Business Strategies: 14 - Gary Zeune...GARY D. ZEUNE The Pros & The Cons 10356 Wellington Blvd Suite D Powell, OH 43065 Office 614-761-8911 Fax 206-202-0880 [email protected] sing

Training, Writing and Consulting in: Fraud and Audit Failures Leadership: Skills and Strategies Productivity Performance Measures

10356 Wellington Blvd., Suite DPowell, OH 43065

Phone [email protected]

www.TheProsAndTheCons.com

Business Strategies:

14 Things You Need to

Know for 2007

GARY D. ZEUNE The Pros & The Cons 10356 Wellington Blvd Suite D Powell, OH 43065

Office 614-761-8911 Fax 206-202-0880

[email protected]


sing 35 years of experience in auditing, corporate finance, and investment banking, Gary D. Zeune, CPA, provides CPAs, attorneys and executives with hands-on experience in fraud and corporate strategy

performance improvement. Mr. Zeune instructs courses for:

FBI National Training Academy Office of the U.S. Attorney The SEC Institute National Association of Securities Dealers North American Securities Administrators Association American Society for Industrial Security Over 35 state CPA societies and bar associations American Institute of CPAs American Management Association Institute of Management Accountants Entrepreneurship Institute Treasury Management Association Private classes for numerous companies and

accounting firms. Mr. Zeune has instructed Strategy Formulation and Implementation in the Executive MBA Program and Accounting and Honors Finance at The Ohio State University. He is also a member of the Education Executive Council and is past chairman of the Education Marketing and Public Relations Committees of The Ohio Society of CPAs. His other memberships include: the American Institute of CPAs, and the Regulation of Public Offerings Committee of the Ohio Division of Securities.

Prior to forming his consulting practice in 1986, Mr. Zeune was an Assistant Vice President of Corporate Finance at The Ohio Company, a Columbus, Ohio investment banking firm. He also spent more than five years in Treasury and Finance at Wendy's International, where he was responsible for mergers and acquisitions, financial and SEC reporting, and corporate finance. He was on the audit staff of Ernst & Ernst from 1973 to 1977; and taught accounting at Ohio University from 1970 to 1973, where he received his bachelors in mathematics and masters in accounting, with honors.

Mr. Zeune is also widely published. He has published more than 40 professional articles and is the author of The CEO's Complete Guide to Committing Fraud and Outside the Box Performance. He has been a member of the Editorial Advisory Boards of the Journal of Working Capital Management and The Ohio CPA Journal.

For Deloitte & Touche, he authored Financing Business Growth and has completed the first draft of The Complete Guide to Buying or Selling a Closely Held Business, two books in the firm's Entrepreneurial Series. He has authored chapters for two books published by Warren Gorham Lamont, the world's largest financial publisher: Accessing the Capital Markets and Options for Raising Capital.

Mr. Zeune has the ONLY speaker's bureau in the country specializing in white-collar criminals — The Pros & The Cons. Mr. Zeune's speakers tell their stories of how and they committed their crimes. Their frauds range from $18,000 to $350 million. Speakers include CPAs, attorneys, and business people. The frauds include:

Mark Morze created 10,000 phony documents to steal $100 million in the infamous ZZZZ Best Carpet Cleaning fraud (86% of the revenue was fake and no one found it)

Fred Shapiro defrauded nearly every major financial institution in the City of Philadelphia to the tune of $8.6M. He is a former attorney, accountant, educator and inmate. Fred worked undercover with the U.S. attorney's office and the FBI in a drug and money laundering operation in an effort to minimize his sentence.

Nick Wallace committed a $350 million fraud as the President of ESM Government Securities resulting in the collapse of the Ohio Saving & Loan Guarantee Fund, and the bankruptcy of 69 Ohio S&Ls

Dunlap Cannon was the largest real estate closing attorney in Memphis. He went to prison for 32 months for stealing $5 million from his clients.

Suffering from medical expenses and family deaths, bookkeeper Teri Lynn Norwood stole $18,000, promising to pay it back. She ran out of time.

U TRAINING AND CONSULTING

ARTICLES AND BOOKS

WHITE COLLAR CRIMINALS

100% No-Risk Guarantee Mr. Zeune’s executive education training is consistently

rated at least a 4.7 on a 5-point scale. If you are not satisfied for any reason, if you don’t learn at least 10 new things you can use the following day, there are no fees or

expenses. PERIOD.

Training, Writing and Consulting in: Fraud and Audit Failures Productivity Performance Measures Leadership Skills and Strategies

ACTION STEPS FROM GARY’S CLASS

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10356 Wellington Blvd Suite DPowell, OH 43065

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Articles at www.TheProsAndTheCons.com

Would your clients, staff, customers, vendors or another group you belong benefit from one of these articles?

Email Gary Zeune at [email protected] for reprint permission.

Wrong Strategy + Wrong People = Fraud/Theft/Abuse – By Gary Zeune, CPA Auditors And Airport Screeners Have Similar Blind Spots - By Gary Zeune, CPA Should Auditors Be Airport Screeners? Or why they both miss what they're paid to detect. - By Gary Zeune, CPA Ex-con: Cunningham Faces Rough Road In Prison - By William Finn Bennett

Walt Pavlo USA TODAY Ethics training -

Gary Zeune on Fraudsters Speaking Out on Fraud The Corporate Counsel - Podcast

OU alumnus examines corporate crime, criminals - By Ashley Ferguson

Ex-cons tout ethics through corporate speakers bureau - By Sarah Anderson

Man's Lifestyle Sold Investors - By Jim Woods

"The Pros of Cons" - By Michael Goldstein

Legal Audits: Does Your Borrower Need A Checkup? - Schottenstein, Zox & Dunn.

An Ex-Con Tells How to Avoid Being Conned. - By Fred Shapiro, in White-Collar Crime Fighter. December, 2004.

