The men who try to do something and fail are infinitely better than those who try to do nothing and succeed.
If it were easy, the word risk would not apply. Being fearless and crazy by definition means things often go astray. They don’t pan out. You fall flat on your face. It’s an unmitigated disaster. A bomb, a bust. What were you thinking? Are you crazy?
In your personal and professional life, as an embracer of the fearless and crazy, you will fail. You will want to quit. You’ll say never again. Because it’s risky—but because it’s risky, it has its rewards. If not this time, maybe next time.
The following stories describe a few notable fearless and crazy decisions that backfired. I present them simply as a reminder that if it were easy, everybody would be doing it.
Nobody had ever seen anything like it. The first DeLorean DMC-12 rolled off the line at its Dunmurry, Northern Ireland, assembly plant in early 1981. Its body panels were made of stainless steel, and most amazing of all, it featured gull-wing doors, which opened up and out, giving it the look of a bird taking flight or preparing to land. It was a fearless and crazy creation, the brainchild of John DeLorean, a former General Motors executive.
Perhaps the unusual new vehicle was too crazy. Sales were tepid, engineering delays were frequent, and cost overruns were eating up any money that did come in. DeLorean placed his hopes on a pending stock issue in the United States, which would raise as much as $27 million, but the Securities and Exchange Commission had too many questions about the company’s viability and canceled the IPO. In two years of production, just 9,000 cars were made.
DeLorean’s personal problems didn’t help matters. In October 1982, he was arrested in an FBI sting operation and charged with conspiring to smuggle $24 million worth of cocaine into the United States. Although he was acquitted, his reputation was in ruins. DeLorean Motor Company declared bankruptcy.
But the story wasn’t quite over. In the mid-1980s, the Back to the Future movie trilogy made the DeLorean something of a cultural icon. Says the first film’s Marty McFly, “Wait a minute, Doc. Ah … are you telling me you built a time machine out of a DeLorean?”
Answers “Doc,” Dr. Emmett Brown, “The way I see it, if you’re going to build a car into a time machine, why not do it with some style?”
Style, indeed. Fearless and crazy. But gone.
She would follow a close-to-the-equator route—29,000 miles in all—thus besting Wiley Post’s northern midlatitude route. Post was a legend in aviation circles by 1937, only two years after he and comedian/commentator Will Rogers were killed in a tragic crash in Alaska. But Amelia Earhart had always tried to do better—especially better than the men. Her accomplishments in the air and on the ground had made her one of the most famous people in the world, male or female.
She was the first aviatrix to fly solo across the Atlantic. She was the first person to fly the Atlantic twice. She was the first woman to receive the Distinguished Flying Cross. She was the first woman to fly nonstop, coast-to-coast across the United States. She was the first person to fly solo between Honolulu, Hawaii, and Oakland, California. Her list of firsts and records goes on and on.
She also was an author of two best-selling books about her flying adventures, and she helped found the Ninety-nines, an organization of female pilots. She was a visiting faculty member of Purdue University’s aviation department. She was a member of the National Woman’s Party and a supporter of the Equal Rights Amendment.
But now it was time to circumnavigate the globe—like no one else before her.
The plan was to go west, starting from Oakland. But when she and navigators Fred Noonan and Harry Manning, along with technical advisor Paul Mantz, got to Honolulu, their Lockheed Electra 10E had a series of technical problems and damages that ended the attempt. When repairs were complete, Earhart’s supporters financed a quiet flight back to the mainland and eventually to Miami, Florida. This would be the embarkation point for the second attempt, still along an equatorial route but this time heading east. And this time with only Earhart and Noonan in the cockpit.
They departed on June 1, 1937, with numerous stops along the way in South America, Africa, the Indian subcontinent, and Southeast Asia. They landed in Lae, New Guinea, on June 29. They had flown approximately 22,000 of the 29,000 total miles. From Lae, they planned to fly to remote Howland Island, then to Honolulu and on to California, and then cross-country to their origin in Miami.
The tragic result is the stuff of legends, tall tales, and conspiracy theories: the world will likely never know why or how, but Earhart, Noonan, and their Lockheed Electra disappeared on July 2, 1937, somewhere near Howland, despite a series of maddening, confusing radio transmissions to the escort ship waiting at the island to guide them in.
Amelia Earhart and her doomed final flight have become a pop culture mainstay, most recently by way of a 2009 feature film starring Hilary Swank as Earhart and breathless news reports in late 2010 that bones found on a deserted South Pacific island could be hers. But the mystery remains unsolved, and it’s too good a story to ever go away. She took a chance; she paid the price.
