The Emperor Is Buck Naked
I started working at age 14, and I have had about 100 jobs since. I would get a job doing whatever I was interested in doing or learning about. At some point in my life, I was into snow skiing. I liked skiing, and I wanted to get better at it. So, I got a job teaching skiing.
When I first started, I didn't know a thing about teaching how to ski. So I went to the teaching clinics and memorized the basic "A"-level beginning lesson. By sticking to the prescribed teaching plan, I could take a never-ever first-timer and make a skier out of him. If we started at 9 a.m., I'd have that person skiing, turning and, best of all, stopping by noon.
The beginning lesson consisted of staying upright and balancing your center of gravity (basically, your belly button region) over your feet. Move to balance as you slide down the hill. To turn, stand on one foot, then the other, just like walking. Keep your balance. The instructions for stopping were pretty easy too. And if all else failed É sit your butt down!
Day after day, I went through the same basic lesson. It was very effective. People learned how to ski. But I felt like an imposter. How could I be a ski teacher with such a limited understanding of the sport?
I confessed my feelings to a friend, an old-timer ski instructor. This fellow had been teaching for 30 years. He chuckled and said, "Let me tell you how a ski instructor develops. First, he doesn't know any better, so he follows the basic teaching plan and gives a pretty good lesson. He is new to the gig and enthusiastic. And the basic teaching plan works.
"After he has been teaching for a couple of seasons, he gets bored with the basic plan. It isn't that the plan doesn't work, it just seems too simple. Certainly, there is more to the sport. So he dives into all kinds of physics - centrifugal forces and angulation and skid ratios. He offers deep psychological approaches to skiing: Feel the mountain, and fly like an eagle. And his lessons go to pot. Because he is interested in all that nonsense, he assumes his students are, too. They aren't. His clients may put up with the Zen-techno master, but just for one lesson. Then they request another instructor.
"Finally, if the instructor sticks with it, he discovers that skiing really is a simple sport. Gravity is king. Move to balance as you slide down the mountain. Keep your belly button over your feet. If he's smart, the instructor gets back to basics É and revives the simple lessons he taught starting out.
"Cut out the stuff that doesn't matter. Concentrate on the few things that make all the difference. Skiing, like life, is pretty simple."
Change Of HeartI took this fellow's wise words to heart. Interestingly, but not surprisingly, my own skiing got much better! Instead of searching for a new, revolutionary technique that was going to transform my skiing, I applied myself to the fundamentals. I learned to ski more simply and efficiently. And I kept my lessons simple and focused on the core concepts. All the details tend to handle themselves when you address the root of the problem.
Delighted, I sought out my ski-teaching mentor and reported my findings.
"You know, I felt pretty stupid about skiing," I told him. "The instructors who use heavy technical words and fancy teaching techniques sound a lot smarter than me. I figured that because I couldn't understand them, I must be an idiot."
"Perhaps," my friend suggested, "you were trying to see the emperor's new clothes."
Remember the story? Conniving elves convince the town's people and the emperor himself that only smart and sophisticated people can see the emperor's new clothes. To not see the clothes, they warned, meant you were dumb and common.
Finally, a young boy in the crowd shouts out "The emperor is BUCK NAKED!" The whole town gasps.
In my version of the story, the boy is shunned by the townspeople.
"What does he know? He's just a kid," they say. "Of course the emperor's wearing clothes. To admit he isn't means that we have been wrong, and that is just unacceptable."
The townspeople continue to admire the beautiful clothes that aren't there, righteously assuring each other of their existence.
I think we are making this "business" business way too complicated. You know more than you think you do about business. You are invalidating yourself and being needlessly impressed by the experts of the world. Business is pretty simple. If you are smart enough to drive a car, not to mention install a complicated hydronic heating system, you can learn the basics. And the basics might be all you'll ever need.
You see, the basics work. Business, like skiing and life, is not that complicated. Stay on the easy trail. Beware the Emperor's New Clothes Syndrome!
Here are some basic lessons from the "A"-level business class.
Lesson 1: Be betterLet's talk about your competition. How about Home Depot? Many contractors believe that Home Depot will put the small-shop operator out of business.
"Home Depot is coming! Home Depot is coming!" they shout in dread, announcing each store's opening as the end of the world. (Reminds me of another children's story with a great lesson.)
Home Depot is bigger than you. How can you be better than them?
On television the other night, one of Jay Leno's "Tonight Show" guests was the young actor Seann W. Scott, who played "Stifler" in "American Pie." (A very funny movie, by the way!) Scott was talking about the jobs he had before he became rich and famous as a teen actor.
One of those jobs was working at Home Depot. He started working there as a cart collector. He would cruise the parking lot and smash one cart into the other until he had a snaky chain of carts a half-mile long. Then he'd maneuver those carts back to the store, occasionally careening into cars and customers.
One day, Scott told Jay's millions of viewers, a Home Depot manager approached him and commented on his excellent cart collecting.
The manager asked him, "How would you like to be promoted to plumber?"
Scott jumped on the promotion and became a plumber. He walked into the store and found the plumbing department. Now that he was a plumber, this was his new turf. He discovered he could slip between the shower enclosures and hide out. He would hang out behind the shower stalls all day, reading magazines and ignoring pleas for help over the intercom. "Plumbing department, pick up line two." Yeah, right.
The one time Scott did pick up a call in the plumbing department, it was his agent. He got the part in "American Pie." He left Home Depot and never looked back.
Cute story, huh? Think you can be better than Home Depot? Oh, I don't think you will topple the Orange Giant. But could you take the customers who want a little more in a plumber than the kid who played "Stifler?"
Lesson 2: Charge more than it costsWe've been into the industry consolidation movement for a few years now. We still don't have a "McDonald's" of plumbing. We have a lot of wreckage from poorly constructed deals and a lot of excuses as to why the consolidators haven't done well on Wall Street. I predict we will have a national brand name for plumbing, but as of right now, it's wide open.
I was pretty dazzled when I learned about utilities partnering with service contractors. I discovered that the utilities were after the high profits of the service companies, and the service companies were after the high profits of the energy sale. Hmmm. So when they got together, both were a bit disappointed. Kind of like finding out that the rich boy you married doesn't really own the house in Maui, he was just house sitting.
Conectiv, KCP&L and other utility-contractor mergers are unmerging now. Just a few years ago, we heard how they were going to offer full home warranties that would make them millions and wipe out the small-shop operators. Who could compete? These companies can bill customers directly on their monthly power bill for all kinds of equipment and services. They would attach a small monthly fee and offer all kinds of great services to their customers. They could sell water heaters for pennies a month. It seemed like such a great idea.
But offering low prices only works if high prices are somewhere in the mix. You can't charge less than what it costs, no matter how big you are. You can do it for a while but not for long. Investors and shareholders want their money back, and they want more money back than they put in. The ONLY way to do this is charge more for goods and services than it costs to produce them. So far, the costs of running these hybrid consolidators have been more than the revenue they produce.
The consolidators are out of favor on Wall Street because they haven't made any money. Forget the weather. Investors don't care. The ultimate winning score for a business is more money in than money out.
So keep your pricing strategy simple. Know your costs. Charge more than that. You may offer a loss leader or a discounted price on a system checkup or water heater. But the loss on each loss leader sale needs to be added to the overall costs of doing business. And those costs have to be recouped from the sale of other goods and services.