Does your compensation system encourage illegal activity? - By Gary D. Zeune, CPA, Published in White Color Crime Fighter in November 2004

Speaker explains how corporate con men get away with it - By Jim Phillips [Athens NEWS Senior Writer] in The Athens News in October 2004

How to Foster Fraud : Forget Ethics - By Gary D. Zeune in White Color Crime Fighter in August 2004

Your Auditors Can Stop Fraud , If they know what to look for - By Stephen Pedneault published in White Color Crime Fighter in August 2004

After Serving Time, Executives Now Serve Up Advice - by CHRISTOPHER S. STEWART in The New York Times

Local CPA, ex-cons attempt to spread word that crime doesn't pay - by SEAN CASEY [Daily Reporter Staff Writer] in Central Ohio Source " The Daily Reporter"

The costs of not securing personally identifiable Data - By Benjamin Wright "The Information Systems Audit and Control Assn." Site : www.isaca.org

Ex-Cons find peace and paycheck on the Burgeoning lecture circuit - By Joshua Harris Prager published in Wall Street Journal May 25th, 2004

Felons become educators for Business - By Mitch Moxley [ Financial Post ] Published in National Post July 17, 2004

A new regard for ethics on the job - By MEREDITH COHN [ SUN STAFF ] Originally Published JULY 9, 2004

The pros of preventing cons - White-collar criminals help companies avoid fraud in their midst By Chiree McCain, For Business First - June 25, 2004

Are You Teaching Your Employees to Steal? - By Founder Gary D. Zeune, CPA in Strategic Finance

When it's one of your own a first-person account of Fraud Inside A Bank - by ex-con Dave London in RMA Journal

FRAUD HAPPENS : How an honest employee crossed the line - by Teri lyn Norwood Published in White - Collar Crime Fighter Magazine , November 2003

Internal theft can destroy years of small business owner's work - by Jane Applegate

Fraud and Theft Start Small - by Founder Gary Zeune in NJ CPA Society Journal

How to Predict When People Will Embezzle - by Founder Gary Zeune in White Collar Crime Fighter

Hubbell details life of fraud - September, 2000 in San Antonio Express

Speaking with Conviction - from Report on Fraud

Corporate crooks hit lecture circuit - from Denver Post

Ex-Con Tells How Auditors Failed to Help Clients Guard Against Fraud - by Mark Morze in White Collar Crime Fighter

Preventing Your Firm's "Enron" - by Founder Gary Zeune in Ohio CPA Journal

SAS 99 17 Ways to Protect Yourself From Malpractice - by Founder Gary Zeune in 7 CPA journals

Regulation SAS 99 Aimed at Curbing Company Fraud - from Bizjournals , March 2004

Business First Auditors' Alert: How NOT to Get Sued Under Fraud Auditing Standards - by Founder Gary Zeune in White Collar Crime Fighter

SAS 99 Friend or Foe - by Founder Gary Zeune in two publications

(SAS 99 RMA) Look Out! New fraud auditing standard holds worrisome implications for financial statement reliability : interview with Gary Zeune in RMA Journal (for banking industry)

Like an article…….Email Gary Zeune at [email protected] for reprint permission.

��

Outside the Box Performance: How to Beat Your Competitors' Brains Out is packed with the techniques small and mid-size world-class companies use to become and stay competitive, and make a ton of money. Learn the secrets to unlock the multitude of new techniques which "drive" your profitability. This book compliments the class and provides new ideas to incorporate in your business. For example, do you know what the basis of competition will be in the next 10 years? It’s around you ALL the time. You expect it everyday as a customer. Or, how to beat your competitors by asking your customers two simple questions? If not, sit back and learn how to "beat your competitors' brains out!"

Don't you want to know how Barry Minkow and Mark Morze stole $100 million from investors in the ZZZZ Best Carpet Cleaning fraud, right under the noses of auditors, underwriters and lawyers? The first chapter of 100 pages in The CEO's Complete Guide to Committing Fraud tells you. It also has 8 chapters on other frauds: computer, real estate, fake financial statements, public company frauds, and a chapter by an auditor who became the target of a fraud investigation, just 4 weeks after becoming the engagement partner. Risk-Free Lifetime Guarantee: Gary Zeune’s books are fully guaranteed. If they ever fail to meet your expectations, even after you've written in them, marked them up, torn pages out, return for a full refund.

I need the following copies of Mr. Zeune's books. Price: 1 @ $19.95: 2 to 5 @ $15.95 6+ @ $12.95 The CEO's Complete Guide to Committing Fraud (300 pages) Outside the Box Performance (200 pages) Number of books ordered 1 @ $19.95 Checks make payable to: 2 - 5 @ $15.95 each Gary Zeune 10356 Wellington Blvd Suite D 6+ @ $12.95 each Powell, OH 43065 Office 614-761-8911 Postage/Shipping $5.00 Fax 801-751-6283 Email [email protected] Total Web www.bigfoot.com/~gzfraud Name _____________________________________________

Company ___________________________________________

Address

City State Zip ______

Phone Fax __ _____________________

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Address is: � Firm � Home

1

Business Strategies14 Things You Need to Know for 2007

Gary Zeune, CPAThe Pros & The Cons

10356 Wellington Blvd, Suite DPowell, OH 43065

Phone 614-761-8911Fax 206-202-0880

[email protected]

v2

FaxAway.com

Business Strategy 2007 2

Required Legal StuffThese materials were developed by Gary D. Zeune.

The following policies govern their use:1. These materials are intended for use in group study situations and

were not developed for self study or reference uses. These materials are copyrighted. Reproduction of the manual or any portion of it is prohibited unless written permission has been obtained from Gary D. Zeune.

2. These materials were prepared solely for the purpose of continuing professional education. They are distributed with the understanding that Gary Zeune is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

3. Participants are advised that the Statement on Standards for Formal Continuing Education (CPE) Programs places responsibility on both the individual participant and the program sponsor to maintain a record of attendance at a CPE program.

4. The information the participant should keep on each program is (a) sponsor's name, (b) title and/or description of content, (c) date(s) of the program, (d) location, (e) number of CPE contact hours. This information is found in the printed program for most courses or conferences and/or in a CPE attendance record form. Either or both of these documents should be kept for an appropriate period to enable regular periodic reporting to jurisdictional board(s) and to professional organizations requiring such reports.