“Please know that I am aware of the hazards,” she said when people wondered why she did what she did. “I want to do it because I want to do it. Women must try to do things as men have tried. When they fail, their failure must be a challenge to others.”94
It seemed like a good deal at the time. In fact, the press called it the most significant, game-changing corporate merger in history, a “transformative” moment, the beginning of a new media era. Photos taken the day of the deal’s announcement, January 10, 2000, show the companies’ two leaders beaming with smiles, their hands clasped above their heads like champion boxers celebrating a knockout.
A knockout it was. Today the merger of AOL and Time Warner is considered the worst corporate transaction in history, the granddaddy of all business school case studies. The value of the deal was a stunning $350 billion, still the largest in U.S. business history. It was fearless; it was crazy. And its failure was monumental.
It was all about the Internet. Online communication seemed poised to change every traditional, mainstream media business model. AOL’s stock price was flying high, about twice that of Time Warner’s. Gushed Time Warner CEO Gerald Levin about the Internet: “It had begun to create unprecedented and instantaneous access to every form of media and to unleash immense possibilities for economic growth, human understanding, and creative expression.”95
Wow. AOL cofounder Steve Case was a little less philosophical but equally impressed with what the two companies had wrought: “This is a historic moment in which new media has truly come of age.”96
But stuff happened on the road to Internet nirvana. From the start, the “merger” was a little odd. It was billed as a marriage of equals, but AOL, with its more valuable stock, was actually acquiring Time Warner. AOL would own 55 percent of the new company; Time Warner, 45 percent. The new board’s seats would be divided equally, however. Levin would be CEO; Case would be chairman.
Federal Trade Commission approval took a year and was granted despite the objections of FTC economists who said the deal didn’t make financial sense. By May of 2000, the dot-com bubble had begun to burst; online advertising had slowed; and AOL’s financial forecasts, on which the deal was based, looked dubious. Most important, the world was moving quickly toward high-speed Internet access and abandoning AOL’s ubiquitous dial-up service.
On top of all that, the two companies’ cultures were decidedly different. Their respective executives seemed to be at war, blaming each other for all the negativity. Secret documents leaked by Time Warner execs revealed that AOL had been inflating its revenues. The SEC and the Department of Justice both launched investigations. The company paid large fines and had to go back and restate earnings. Steve Case stepped down as chairman. Many employees and investors lost significant money, including Ted Turner, who lost $8 billion—80 percent of his worth at the time.97
The marriage was over. Today the two companies are single again, and their combined worth is only about 15 percent of their worth on the day of the merger.
Blockbuster deals are sometimes too fearless and crazy for their own good.
Interestingly, in February 2011, AOL announced it would acquire The Huffington Post, the influential news and comment site founded and run by Arianna Huffington. She will be in charge. Execs from both companies are gushing about the perfect fit and the powerful synergies.
Déjà vu?
If it ain’t broke, don’t fix it. It wasn’t, but they did. And they paid dearly.
It was the numbers that made them do it. Coke, the Coca-Cola Company’s flagship beverage, had been the dominant market leader for decades. In fact, just after World War II, its market share was 60 percent. But by the early 1980s, Pepsi-Cola, Coke’s archrival, was making phenomenal gains with aggressive marketing, including its television “Taste Test” commercials. Coke’s market share had shrunk to 24 percent. Something had to be done.
Coca-Cola senior executives commissioned a secret initiative called “Project Kansas” to test and perfect a new flavor for Coke. The secret tests were encouraging. The new formula gave Coke a sweeter taste, closer to that of Pepsi. And the new formula beat out both traditional Coke and Pepsi in focus groups. But a significant minority of those tasters—about 10 to 12 percent—was adamantly against any change, and they made their feelings known. Coke execs didn’t realize it at the time, but this sort of reaction was a harbinger of things to come.
Management decided to move forward. Coke would be replaced by the newly formulated Coke and, in fact, called New Coke. They would introduce it with a marketing and media blitz that would be like no other and send Pepsi back to whatever bottling plant it came from. The New Coke announcement and debut was scheduled for April 23, 1985, but Pepsi officials got wind of it and took out ads in the few days before April 23, claiming they’d won the “cola wars.”
The big day came, and Coca-Cola held a press conference at New York’s Lincoln Center. Coca-Cola CEO Robert Goizueta did the honors, but his performance was less than scintillating. The press had been fed tough questions about the change from Pepsi officials, most of them versions of the basic “Why?” Goizueta stumbled over his words as he described New Coke’s taste as “smoother, uh, uh, rounder yet, uh, bolder … a more harmonious flavor.”98 You’d think he might have rehearsed a little.
