“The Profit”: When Ego Fights Brand Evolution

One of my favorite new shows I’m enjoying is CNBC’s “The Profit” in which billionaire Marcus Lemonis attempts to turn around struggling businesses by offering them a check and in return, he gets to do pretty much everything his way for a week, including making all decisions on the company. And the current managers can’t do a darn thing about it.

If you think all episodes featuring these business owners work out and they live happily every after, you’re wrong. So far, only about half of them have.  There are some businesses Marcus just can’t fix. And it’s not his fault – certainly not because of his business acumen. No, although Marcus judges a business based on People, Process and Product, from my point of view the reason some of these businesses featured aren’t successful deals for him really comes down to one thing above all:

It’s because the management doesn’t want to listen and can’t admit their mistakes.

Period. Oh, they can say they were wrong. But it doesn’t mean a THING in saying that if they don’t actually do something about it. And that’s where Marcus can help the business. But something in the human element is fundamentally flawed. They have other problems to be sure too – like not knowing their numbers accurately – but even that can be fixed easier over time.

For example:

One owner has anger management issues and can’t control his emotions. Everyone but him is wrong and stupid. He arrogantly thinks he knows better than everyone, including Marcus.

Two co-owners used to be a couple, broke up and now can’t stand each other…but they still jointly own a company. They’ve let their hate for one another ruin the business. Buy one another out? Nah. It’s easier to blame and point fingers.

One owner just doesn’t want to even be in the business and lacks all passion for making any kind of meaningful change. He bolts early on the day of the business’ re-grand opening.

The ones that worked out? Boy, do they work out brilliantly. Because they listen. Sure, they’re a little nervous to give up making decisions for the company temporarily for a week – come on now, A WEEK – and do things radically different in some cases, but they surely realize that the current path isn’t doing anything for them financially, emotionally and in terms of their goals and dreams. So they take the deal and shut up and listen to an outsider – an outsider who happens to be a highly effective CEO too. We’re not talking about Joe Schmo off the street.

I’m no billionaire (yet!), but I’m fascinated by this pattern when recommending changes not on the operational front but for brand strategy. It’s absolutely shocking to me when I see this play out on a grand scale on “The Profit” because these people are throwing away an absolutely golden chance to change their businesses in an opportunity they will probably never have again.

And for WHAT? Trying to be…right? Trying not to look stupid? Seriously? Seems pretty childish to me when, in the case of this show, an entire business hangs in the balance. But some are just…blowing it due to their constant inability to eat humble pie. And ironically, in doing so, look mind-blowingly idiotic for their digging in their heels anyway.

This is why the willingness to listen and be open to change is a pre-requisite for me. I can’t and won’t convince the patient they’re sick. They have to know they are. And they have to want my help – or at least somebody’s help.

Unfortunately, while I have many positive stories to tell, I’ve also seen stubbornness surface from people who don’t know how to get out of their own way. Agency heads who think they know everything and have a formula they can’t break out of. Marketers who have always done it a certain way. Creatives who would rather wax nostalgic about the good ol’ days of print than learn about social media. Micromanagers who hover over agency creatives and direct them like umpires making calls behind a catcher. 

Some have gone against what clear data is telling them. Hell, some have gone against what their own customers are telling them.

When otherwise good people think they know better than their own client and that the brand’s message should appeal to so many people within their own walls, none of whom is the client, you’ve got a bad situation. When some twerp serves the client what they want to hear no matter what rather than growing a pair and telling them what they need to hear, you’ve got an even worse situation.

That’s why I say, in reality, I don’t really write for clients at all. I write for their audience. The ones I have the best relationships with get why that’s important and why the brand can’t always sound like their official mouthpiece. Because there’s something much bigger at work than one person trying to be the loudest heard. There’s an attempt to have a meaningful connection and that takes identifying with others. And caring. And actually demonstrating that love in consistent gestures.