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14 Things You Need to Know for 2007

1. Forecast: what effect will oil prices have on interest rates andthe economic expansion

2. How one drug company’s pricing model could threaten the corner drug store

3. How 70-year old Lego is competing in the internet age4. Find out how Staples developed a unique, and highly

profitable, source of new products5. Do you know what new regulations for E-waste could be

hazardous to your financial health6. To make more money, put customers in charge7. How Kodak gets customers to try its cameras, then buy one


14 Things You Need to Know for 2007

8. How the number of choices affect customer buying behavior9. How the rapidly changing gender mix of college grads will

affect your bottom line10. Why these workers act like owners11. How to tailor perks to retain more employees12. Get the latest on how companies are dealing with computer

misuse 13. Find out how advertisers are requiring measurable results for

their ad dollars 14. How a 125+ year old house wares company went bankrupt

and now makes a profit

4


More Strategy Secrets (if we have time)

1. Why things don’t change2. Accountants information market share3. Non-financial performance measures4. Extraordinary guarantees5. Disruptive technologies6. Competing based on service7. Keep customers coming back8. Strategy questions


“Is there a better way?”

We must never stop asking, “Is there a better way?” You can’t pray for progress and fight change. In 1829, Martin Van Buren, Governor of New York, wrote to President Andrew Jackson cautioning him about the future: “President Jackson, the canal system of this country is being threatened by the spread of railroads. We must preserve the canals for the following reasons: (1) If canal boats are supplanted by railroads, seriousunemployment will result. Captains, cooks, repairmen and lock tenders will be left without jobs, not to mention farmers now employed in growing hay for horses. (2) Boat builders would suffer, whip and harness makers would be left destitute. (3) Canal boats are absolutely essential to the defense of the United States.

5


“Is there a better way?”

In the event of the expected trouble with England, the Erie Canal would be the only means by which we could ever move the supplies so vital to waging modern war. As you may well know, Mr. President, railroad carriages are pulled at the enormous speed of 15 mph by engines, which, in addition to endangering life and limb, snort their way through the countryside belching out smoke, setting fire to crops, scaring the livestock and frightening women and children. Surely the Almighty never intended people should travel at such breakneck speed.”

Poor Martin – what would he think if he knew we were flying 33,000 feet high, at 500 mph, sipping coffee and typing on a notebook computer? God is the author of all true progress, so we must never stop asking, “Is there a better way?”


Why People Don’t Trust Business

Strategy Tip: If customers have to read the ‘fine print’ to understand the deal they won’t _________trust you.

6


Why Employees Don’t Trust Management


Hi & Lois Real Estate Jargon

7


New Business Ideas

New businesses start when someone sees or has a problem.


Luggage Express

1. Started in 20002. CEO hurt his shoulder getting his golf clubs to

Europe3. Business took off after __________4. Business up 30% since Aug 10, 2006 when TSA

banned _________5. Large bag one-way $130+6. www.usxpluggageexpress.com or 866-SHIP BAGS

Strategy Tip: ALWAYS be alert for problems to ______ solve

8


Unintended Consequences


Toyota Drove a Ford to the Bank

1. Sell them here, you must build them here in 1970’s2. GM/Ford/Chrysler had ____% market share

1. 800,000 employees3. Two fuel shocks in 1970’s sent Japan’s market share

from 20% to 30% from sales of small cars4. American car companies, unions and politicians

demanded Japan build cars here5. Japan and US agreed on voluntary import limits6. Detroit thought limits would give it time to rebuild7. Thus forcing plants to be ___________________

70

built here

9


Toyota Drove a Ford to the Bank

1. Detroit lost American buyers’ loyalty2. Most Japanese cars come from American plants that

Detroit insisted the companies build3. Gave Japan insight into American life, created

thousands of jobs, keeps profits here4. Toyota builds Camry in 7 countries from lessons it

probably wouldn’t have learned otherwise5. States now line up to provide incentivesStrategy lesson: Unintended Consequence….

Detroit’s brake was Japan’s ________accelerator


Change Rules, Change Behavior

1. FDA requires disclosure of trans-fat content on labels

Companies spending millions ________________reformulating products

10


Competitive Threats


Bad Bosses

Survey of 700 employees by Florida State University College of Business reported in The Leadership Quarterly, Fall 2006

23%Supervisors who blamed others to cover up mistakes or to minimize embarrassment

24%Supervisors who invaded their privacy

27%Supervisors who made negative comments about their employees to other co-workers and managers

31%Supervisors who gave their employees the "silent treatment" in the past year

37%Supervisors who failed to give credit when due 39%Supervisors who failed to keep promises

11


Gem War

1. $143 billion industry2. Jewelry quality made in a lab3. 15% cheaper than mined stones4. Will people buy synthetic or cultured 5. Mined diamonds have bad reputation6. True diamonds, not fakes 7. Colors are easy to make but rare in nature8. Cultured pearls now 95% 9. Hollywood pushing 10.100 million new customers in _____________India and China


Assist U.S. Car Makers?

Should the federal government provide financial assistance to

U.S. auto makers?

Yes12%

No88%

WSJ, Online Poll, November 13, 2006

12


Dilbert on Sales


Ford 500 Renamed Taurus

1. Taurus 3rd most recognized nameplate1. F-Series and Mustang2. 7 million sold in 21 years

2. Ford 500 108,000 sold in 2005 dropped to 84,000 in 2006

3. Freestyle crossover now Taurus X

1st day at Ford…….”Why get rid of the Taurus? How can it go away? It’s the best-selling care in America,” Alan Mulally, Ford CEO, from Boeing.

BS: Will renaming the Ford 500 increase sales Yes No ?