But despite the shaky beginning, New Coke seemed to be a hit. Coca-Cola stock went up immediately, and virtually everyone in the country knew about the switch, especially after a series of major marketing events. Coke sales jumped 8 percent over the year before.
But not every Coke drinker was happy. Southerners especially complained about the new taste. Coke had always been their drink, and they felt this change showed a lack of respect for their region. Journalists, comedians, and talk show hosts across the country got on the negative bandwagon. When ads for New Coke flashed on the scoreboard at the Houston Astrodome, fans booed. Fidel Castro, a Coke drinker, called New Coke yet another sign of American capitalist decadence. There were public protests, with people emptying New Coke cans into the gutter. Even Coca-Cola bottling companies were grumbling. Pepsi loved all the wailing and gnashing of teeth and reworked its ads to take advantage of Coke’s backlash storm.
Bashing the New Coke had become the “in” thing to do; it was chic. Even if New Coke had been the nectar of the gods, it was probably too late to save it. On July 10, 1985, just 77 days after New Coke’s introduction, Coca-Cola executives announced the return to the original formula. “Old” Coke was back, with the name Coca-Cola Classic or simply Coke Classic. ABC’s Peter Jennings interrupted General Hospital to share the news with viewers. On the floor of the U.S. Senate, Senator David Pryor called the reintroduction “a meaningful moment in U.S. history.”99 The public had prevailed. A giant corporation had listened to the masses.
A fearless and crazy corporate decision had backfired. Spectacularly.
Or did it? Coke Classic sales grew by leaps and bounds. Coca-Cola’s market dominance became stronger than ever. Cola drinkers applauded the company for listening and bought its products with fervor and loyalty like never before. In fact, Coca-Cola rebounded so well with its Coke Classic that some cynics think the whole thing might have been a giant marketing ploy, a PR trick to win back customers. Now, that would be fearless and crazy.
MY TAKEOur four subjects discussed here made fearless and crazy decisions and lost. That will happen a lot, of course. They don’t call it risk for nothing. Amelia Earhart paid the ultimate price for her decision. Time Warner and DeLorean never fully recovered from theirs. As for Coke, it bounced back beautifully from its miss and is as strong as ever.
So why do some swings lead to home runs and others nothing but air? In the world of corporations and entrepreneurs, why do some businesses fail while others flourish? In terms of our ongoing discussion of life-wealth planning, why are some people and companies able to deal with the unknowns and others aren’t?
There are the obvious, most common reasons, of course: too little money, a product or service nobody wants, strong competition, and so on. Business writer Will Limkemann lists and analyzes a few more that are often overlooked. Briefly, they are:
Employee theft, including embezzlement, cash theft, inventory or equipment theft, and even intellectual property theft. Examples include the bartender who gives his pals an occasional free drink and the office employee who takes home Post-it Notes and printer paper.
Unplanned growth. If a business is so successful that it can’t keep up with the demand, every shred of goodwill and good PR it has earned could be squandered. For example, a new restaurant opens to amazingly positive buzz but can’t handle the resulting rush. Service is terrible; the food takes forever. And no one comes back.
IT failures. There isn’t a business in America that doesn’t rely on some form of Internet, email, social media, or app. If your website goes dark, even for just a short time, you can be in trouble. Consumers and clients expect—and demand—online access, service, and information.
Poor record keeping. Limkemann cites an amazing statistic from a survey of businesses that filed for bankruptcy: 58 percent of those failed businesses did little or no record keeping. If you hate keeping track of things or aren’t any good at it, hire someone to do it. There’s more to business than handshakes and lunches.
Failure to seek and use advice. Nobody does it alone. We stand on the shoulders of others. Find a friend or colleague who has been there and done that. Contact the professional, governmental, and service agencies dedicated to helping. Take a class. Read a book (even this one). There’s no excuse for being deliberately ignorant.100
So these are things to watch out for, obstacles to avoid. But what do you proactively do to advance your professional career and minimize the chances of failure? How can you avoid the misses while still being unafraid to make the fearless and crazy swings? Minimizing the risk of failure, personally or professionally, is possible if you focus on one simple, all-important word: knowledge. Socrates—another risk taker who paid the ultimate price—said it best: “Know thyself.”
A key step in business development and planning is knowing your competition and, more important, knowing yourself and what you are capable of. When I say “you” and “yourself,” I mean you as an entrepreneur and your company.
