, Ralph Stevens, turned 100 while we were out there, and we went to the party along with about 40 of his relatives. I'd never been to a 100th birthday party before, although I did go to my neighbors' 70th wedding anniversary.

When I was a kid in the 1960s and 70s, many people born around the beginning of the 20th century were dying off; if you lived past 70, you were considered old. Yet 76,000 Americans have reached that amazing 100-year milestone--and these are the same generation that appeared to be dying off thirty and forty years ago. What marketing opportunities are presented by people living to be 100? By having four or five generations of the same family alive at once? What does Ralph Stevens, a wheelchair-using blind centenarian who loves to sing and lives in close proximity to a large family, want and need in his life? How would you market to him in his nursing home or through his family?

Saturday, November 26, 2005

Trendwatching and Marketing, Part I

Just back from several days in Minneapolis, and I had my trend-spotting radar up. Some observations:

1. The airline industry continues to shift.

We flew ATA and Southwest, and it was illuminating to contrast them. Southwest still very much encourages the nonconformists and humorists among its staff, and continues to do very well with on-time performance, full or nearly-full planes, and other metrics. And they continue to make things nicer for their customers. For instance, online check-in is a big improvement over the cattle-herd system of the old days, and printing your boarding group right on the boarding card is much better than the old plastic passes. Maybe it was my imagination, but it seemed to me there's a bit more leg room than there used to be. And on today's flight home, they even gave us each a square of chocolate!

Lessons for other companies: give your people room to shine and they will. Fill a market niche, and you'll be profitable. Be nice to your customers, and they will return. Do all three things right and you're a rare success in a troubled industry.

ATA, by comparison, was not a pleasant experience. The seats are jammed together to the point where, even at only 5'7", I was extremely grateful to have an aisle seat so I had someplace to put my feet. (My wife flew Northwest recently, and said the legroom is even worse there.) On the way there, we discovered that the airline had never entered a change in our itinerary and had us flying the previous day. Luckily, we had a paper trail and there were still enough seats. Yet, even though I watched the ticket agent enter the correct information for our return trip, it seemed the check-in agent on the flight home had some difficulty getting the reservation to show up appropriately. And other little things--no sparkling mineral water or seltzer, only club soda (which has salt, on top of all the salt in the pretzels). And big things: ATA had over two hours to get our luggage to Southwest during our Chicago transfer; not one of our four bags made it on the plane, and neither did the bag of another passenger with the same itinerary. None of this was life-threatening, and most of it is a pretty small inconvenience--but it added up to somewhat negative experience that is likely to influence future purchase decisions. Oh yes, and the reason we were on Southwest in the first place is that ATA suddenly pulled out of our market long after we'd booked our flight. (Southwest doesn't fly to Minneapolis.)

Lesson: No matter how good your advertising, your brand is built on positive and negative customer experiences.

(Disclosure: I was a fan of Southwest long before this happened, but I should point out that the company bought 1000 copies of Principled Profit: Marketing That Puts People First, prepublication. If that colors your view of my comments, so be it.)

2. A Discounter Goes Upscale

Southwest again. The airline's Unique Selling Proposition has always been the combination of low prices, reliability, and superior service. Perhaps it's the service aspect that's helping Southwest Spirit, the inflight mag, to go after a very upscale advertiser profile. The pages are filled with ads for expensive high-rise housing, Las Vegas casinos, glitzy restaurants, expensive gizmos...and there are a lot of ads!

This could mean several things:
  • High-end consumers are putting greater value on low prices
  • Southwest's superior experience means non-price-conscious consumers are seeking them out because they want to get there on time and be entertained
  • The airline may be experimenting with moving away from that USP, and higher prices may be on the way (though I suspect they wouldn't be quick to throw away 30 years of loyalty built in large measure by affordability)
I'll try to do Part II tomorrow

Saturday, November 19, 2005

Katherine Harris on Integrity--Give me a Break!

