A few weeks ago my wife’s twin sister came to visit, and as they sometimes do, both sisters stayed with their brother and his family in Windsor. So, I had a hall pass on a Friday night, and as I sometimes do, I chose to use my pass to go have some drinks and play some pool at the Trailhead Tavern.
The Trailhead was my pub of choice in my early years in Fort Collins, and it’s now the closest watering hole to my house, so a few times a year I head down and knock the rust off my pool game. On this particular Friday, I was on fire! - I nearly ran the table in my first game, and ended up playing some games with a few young men from my native North Dakota - one of which had just moved to town that week! We had a whiskey shot (or two) to celebrate the new friendship, and I remember one of them bought me a double vodka Red Bull after a hard-fought win. In a few short hours, I built a reputation on the tables, and one young lady asked me to partner with her to beat her ex-boyfriend and his buddy on the adjacent table. So we did, and then she dumped me to partner up with her (now not-ex?) boyfriend, and I was cut loose to find another partner and table. And do you know what happened after that?
Neither do I! I woke up in bed the next morning, with an ear-splitting headache, a scraped-up elbow, a big bruise on my hip - and a broken iPhone! Based on the evidence, I was probably looking at my phone on the walk home, stumbled over a curb or a sidewalk crack, and broke my fall with my hip, elbow, and the phone in my hand! I was having a blast - king of the pool tables with new friends and conquered opponents buying me drinks - but it was too much of a good thing!
I spent much of the next day without a phone, and then the rest of the weekend with a phone that didn’t have any of my contacts in it (the screen was smashed, contacts couldn’t be transferred), and didn’t have any of my apps loaded - no email, no LinkedIn, no Insta. It was kinda nice, actually, and it was the loss of my phone that led me to the title of this month’s blog post. In business and in life, there are many good things. And, in both cases, too much of those good things can be counterproductive, or even destructive. The questions and ideas I’ve been tumbling around in my head are as follows, and I hope we all can learn something by sorting it through:
My phone, like most of yours, is capable of amazing things. I can respond to emails - with my voice! - and post pics or videos to my social media, I can call or text my mom - or a thousand other people - I can update spreadsheets and look up anything on Wikipedia - or anywhere else. I can transfer funds to almost anyone - for free! - or buy bitcoins or cars - or anything!, or read books or listen to them, or podcasts - or play any of thousands of games...I guess you get the picture. It’s so amazing that I sometimes spend 5 hours or more using this amazing device, much of which is spent during the workday. And 5 hours is probably too much! It’s fun to go to restaurants and see all the couples with both heads down looking at their phones, or a whole family, or a group of friends...actually, it’s not fun, it's terrible - too much of a good thing!
So, in that light - what are the good things in business? - what are we rightly and justly pursuing by these human-imagined and powered enterprises?
Profit, right? - that’s the purpose of business according to Milton Friedman, to maximize profits for the shareholders. The Friedman doctrine - also called the Stockholder Theory or Shareholder Theory - has carried the day in many hearts and minds for some 50 years now. First published in 1970 in the New York Times, Friedman’s essay titled “A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits”, has been a cornerstone of social-economic theory ever since. His essay describes an active shareholder who guides the company into pursuits that are beneficial to society and watch the risks, and all the other good things - which we now know to be basically folly. Our corporate boards are basically rubber stamps for the A-list CEOs, most of whom pursue whichever strategies might maximize quarterly profits. Most C-Suite players in the Fortune 500 are compensated more by options and shares than by salaries - and their salaries are often 100x or more than that of their common workers. It seems like they’ve developed the dual purpose of maximizing income for the upper management team whilst maximizing profits for the shareholders. It’s kinda yucky, really, meritocracy taken too far, now drifting into cronyism.
In my undergraduate years, we learned that when profits are too strong (too much of a good thing), competition will come in at a lower price, and margins will thin - unless the company has monopoly power. Only with monopoly power - or sometimes oligopoly power (dominance by a few) - can profits be extreme and durable. The aforementioned social media and phone and technology-dependent life I described above comes to mind in this - Facebook, Google, and Apple all have significant market power - evidenced by their extreme and durable profits! Can I be both a small-L libertarian and a trust-buster in the vein of Teddy Roosevelt?...the answer is yes...the power and capability of some of these companies is too much of a good thing in my opinion.
Social Responsibility. In the last 20 years or so, corporate social responsibility has become a thing and most would say it’s a good thing. Many companies now give some attention (or at least lip service) to the triple bottom line (profit, people, planet), and some have even taken the step of codifying it in becoming B-Corporations. Conscious Capitalism is a book by Whole Foods founder John Mackey that I’ve listened to with good interest and agreement. Last summer and fall, corporate donations and pledges to address racial inequality were counted in the billions of dollars, and enough donations apparently flowed into BLM Inc. for its founder to purchase a fancy house in Malibu. Virtue signaling seems as common in the corporate world as it on private social media it seems, and maybe that’s a signal of too much of a good thing?