13


Pricing Parking

1. Introduced in Oklahoma City in _________2. Never have enough + never cheap enough3. How much does it cost at a meter in your town4. Why are all meters priced the _________5. Seattle no free parking north of downtown6. London up to $___ per hour7. San Fran AT&T Park meter $4500/year but

meters mile away $10/year now adjusts prices in real time

1936

SAME

10


Pricing Parking

1. Cities and merchants argue cheap parking brings _____________________

2. People moving back downtown with their ____3. 85% rule: Set prices so that 85% of spaces are

full at any time (Portland OR and Anchorage)4. Portland free to 75¢ bus ridership to Lloyd

District 10% to 33% of office/store employees5. The High Cost Free of Parking, Donald ShoupStrategy Point: You don’t have to charge all

customers the _______________

customers downtown

SAME PRICE

14


Cell-Phones Disruptive Technology

1. Watches Why _____________________2. Cameras

1. U.S. 3.2 megapixels2. Europe and Asia 8 to 10 megapixels

1. Built-in flash2. Advanced lenses

3. 2007 est. 74% have cameras with 13% high resolution

4. Send pics from phone without __________Strategy: Cell phones may ___________ low end

cameras

Samsung A990

Cell phones have time built in

obsolete


Are Your Employees Engaged?

Renegades11% Know what to do but don't

want to do it

Engaged57% Know what to do and want to

do it

Disengaged27% don't

know what to do, and

wouldn't do it anyway

Enthusiasts 5% Want to

do their work, but don’t'

know what to do.

Sibson Consulting

15


Kodak’s Printer Strategy

1. Film fading so Kodak needs new revenue 2. Old Strategy:

1. Cheap printers + Expensive ______2. Printer revenue ¼ ink revenue

3. 70% parents restrict kids printing4. New Strategy: Kodak up-pricing printers

but cutting ink prices about _____ 5. Black ink $10, color ink $156. 4x6 10¢ compared to 29¢Strategy: Who’s at risk ______________

EasyShare 5500 Prints/copies/scans/faxe

1/2

Cartridge refill


CA’s Defective Sales Commission

1. Formerly Computer Associates 1. Why name change _____________

2. $2.2 billion accounting fraud3. CEO, CFO, numerous acctg/fin execs pleaded

guilty to securities fraud and obstruction4. Kumar gets 12 years in prison and fined $8 million

Sanjay Kumar

scandal

16



1. Revised commission structure 20052. Encourage sales to new customers3. Acquired Niku and Concord Communications4. Negotiated quotas with sales who ___________5. “Overlays” CA told its sales people would be

paid for sales to “their” customers by new sales folks6. Base $45k + $____k if met quota7. Lots of sales people beat quotas 8. Internal comp system failed to alert mgt

Sanjay Kumarsandbagged mgt

120



1. Restated earnings because higher than expected sales commissions

2. Considered paying less than promised3. $70 million more commissions than expected4. “poor design and administration”5. Managers lost some bonus and can’t exercise options6. No payment to 401(k)7. Sales chief and CFO _________Strategy Tip: People ALWAYS change their __________

to maximize the benefit to themselves

Sanjay Kumar

in jailbehavior

17


Finding the Most Profitable Ideas


Staples Reinvents the Letter Opener

1. InventionQuest 10,000 inventors2. Winners get $25,000 + up to 8% royalty3. Products invented by customers who can’t find

____________________________4. Make house items top office products brand 5. In-house design has 50 patents6. Competing with name brand products 3M, Xerox

something they need

18


TackDots

1. Inventor Neil Grimwood came up with StickyDots after missing an appt when a Post-It note fell off his ______________

$5,000 royalties at 12/31/052. Mini bulletin boards easy to stick almost anywhere3. Great for small areas like monitors, cabinets, lockers 4. Use to leave notes, put up lists and display photos 5. Powerful adhesive holds strong yet won't leave residue 6. 3M® brand adhesive sticks to almost any surface 7. Includes 8 mini bulletin boards and 8 silver push pins


Handy Strap Stapler

1. Teacher Nancy Garner 2. What do teachers need to staple

________________3. Adjustable strap keeps fingers free to hold papers

while tacking them to a wall 4. Removable base allows this stapler to be used as a

desktop stapler 5. Staples up to 14 sheets and tacks up to 5 sheets 6. Designed for teachers

19


Rubber Bandits

1. Former Car designer Adrian Chernoff now full time inventor

2. The easy way to organize and label items3. Instant organization - just wrap and you're done 4. So many uses - organize documents, label items for

storage, create reminders 5. Heavy-duty rubber bands with water- and tear-

resistant, write-on labels 6. Write on label with pen or marker


WordLock

1. Software engineer Todd Basche2. Easy-to-remember combination

lock - you pick the word!3. Choose your combination from over

10,000 word or letter combinations 4. Protecting your valuable equipment is easy5. Reset your combination at anytime 6. 6.5' galvanized steel cable, security mounting plate,

and instructions with sample word list

20


Staples Bottom Line Results

1. Staples brands1. 2004 11% 2. 2005 18%3. 2006 20%

2. House brands have _________ profit margins3. 2002-06 sales increased 11% and Profits 26%4. Surpassed OfficeMax as #1 retailer5. 80% of all the best new ideas come from ________Strategy Tip: Do you have a formal program to

_____________________________.capture your customers’ ideas

higher

customers


To Charge Up Customers, Put Customers in Charge

1. Lead-user innovation2. Intensely engaged user find new uses long before

__________________________3. Not market research4. Identifying what most advanced users are ________

the company does

doing

21


John Fluevog Shoes

1. Open source footwear2. Rock stars and fashion models3. Solicits ideas from brand _______________4. Who submit their own ____________5. Desire for a connection6. Some are striking but impossible to make7. Best are “intriguing twists on designs we’re already

exploring”8. 300 finalists

enthusiastsdesigns


John Fluevog Shoes

www.fluevog.com/files_2/os-1.html

22


Jones Soda

1. “The world does not need another soda” forced a different way to look to form a connection with customers