This week, I received a fund appeal on behalf of none other than Katherine Harris. Remember Harris? She was the highly partisan Florida Secretary of State whose conduct of the 2000 election and counting cast a cloud of illegitimacy over the entire Bush II administration (a cloud that only gets thicker with time).

This would be funny if she weren't serious. Ms. I-Have-No-Integrity-To-Start-With has the chutzpah to write,

I can no longer take the high road, turn the other cheek, or consider the source when faced with character assassinations, half-truths, and outright lies, I must fight back.

Protecting my integrity takes money.

Well, I don't know how much father she can fall off the integrity wagon! Her conduct as Secretary of State was shameful. In an normal era, it might have been labeled criminal.

When Harris says she will no longer take the high road, I don't even want to speculate on how low she will stoop.

Saturday, November 12, 2005

CEO Pay and Disclosure: Good Target for Reformers

Something most of the corporate scandals have in common over the past few years: those with their hands in the cookie jar already were receiving compensation that most of us would consider wildly excessive.

For a number of years, some companies have established maximum earnings for top execs as a multiple of the earnings of the company's lowest- paid employees. So if the multiple were, say, 50 times, and the lowest paid worker made $15,000, CEO pay would be capped at $750,000. If the CEO wanted higher pay, that $15,000 a year worker would get an increase as well.

But we see CEOs with compensation in the hundreds of millions. Often the crooked ones. The Wall Street Journal reported that Enron Chairman and Chief Executive Kenneth Lay was paid $67.4 million in the year immediately prior to the company's bankruptcy filing. That same year, according to the American Institute of Certified Public Accountants, Tyco's Dennis Kozlowski received $125.3 million in total compensation. And you can bet that the lowest paid workers at Tyco got nowhere near 1/50th of that.

Yet these outrageous figures weren't enough to keep them from stealing? How much money does any single person really need to live on?

A very interesting solution was proposed in this report of the Center for Corporate Policy; I like it because it relies on tax law, rather than coercion, to enforce the cap:
Cap CEO pay through a maximum wage. This can be done by eliminating tax deductions for executive compensation above a certain amount -- e.g. above 25 times that of the lowest-paid employee, a standard originally proposed by management guru Peter Drucker. Rep. Martin Sabo (D-Minn.) has included this proposed standard in "The Income Equity Act of 2003" which would eliminate all tax deductions for compensation above 25 times that received by the lowest paid worker in the corporation.
Another law, proposed by Rep. Barney Frank of Massachusetts, would initiate strict disclosure rules for CEO compensation, making the packages subject to investor scrutiny for the first time.

These are both positive steps. And long overdue.

There will be a consumer rebellion if steps are not taken to curb these excesses.

Saturday, November 05, 2005

Well, Duh! White House Finally Discovers Ethics Training

Talk about too little, too late! In the throes of a popularity plunge, GW Bush decides to have Harriet Miers conduct ethics trainings for key staff. So reports the Washington Post.

This is the most scandal-ridden administration since maybe Warren G. Harding. The group that has built its entire platform on lies, favors to friends at taxpayer expense, suppression of legal dissent, illegal disclosure of an undercover agent in apparent retaliation for a policy critique, and criminal foreign policy. Oh, and can we throw in a level of disaster unpreparedness that would embarrass a typical 3rd or 4th world country coupled with a president who doesn't have a clue about what to do when his people are hurting?

Ethics training? Don't make me laugh! These guys (mostly, they're guys) wouldn't know ethics if it walked up to them and bit them on the cheek. If I thought for a moment that this was anything other than a PR stunt to begin damage control, I might be hopeful. But call me cynical, but I think this gang is far too far gone to actually care about their impact on others.

You want to show me you're serious, Mr. Bush? Start by making good on your promise to fire anyone tainted by the Plamegate scandal. I don't see Karl Rove or Cheney packing their suitcases just yet, and Libby's replacement is part of the same skunkworks. So let's not pretend ethics has anything to do with this administration while those two "gentlemen" go to work at the White House each day.