Growth. Humans love growth, and so do businesses - it’s intrinsic to us it seems. Governments love growth too - it’s what allows the debt ball to be kept rolling up the hill with hopes of a larger economy to tax down the line! One of the reasons businesses love growth is that the overhead expenses of running the business don’t necessarily jump when sales go up, and thus profits are easier to come by. Here at LoCo Think Tank, we’re in the realm of $30K in monthly revenues today, and my LoCo Facilitators earn about $12K off the top, and we’ve got a few thousand dollars in fixed overhead for office rent, software, and the like, leaving just enough for a modest salary for me and liveable income for Deb and Alma on my team. I’d like to pay them more, and me, and I’d love to have some more talent on the team to help us grow even more. Growth is a good thing for business.
Over and over again though, I see the same story: Business starts, creates value in the world and gets through some tough times, grows and grows some more, becomes awesome - loved by its customers and its employees and the community - for a season or two - and then continues to grow until it’s no longer what it used to be. Or it gets acquired by a bigger, soulless organization that no longer loves its employees like the original, and is perhaps too focused on maximizing profits. One of my biggest banking successes in my banking career was the startup financing for Green Ride - the airport shuttle service founded in ~2009 and which was sold to Groome Transportation in ~2018. Green Ride so loved its customers and team and community that it grew to dominate the airport shuttle service locally, leading its primary competitor Super Shuttle to depart the market - an international company that previously dominated it! And now we have Groome and I’ve rode it and it was fine but from everything I hear - “meh” seems to be the primary emotion of its customers these days.
Another great comparison that comes to mind is New Belgium vs. Odells. New Belgium pursued growth, growing to become one of the largest craft breweries in the US, and found in almost every state. They expanded dramatically at their Fort Collins location and then built a fancy-pants new brewery in an even cooler town - Asheville, North Carolina. Odells always pursued a slower-growth strategy, and in 2019 was the 23rd largest craft brewery in the US, with sales in ~20 states and around 135 employees. But New Belgium got out ahead of their skis a bit - they didn’t find customers fast enough to keep up with all of that new capacity in NC - and they didn’t have the juice to cover the costs and basically were forced to sell to save the brand (or so I hear). Growth can be risky, and NB had too much of a good thing! The founders of Odells, in comparison, sold to a group of senior managers and an employee stock plan in 2015 and built the company for the long haul. Still, the best beers around, and now they have a wine bar and canned wine sold in liquor stores - to my eye they’re doing the growth thing right.
Processes and systems. Two good things in business, and among the areas our members work the hardest! Often, when a business is founded, the owner does all the things - or nearly so. And then as it grows a bit, the small team pretty much knows everything that is going on, and who does what, when, and how. And that’s great - but it’s often not sustainable. Just yesterday, in our weekly Operations Meeting, my staffer Deb had a new idea and said (rhetorically) - “Do you know what we should do?!” - to which I replied, tongue in cheek - “No, please tell me!” The moment brought to mind another conversation with Rory, a few months into her tenure, where she said “Just tell me what to do and I’ll do it!” - and admittedly, the what to do of growing and prospering LoCo Think Tank is not as clear as it might be in more traditional businesses. But we have a lot more processes and systems in place than we did a few years ago when I went full-time pro at this enterprise, and it’s better. Your team and whoever becomes the next owner of the business will really appreciate your efforts at building processes and systems.
Some companies that come to mind that had great processes and systems are Sears and Kodak. Sears had a dominant catalog for years, along with immense real estate holdings in some of the best locations across America. On paper, they should have held a strong position in the general merchandise space for generations more - but they failed to adapt. For starters, their online efforts were weak and slow in coming, and 20 years later they are a shell of their former self. Kodak was once a major employer in our region, with a large plant just east of Windsor, they had strong growth and great profits historically, and in 1975 one of their engineers patented the first digital still camera! On paper, they were in great shape - but they were a film company. Digital photography would cannibalize film sales they figured, and so they didn’t pursue their own innovation. Sometimes - “the way we do things around here” has to be re-examined, especially as technology and trends change. You can indeed have too much of a good thing in this area too.
Happy People! Who doesn’t like happy employees? Of course, that’s a good thing in our business community. When I first hired Rory, I commented that I hoped within a couple of years we’d both be underworked and overpaid - which unfortunately has not yet come to pass. Rory has since moved on to greener pastures - in large part because we weren’t able to grow enough to even pay us fairly. Happy people are a good thing for small businesses - customers win because of their better experience, owners win because happy customers lead to bigger profits, and employees win because who doesn’t like to go to work with other happy people? How to go about creating happy people is a whole ‘nother essay I suppose, and what too much of a good thing here looks like I don’t truly know - but it’s probably not sustainable!
I could go on and on - hard work, purpose, the flexibility of hours, insurance plans - all good things, but can be taken too far. Thanks for reading along and thinking this through with me, go and pursue the good things in life and in business in the weeks ahead - but don’t chase them too hard!