2. How to let customers own the brand3. 12-24 year-old demographics4. 12-ounce glass bottles5. Labels b&w photos from ___________ 6. That _________ regularly

customerschange


Jones Soda

1. Web site displays some of the millions received2. Visitors do what ________3. Selected labels includes ______________________4. Highest margin product 12-pack with customer’s

own _________________ cost $_______

VOTEName and address

photograph 34.95

23


Threadless.com

1. T-shirts 2. 70,000 designs all come from ___________3. Visitors rate 4. Company selects 5 to 7 per week5. Winners get $1500 cash + $500 merchandise6. Customers get points for referring others and

posting photos 7. Customers design, select, market and buy8. Customers ARE ______________

customers

the designers


Threadless.com Screen Shot

24


Threadless.com

1. 300,000 registered users +20,000/month2. 150 new designs/day3. Sell 80,000 shirts/month4. 4 rules

1. Members create content2. No advertising3. Members help with the business4. Reward members

5. Low-cost, high-involvement


Threadless.com

1. In effect Threadless.com is a __________________2. What do you want to know about the T-shirts $____

Strategy Tip: Technology makes it easy to let your customers help you _______________

custom job shop

15

run the business

25


Firing Up Your Troops and Customers


For Every 50 Men, There Are __ Women...

31

37

39

48

50

53

0 10 20 30 40 50 60

Master's

Bachelor's

In college

HS grad

High school

Elementary

Women Dusting Men in College

26



1. “I take the path of least resistance. What’s the difference between an A and a B? Either way, you go on to the next class,”Rick Kohn, UNC.

2. Regardless of race or economic status Dept of Ed stats show men ….

Less likely to graduate and of those who doFewer do it in 4 or 5 years and Get worse grades



1. Men are only 42% of students2. Harvard Honors grads 55% women vs. 49% men

2006/7 class was 52% female3. Florida Atlantic women 64% of grads but 75% of

honors degrees and 79% summa cum laude4. “The boys are where they were 30 years ago, but

the girls are on a tear, doing much, much better,”Tom Mortenson, Senior Scholar, Pell Institute.

5. Cultural ADD……..not cool to study

27



“Most women want a high-powered career that they are passionate about. But they also want a family, time off, and make dinner. I won’t date anyone who plays video games…They’re choosing to…waste their time and it sucks the life out of them. Men don’t hustle as much. It’s that entitlement thing. They think they can sit back, relax and still get a good job. They think if they have a firm handshake and speak properly they’ll be fine.” Jen Smyers, who has a dean's scholarship and has had four internships and three jobs while at American University. She also led the campus women's initiative.



Christina, left, and Lynette Thompson attend the University of North Carolina, Greensboro. Their two sisters also went to college, but their three brothers did not. "I think women feel more pressure to achieve," said Christina Thompson, who is majoring in political science.

Strategy Tip: What programs/practices do you have in place get and keep the ________________________?the best and the brightest

28


The Paradox of Choice

“We are now discovering the difficulty of deciding just what makes us happy in a world of innumerable options. Since graduation, we’ve struggled to make our own happiness. It seems that having so many choices has sometimes overwhelmed us. In the seven years since I left for college, I’ve had 13 addresses and lived in six cities. How can I stay with one person, at one job, in one city, when I have the world at my fingertips?”, Jenny Norenberg, Newsweek, 12/6/06.

Jenny Norenberg: Paralyzed —and propelled — by choice.

Strategy Question: How do you get employees to stay “down on the _______”.


Reflexite Corp ESOP

1. 75% owned by 500 ___________2. Monthly Town halls: Strategic and

financial update3. “My bosses are all around me. ¾

of the equity is in the hands of people who have direct impact on the business. We attract people who want to be in business for themselves, just not by themselves,” Cecil Ursprung, CEO.

employees

29


Reflexite Corp ESOP

1. $100 million and growing fast2. NY, Conn, 14 foreign locations3. Reflective material for tractor trailors, police cars,

construction cones, roadwork signs, firefighters’coats, and cycling vests

4. Components for overhead projectors, motion sensors, thin films for lcd screens

5. Compete against giants because employees are invested in success through ESOP


Reflexite Corp ESOP

1. Employee Stock Ownership Plan2. 6 to 18% of salary every year3. 60+ in East Germany + 110+ in

China4. “People are at their best when

they’re in a constant state of dissatisfaction, when they’re always looking to make things a little better. That’s what ownership does. It’s remarkable what gets unleashed when people share in the wealth they help create.”

05

1015202530354045

1985

1995

2005

Mill

ions

Value of ESOP Shares

30


Jonathon Barnes Architecture and Design

1. Overseas ‘fellowships’Cutting-edge Creative insightJob well doneWorld-class designsRicher understandingBenefits _________

Bonuses and travel strong retention toolAverage cost ______________

client

$2,500


Jonathon Barnes Architecture and Design

1. Unusual bonuses and incentives tailored to employee work

2. Employee chooses destination3. Meets with local architectural firms4. Presents findings to firm5. Softball and pizza are nice, but trips

enhance expertise, retain clients and make firm/company _______

Strategy Tip: To keep employees customize rewards that benefit you.

money

31


Getting People to Try Your Product

1. Fuji and Sony supply hotels with new gadgets for guests to use cost _____

2. Hotel staff give guest pictures on a CD3. Enhance guest experience4. “It’s a real-world test drive. We are

hopeful people will see how well they operate and buy one,” Andy LaGuarida, Fujifim USA.

Strategy Tip: Find ways to expose customers to your product or service without _____.

Sony PlayStation 3

$0 to customer

selling them


More Choices Isn’t Always Better

Strategy Tip: Choice can no longer justify marketing strategy.

32



1. Amazon has how many books _______________2. Netflix has how many movies on dvd _________3. Sales increase but profits ______decline

2,000,00035,000



1. Sample any number2. $1 off coupon3. 60% of customers sampled 24 4. 40% of customers sampled 65. 30% of 6 jam samplers bought6. __% of 24 jam samplers bought7. More choices take more time and cause

anxiety…”Did I make the __________”

24 jams

6 jams3

right choice?