So how do you get to know yourself and your competition? Go to the library? Surf the web? Ask around? Go through your competitor’s trash? Well, all of that might help. But there is a popular business analytical tool that can provide some assistance. It’s popular because it’s effective. It’s called SWOT analysis. It’s a strategic method you can use to get to know yourself and your company so you can better decide a course of action, more successfully launch a new product, or more effectively take on a new initiative. You can use the SWOT tool to pause for a bit, to catch your breath, just before your fearless and crazy marketing of Product You and the company you are begins.
As mentioned in Chapter 1, SWOT analysis is a key tool in the marketing component of life-wealth. In fact, a SWOT analysis is an excellent first marketing step. You may have heard of SWOT analysis and may have even used it. If so, this refresher should make you feel even more confident.
Basically, SWOT analysis involves examining and evaluating strengths, weaknesses, opportunities, and threats (hence the acronym). In business, these categories are defined as follows:
Strengths: internal characteristics of the business or team that give it an advantage over others in the industry. Internal simply means specific to you and your situation (or to that of the business you’re analyzing).
Weaknesses: internal characteristics that place the firm at a disadvantage relative to others.
Opportunities: external chances to make greater sales or profits in the current environment at the current time. External simply means outside the business—out in the community or marketplace.
Threats: external elements in the environment that could cause trouble for the business.
SWOT analysis is key for me in all my business planning and strategizing—everything from deciding whether to enter into a joint venture to expanding one of my companies, from discontinuing a product or service to making key personnel decisions. Sometimes I write down the lists and create the SWOT grid; other times I use SWOT analysis instinctively in my head on the fly.
Let’s focus on a SWOT analysis of a businessperson, an entrepreneur—you. To begin, you must understand that you are at the center of whatever business you’re running and have various products and services to offer. Similarly, big corporations have their various departments, branches, and offices, plus all the people that work in those departments, branches, and offices. The corporations have cost centers and profit centers. So do you. Think of yourself objectively, as a product. Product You could be anything you are good at; it could be freelance photography, web design, running a nursery, coaching executives, or making sports drinks. You are the hub of the wheel and all your various companies, skills, products, or services, the spokes that come out from that central brand—you.
Let’s look at an example I’m intimately familiar with: Product Arthur Wylie. Arthur Wylie’s products and services (“spokes”) include:
Motivational speaking
Financial consulting services
Online consulting business
Real estate services
Multilevel marketing
Feature film development
If we don’t think of ourselves as products suitable for analysis—if we think of ourselves as simple nine-to-five drones, working for the man—there isn’t much of a wheel, no “spokes” to list. They pay you; you go home and hope the job is there tomorrow. It’s all about them, not you. They are the product, not you. Do you see the difference? When you become a product—when you analyze your strengths, weaknesses, opportunities, and threats to determine your ultimate success—you are in control of your own destiny. That analysis can be as lofty as a personal assessment of your character and personality and your place in the world, or it can be a nitty-gritty assessment of a business opportunity. The SWOT tool is so simple yet so valuable.
Let’s look at a business opportunity. We’ll create a simple case study and run it through the SWOT paces.
Daniel has opened a used bookstore featuring nothing but histories and biographies. No cookbooks, Dummies guides, or vampire tales. His store is located in a restored building in a gentrified part of town adjacent to the university. He calls his bookstore Past Lives.
Strengths: With a location so near the world of professors and students, he has a ready-made clientele for his products. There will be plenty of books to buy, sell, and trade and lots of foot traffic in the area. His vintage building also helps the marketing; the store’s name is a plus as well.
Weaknesses: That old building has ongoing maintenance problems. Furthermore, there’s no room in the cramped store for couches, a coffee counter, or other perks. Also, Daniel must create and maintain a database of the books on his shelves—a database that must be updated constantly. And his clientele will expect a website—more work that will keep him from minding the store and interacting with customers.
Opportunities: The store could host readings, receptions, and book signings with the talented university faculty, many of whom are biographers and historians. Low-cost student labor is available to help Daniel keep the shelves full and handle those computer tasks.
Threats: Chain restaurants and retailers are changing the tone and tenor of the neighborhood. The campus bookstore buys and resells used books. The Kindle, Nook, and iPad revolution means there will be fewer customers for ink-on-paper products and fewer young people interested in browsing Daniel’s shelves.
In SWOT analysis, you want to understand what makes you strong as a professional or as a business prospect and what your business challenges are. The driving question is: What makes you better than anyone else in that particular field, for that particular task, or for that particular position? Or what are the factors and conditions that are keeping you from being better than everyone else?
When I was new to the financial services game, my answer to the first question was that, unlike many of the financial planners at those big-office, big-name, big-money organizations, I was hungry for success, I was young and determined, I had passion and stamina, and what’s more, I had a proven success story in myself. My SWOT analysis back then looked something like this:
The stock market was soaring.