33


Chocolates on the Pillow Aren’t Enough

1. “Big Aha’s” Each chapter has lessons from loyalty building companies

2. Harley nearly dead 3. Harley lessons

1. Start with people who love you ____________2. Expand their loyalty _____________________3. Plan for next generation __________________

______________________________________Strategy Tip: ________________________________

aging bikersRoad trips, rallies, get-togethers

High performance, less expensive, smaller

www.harley-davidson.com


Lego

34


Lego Redefines Its Business

1. Children outgrowing toys faster2. Sales of traditional toys

2004 $22.1 billion 2005 $ 21.3 billion3. Lego started in 19324. One of last producing toys in U.S.5. Cheaper plastic block competitors6. 1998 first loss ever7. Closing Conn. and some Denmark operations


Lego Redefines Its Business

1. Chased fads and tried to diversify1. RC toys and LegoLand

2. Plastic block production moving to Czech Republic3. High tech electronic toys staying in U.S. + Denmark4. 2004 ($327 million) 2005 $86 million

Strategy Tip: Lego redefined itself as a construction brand.

35


Oneida Ltd.

1. 120+ years old largest flatware maker in the world2. 5500 employees + $500 million 3. Jan ’03 – Oct ’05 $(157 million)4. Waited to long to offshore production5. 2002 restructured to market/distribute ___________6. 2004 bankruptcy 7. 2006 bought by private equity lendersStrategy Tip: The market doesn’t wait on __________.anyone

imported flatware


Sunny, With Good Chance of Viewers

1. Networks guarantee viewership for programs2. Promising 8 to 10 advertisers specified viewer levels3. TWC will “make-good” short-falls4. All clients of Starcom5. Why isn’t program viewership guarantee enough __6. Nielson measuring commercial viewership

TheWeatherChannel

36


Sunny, With Good Chance of Viewers

TheWeatherChannel

"We want to be smarter about the way we invest our money, and commercial-ratings guarantees get us one step closer to knowing what we are paying for," MiahSullivan, senior manager of media for Luxottica Retail.

Strategy Tip: Rapidly growing demand by clients to pay for results, not effort. So are your systems set up to reliability capture and report ____________.outcomes


Oil Prices Driving World-Wide Prices

1. 2006 16% of corn to ethanol to grow to 30% by 2008

2. Global grain stocks at 30-year low3. China and India growth 4. Central banks increase rates to

fight food inflation5. Developing country residents can’t afford ‘luxuries’6. National Chicken Council calls corn shortage “the

ethanol crisis”Strategy Tip: Have you factored this into your _________. forecast

37


Healthcare Update


Drug Patents

1. 70 brand name drugs will lose patent protection by 2001

2. “This is once-in-an-epoch stuff. We haven’thad this kind of a generics wave in decades,” Kemp Dolliver, Health-care analyst, Cowen & Co.

3. Reduce drug cost $24 of $252 billion4. Merck’s Zocor $4.50 to $1 generic from Teva

1. Merck is ____________ Teva’s priceStrategy Tip: Is your PBM encouraging doctors to

__________________________________________

undercutting

prescribe generics when appropriate?

38


Disruptive Pricing

1. Wal-Mart $4 for about 300 generics (included different dosages) WHY $4 pricing? _____________

2. Eliminate different dosages and fewer than _____3. Save $1 to $20 for 30-day supply4. Draw more customers5. Shares of generic and pharmacy companies ______6. Target/CVS and others soon matchedStrategy Tip: Who will $4 pricing hurt ____________

Saying 300 instead of 150 ___________________

150

Public image on health insurance

damaged WalMart’s credibility


ITAGroup Trims Health Care Cost

1. 15% of companies with 100 – 500 employees have adopted high-deductible plans, most with HSAs

2. 450 person marketing/incentive company in Iowa3. Added high-deductible to traditional plan so won’t

alienate employees 4. 17% of employees have signed on5. “We want to cover the things that are costly

while managing the company’s expenses. We’re better off investing in preventive care than dealing with problems,” Dick Rue, CFO.

39


ITAGroup Trims Health Care Cost

Adding HSAFlu shotsMammograms

Other benefits

80% up to $2500/$5000

90% up to $1300/$2600

In-network co-pay

$15, $30, $50$10, $25, $40Prescriptions$65/$182$89/$248Premium$25$15Co-pay

$1000/$2000$500/$1000Deductible

High-DeductibleSingle/Family

TraditionalSingle/Family


Books You Should Read

40



Jonathan Tisch, CEO, Lowes Corp.3 secrets for lasting customer relationships1. Make guest feel welcome2. Memorable experience3. Feel safe 24/7Tisch says these can be applied to _____________any business



1. Lowes hotels “home away from home”2. Go beyond list of goods and services

to ‘total well being’1. eBay2. Harley-Davidson3. Fast Company4. Wall Street Journal

41


GO Put Your Stengths to Work

1. Marcus Buckingham “First, Break All the Rules”2. “The effective executive makes strength productive.

He knows that one cannot build on weakness,” Peter Drucker

3. 87% think success = fix your _________________weaknesses


Steps to Put Strengths to Work

1. Bust the myth that success is fixing weakness2. Label strengths (they aren’t personality tests) but

“consistent, near-perfect ______________”3. Flourish by volunteering your strengths to the team4. “Strengths and weaknesses talk with team and

managers to engage strengths”5. Build strong habits (assisted by his _______)

Strategy Tip: VERY few people can be persuaded to change work habits. Change comes from _________

performance

book

within

42


Books Worth Reading

366 Days of Insight and Motivation for Getting the Right Things Done

First Sentence: The proof of the sincerity and seriousness of a management is uncompromising emphasis on integrity of character.

The 8 Point Plan: Concrete guidance, some contrarian, for the newly hired or promoted leader. Interviews with leaders in many industries on the first 100, critical, days of leadership. The ‘honeymoon’period that’s the ‘temporary state of incompetence’.


Books Worth Reading1. People are working longer and longer yet

aren’t happy and their incomes aren’t secure.

2. Best route to emotional satisfaction is to stop looking for it a work.

3. 7 principles for coping with modern work.

1. No Evaluation systems of more than 2 pages.2. Don’t use budgeting. Operations using stretch goals.3. De-link pay to the budget. Link to performance

against prior year and competition.4. Fire people with no surprises and little humiliation.5. Many rules and guidelines, often in list format.

43


Books Worth Reading

1. Please customers and profits will follow

2. Give customers what they want at every contact

3. Treat employees right4. Make service a

leadership priority


Is Your Data Secure?

Laptop thefts expose 40,000 Chicago teachersBy Drew Cullen April 9, 2007

A thief walked into the headquarters of Chicago Public Schools (CPS) on Friday, April 6 and grabbed two laptops containing the names and social security numbers of 40,000 teachers. The CPS has released an image of the suspect captured by CCTV and is offering a $10,000 reward for information leading to the arrest of the thief or recovery of the data.

The laptops belonged to _________________ and its subcontractor, who were ___________ pension contributions made by teachers between 2003 and 2006. The data does not include date of birth or addresses, which is something, we suppose.

Strategy Tip: How do you secure your laptops and monitor ‘employees’?

[McGladrey & Pullen]auditing

44


E-Waste Disposal Hazardous to Your Bottom Line

1. Old electronic gear is worth less than zero and can be a liability

2. Computers, servers, cell phones, printers, PDAs, monitors, video projectors, telecom systems, etc.

3. Average cost is prox $100 for sanitizing drive and proper physical disposal

4. Piling in a corner increases long-term disposal cost5. “Out of sight, out of mind doesn’t apply here.

Companies must view E-waste disposal as more than taking out the trash,” Francis O’Brien, Gartner.


E-Waste Proposed Legislation

1. Europe and Asian countries have national laws2. Four proposed Federal bills will drive costs higher

Computer Hazardous Waste InfrastructureNational Computer Recycling ActElectronic Waster Recycling Promotion and Consumer Protection ActTax Incentives to Encourage Recycling Act

3. States and municipalities aren’t waiting

45


Where's the E-Waste Risk

Percent of 300 Compaines Surveyed

2

4

4

18

68

0 20 40 60 80

Max sales

Free space

Min disposal

Environ risks

Data/privacy risk


E-Waste Current Law

1. Federal Solid and Hazardous Waste Regulations prohibits simply throwing away most E-waste or sending to regular recycling

2. Disposer's responsibility to determine if there’s any landfill-polluting toxic compounds

3. Graham-Leach-Bliley and HIPAA could apply 4. “Sham recycling” or “sprinkling waste”5. EPA fines if don’t properly dispose6. Do you have an E-waste policy and related controlsStrategy Tip: If not, have you recorded a ___________contingent liability?

46


More Strategy Secrets


Why Things Don’t Change. . . .

Your organization and processes are perfectly

designed to give you the results you are getting.

47


Accountants Information Market Share

Total info used torun business

Portion of info provided by accountants

1900 2000Adapted from "The Future of Audits"Journal of Accountancy, Sept. 1994, p. 74

100%

75%

100%

25%


Nonfinancial Performance Measures: Examples

AMP Corp

A-1LawnCare

48


AMP Corporation

AMP CorpNumber of ringsHang upsAnswer by 3rd ringOrder capture rate

Super

Before

Super

After


Extraordinary Guarantees

100% No-Risk Guarantee

Mr. Zeune’s executive education training is

consistently rated at least a 4.7 on a 5-point scale. If you are not satisfied for any reason, if you don’t learn at least 10 new

things you can use the following day, there are no fees

or expenses. PERIOD.

49


Extraordinary Guarantees Examples

SolotronFederal ExpressRoofing contractorMarine paint distributor



Definition

Why EGs work when other quality programs fail

Why EGs are appealing to customers/company

50



What prevents EGs?Inability to track/identify customer needs/wantsLack of enthusiasmCumbersome organizational structure

Changes required to implement an EGFind out why customers do business with youStream line operationsPush decision making downImprove service


Xerox Docutech Guarantee

Unconditional return3 months6 monthsFull year

51


Types of Extraordinary Guarantees

UnconditionalSpecific

Focus customer attentionNo risk for uncontrollable elementsCustomer participation

Pass through


Driving Your Bottom Linewith an Extraordinary Guarantee

THE MANTIS PROMISE

Try any product that you buy directly from Mantis with NO RISK!

If you’re not completely satisfied, send it back to us within one year for a complete, no-hassle

refund.

52


Driving Your Bottom Linewith an Extraordinary Guarantee

1. Draw 2 lines representing monthly sales:(a) 30-day return guarantee(b) 1 year return guarantee2. What are pros/cons of the 30-day vs. the 1-year guarantee?

Sales

Jan Dec

30-dayguarantee

1-yearguarantee


The Basis of Competition Changes

1970s

1980s

1990s

2000+

Price

QualityValue

Speed

Mass customizationFlexibilityManufacture to order

www.gamblincolors.com/

53


7 Fatal Flaws of Non-Financial Performance Measurements


7 Myths of Measurement

1. Measure the hard results and the soft stuff will follow

2. Measurement is for bean counters3. Measurement is only rearview oriented4. Measurement creates reality5. Measurement stifles creativity6. Measurement is anti-humanistic7. The more measurement the better

54


7 Warning Signs of a Defective Measurement System

1. Performance OK on all indicators except profits2. Customers don’t buy even when prices are

competitive3. No one notices when performance measurement

reports aren’t read4. Managers spend significant time debating the

measures5. Share price is lethargic despite solid results6. You haven’t changed your measures in a long time7. You’ve recently changed your corporate strategy


What Gets Measured Gets Done

Measurement Behavior Side Effect

% aircraft pulling back from gate on time

Number of phone calls to a service center lasting more than 3 minutes

The Boston Consulting Group

Push back even if not repaired

Flights depart even later

Takes longer to help customer

Hang up even if problem not solved

55


Will Technology Obsolete Your Company


The BIG (Xerox) Picture

1. What business is Xerox in ______________2. 1970 The _________ Company3. 1995 The _________ Company4. What’s the difference

1. __________ is ____________2. ______________ is ____________

5. Impact of the internet6. What business is Xerox in ______________

COPIER BUSINESS

COPIERDOCUMENT

COPIER INTERNAL

DOCUMENT EXTERNAL

INFORMATION DISTRIBUTION

56


Business Models

SouthwestAirTranJetBlueATA

OLD NEW


Disruptive Technologies

OLD NEW

57


Disruptive Technologies

OLD NEW


How to Maximize Your Value

58


Competing Based on Service

If you were arrested for customer service, would there be enough evidence

to convict you?