Because my investment company was a small, online operation at the time, I was able to compete with the “big boys” without many up-front expenses.
I was young and going after young money. My target clients wanted young blood. I could easily relate to them. They were new doctors, college graduates, and middle-income workers—primarily new money that was typically overlooked.
I was willing to grow my own assets slowly and steadily by growing my clients’ assets, instead of continually going after the home run, the big deal.
I created financial products that addressed my clients’ specific needs according to their particular investment time lines (i.e., products for short-term, mid-term, or long-term goals).
I was getting a steady stream of referrals because my business was small and consequently my services were personal, caring, and appropriate—something the big companies with all their assets and spreadsheets couldn’t match.
Next, the weaknesses. What things do you need to work on? How can you overcome those weaknesses and be more competitive? In my case, I knew many considered my age a weakness, but I was determined to make it a strength. That’s why I took so many extra classes, earned so many certifications, and managed on such a lean budget. The following are my weaknesses as an investment advisor. Notice that even though they are internal (unique to me), they ended up being external; they were perceptions by others, by the market. Yet that didn’t mean I could trivialize them. After all, as discussed previously, perception is reality.
Age: This didn’t really hold me back because, as mentioned above, I targeted clients who were also young and who shared many of the same financial goals. We spoke the same language. Had I been going after “old money,” gray-haired retirees, my youth definitely would have been a weakness.
Race: Certainly if I had been trying to get clients at an Aryan Nations rally, this would have been a weakness. But my race helped me attract clients who were people of color. Obviously, we had something in common immediately. We could relate.
Lack of capital: A weakness, sure. So I dealt with it: I worked more jobs, got more credit, and found investors. I controlled my costs.
Lack of experience: This was an initial weakness, but it didn’t last long. I managed my own money well at a young age. I owned stocks, bonds, real estate, and many other assets, frequently trading those assets and growing my wealth. I also teamed up with a brokerage firm that had been in business for more than a hundred years to handle all my trades and compliance issues, giving me and my company an aura of stability and creditability.
Next, we look at opportunities. What are your opportunities? What is your next level of profitability, and what do you need to do to reach that next level? What other areas of personal and professional development do you need to achieve to accomplish your overall goals? Here’s how my list of opportunities looked:
Diversifying into various income streams, including:
Real estate
Entertainment
Public speaking
Publishing
Wealth management—institutional sales
Bicoastal operations
Online marketing
Last, we explore threats. What things could put you out of business if you aren’t able to address them and eliminate them early on? What might prevent you from achieving your goals? As I was establishing and growing my business, these were my threats, both to my company and to me as a brand:
Decline in the market
Increased competition
More online trading companies
Increased regulation leading to increase in cost of doing business
Employee turnover in an emerging organization
Doing the SWOT analysis helped me then, and it helps me now. It has become part of my standard operating procedure as an entrepreneur, as a brand. It’s key to my marketing efforts. I don’t leave home without it.
Time to SWOT analyze yourself, even if you’ve done it before in your career. Everything is changing; everything is in flux, always. If you need a little help getting your SWOT started, I provide step-by-step guidance in Chapter 10.
As you work on your SWOT analysis, either now or when you get to Chapter 10, make the four lists, even if you have only two or three items for each. Keep those lists handy for a few days or a week or so, because you’ll think of more strengths, weaknesses, opportunities, and threats from time to time, and you’ll want to add them on. Keep the lists on your nightstand; we all know how insights pop into our heads when we’re staring up at the dark ceiling.
By doing all this, you’re getting to know yourself better, and you’ll be able to market yourself better. If you know yourself better, your odds for success increase significantly. You’re training yourself for future fearless and crazy decisions. Because you know who you are, what you’re doing, and what is possible, those fearless and crazy decisions will be hits, if not home runs. You won’t often swing and miss.
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94 “Biography,” Amelia Earhart: The Official Website.
95 Tim Arango, “How the AOL-Time Warner Merger Went So Wrong,” New York Times, January 10, 2010, http://www.nytimes.com/2010/01/11/business/media/11merger.html?pagewanted=all.
96 Ibid.
97 Ibid.
98 Mark Pendergrast, For God, Country and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It (New York: Basic Books, 2000), 352.
99 Ibid., 364.
100 Will Limkemann, “Five Surprising Reasons for Business Failure and How to Prevent Them,” Ezine Articles, June 25, 2009, http://ezinearticles.com/?Five-Surprising-Reasons-For-Business-Failure-And-How-to-Prevent-Them&id=2501260.