Customer Satisfaction Drives Loyalty Which Drives Profits

Apostles

Zone of affection

Zone of indifference

Zone of defection 1991 XeroxStudy

Terrorist1

Extremelydissatisfied

2Somewhatsatisfied

3Slightlysatisfied

4Satisfied

5Very

satisfied

Source: Time-based Competition

59


Where Do Profits REALLY Come From?

% ofCustomers 20

% of Profits

80100


Independent Bookstores

What’s happened to 85% of independent bookstores the last 10 years _________

WHY _____________________________________

GONEFAILED TO ADAPT

60


Internet Threatens Realtors

1. Realtor Commissions Face New Pressure2. Federal lawsuit challenging……….

1. National Assn of Realtors rule that real-estate firms can refuse to allow home-listing data

2. State laws that prevent discounters from offering lesser service at lower prices

3. Home owners negotiating commissions


Internet Threatens Realtors

ForSalebyOwner.comListings, supplies and adviceFor Sale by Owner

RealEstate.comMonstermoving.com

Agents share commission via cash or gift cards

Rebates

HelpUSell.comAssist2Sell.com

Fixed prices for services: e.g., list and negotiate

Fee for Service

ZipRealty.comFoxtons.com

Seller’s agent 1 to 2.5% Buyer’s agent 1 to 3%

Discounted commissions

Century21.com REMAX.com

5% to 7% commissionTraditional

COMPANIESHOW IT WORKSSERVICE

61


Dilbert: Take Engineer on Sales Call

Lesson: ________________________Go on sales calls


New Business Ideas

62


Airlines Mull Selling Prepaid Passes

1. Frequent flyer programs lost loyalty2. Build customer loyalty by locking customers3. Battle low-cost carriers without matching prices4. Higher than lowest coach / lower than highest coach5. Customers not a likely to shop around6. Won’t have credit card charges on every ticket7. Less advertising per dollar of revenue8. Transfer some risk of empty seat to customer



1. Air Canada 1. Selling set number of flights for fixed price2. Companies can buy as many tickets as want3. Can be used by 300 people

2. American1. Businesses can buy 25,000 miles for $10,0002. 40¢ vs. 12.85¢ first quarter average 3. Designing plan for consumers4. 1990s sold 500 lifetime passes but discontinued

63



1. United1. 25,000 miles in one year for $11,7502. Club privileges and elite-level perks

2. Cape Air books of 10 tickets now 1/3 of revenue3. Cathy Pacific 21-day pass for 18 Asian cities $1299

4. Customers like………1. Predictable cost2. Unused tickets go back into trip bank


Keep Customers Coming Back

1. Hotels, car rental, airlines saving customers by giving front-line employees power to ____________

2. Hell to heaven in 60 seconds3. Put a smile on customer’s face4. Customer has done business with the greatest

company on earth5. Hampton Inn

SOLVE THE PROBLEM

64


Service Recovery KeepsCustomers Coming Back

1. Empowers frontline workers to apologize AND

2. Immediately solve the problem AND

3. Give something of value to the customer THAT

4. Doesn’t cost the company very much Martha Gordon

Hampton Inn housekeeper


How Hampton Inn Saves Customers

1. Auditor Tom Taylor’s room…..1. Hot/cold _____________2. Two lamps weren’t _____________3. Driving directions on web site were _______4. AC was too cold

2. Front desk clerk immediately offered two nights free1. Taylor accepted only one because ___________

3. EVERY employee is empowered to fix a problem

REVERSEDPLUGGED IN

WRONG

2 was EXCESSIVE

65


How Hilton Garden Saves Customers

1. “Own the Goodbye”…..Manager calls every guest before checkout

2. Hilton Garden at LAX has 162 rooms1. 2500 guests per month2. Free night twice a month


Wyndham and Ritz-Carlton Hotels

Wyndham“It was a culture shift to tell [front-line employees] it’s OK to give something away.”Rarely need to give away free roomGive Dry cleaning, Phone, Movie or restaurant

Ritz-CarltonALL employees empowered to settle a customer dispute up to $_____________How many times has a Ritz employee given away the full amount ____________

2,000 per DAY

ZERO

66


Do Customers Scam

1. Downside Estimated scammers _________2. Upside Save 97% with legit complaints who

would leave and _____________________________

3. “Customer service is the key to loyalty, and loyalty is the key to profitability,” Frank Crawford, President, Accounting Firm, Oklahoma City.

1-3%

NEVER come back


How Hampton Inn Makes Money

Hampton Inn

Hampton Inn

Hampton Inn

Hampton Inn & Suites



0 10 20 30 40 50 60

Refunds

Est revenue

Return for $1refunded

67


Strategy Questions #1

How do our customers and non-customers select from among competing suppliers?What are the key quality attributes (purchase criteria)?How important is each criterion (relative weights)?Which criteria are increasing or decreasing in importance?



How do weights differ by market segment?How do we perform on each criterion?How does each of our competitors perform on each criterion?How do customers (ours and competitors’) size us up versus each of our key competitors?

68



How is our perceived performance versus that of competitors changing?What process determines our performance versus that of competitors? Who owns it?Why are orders/customers won or lost?Who are we winning orders from-who are we losing them to-why?



How does each set of competitors’ customers size us up head-to-head versus that competitor?How can we shift the attribute importance weights in our favor?Which segments should we target?How will customers size up the new versus the old technology?Which of the new technologies will win?

Documents

Business Strategies: 14 - Gary Zeune...GARY D. ZEUNE The Pros & The Cons 10356 Wellington Blvd Suite D Powell, OH 43065 Office 614-761-8911 Fax 206-202-0880 [email protected] sing