Wait. Is that love applied to your own people or your customer? Hopefully it’s both.

Ego is the enemy of evolution. 

You’ll be amazed by how fulfilling life can be sometimes when you just be quiet and listen. Especially when someone who only wants to help you is walking through the door.

I’d love to hear your experiences and challenges with this and/or your thoughts on “The Profit” if you’ve seen it. Sound off.

Walking Barefoot Into An Entrepreneurial Adventure

A conversation with Michael Houlihan, founder of the Barefoot Wine brand


Michael HoulihanFounder, Barefoot Wine

Michael Houlihan
Founder, Barefoot Wine

Michael Houlihan may represent one of the ultimate “pulled up by the bootstraps” stories of entrepreneurialism.

From humble beginnings in the laundry room of a rented farmhouse in the Sonoma County wine country, Houlihan, along with partner Bonnie Harvey, co-founded the Barefoot Wine brand in 1985.

Without much capital, industry knowledge or advertising budget, he built one of the most successful wine brands in the country – selling Barefoot to E&J Gallo 20 years later. He retells the story in a new book titled: The Barefoot Spirit: How Hardship, Hustle, and Heart Built a Bestselling Wine.”

Dan Gershenson: First, what’s your relationship with Barefoot Wine today?

Michael Houlihan: After we sold the brand in 2005, we continued to work with Gallo for a year to keep the entrepreneurial spirit of the brand alive and well. This is important because you’re talking about a mindset of preserving a positive company culture that often gets lost in corporations due to large budgets.

DG: Large budgets, in what way?

MH: When you do have financing and plenty of money, that’s not necessarily as good as you might think because now you can just throw money at every problem – and think that’s going to fix everything. On the other hand, there’s something to be said for the creativity and passion of someone who burns with desire but doesn’t have as much money. You can’t lose that ability to think outside of the box even when success happens – if you lack creativity and don’t keep your customers as the top priority in amazing ways to make them feel like their #1, money won’t make up for that.

DG: I’m sure like many entrepreneurs, you made a mistake or two out of the gate. If it’s not too painful to share, what would say one of your big ones was?

MH: You start off with this idea that it’s all about the product and that you’re sure you have the very best product, price and quality. It’s a big mistake many entrepreneurs make. They overvalue the product itself over the distribution of the product. Excellent distribution trumps production every time. What’s more important is to get your product out there. This is hard for some folks to believe, I know. But when you think about it, if it’s not out there, they can’t buy it, can they?

DG: I’m sure some will be shocked to hear you say that about product quality. Especially since we’ve often believed quality is King.

MH: Of course, quality is ultimately king. And I’m not saying that just anything goes. But in our early stages, just because we believed we created the very best wine at the best price didn’t mean instant success. And we got tons of accolades at Barefoot Wine too. So guess what? We got overconfident about distribution. We thought distributors would now just have to present the product to retailers, sell it to them and the retailers would order it repeatedly when it ran out.

We smoked cigars in celebration the first time we sold to a distributor but we should have been working harder to help them sell into the retailers repeatedly. In businesses like ours, the first true buyers are not the general public but the distributor and then, if he picks you up, the retailer. We forgot that side of the equation and it could have been disastrous.

DG: Did you have a team in the field to self-police this better?

MH: We had to. The product can be technically “sold” and yet, the ball can be dropped in all kinds of ways – it’s not often due to the fact that it isn’t selling. It can get hung up in a warehouse. The store could program in the wrong SKU number. The clerk, manager or distributor salesperson just might forget to re-order it. So you need that “cop” who not only sees your product go to the store but checks to make sure it stays on the shelf each week.

DG: What other kind of challenges did you face?

MH: Many stores said they would never carry a wine with a foot on it. They said they would only carry it if we spent millions on advertising. Of course, we couldn’t. We barely had any money at all.

That’s when we decided to sponsor some worthy causes and nonprofits that were in the neighborhoods of where those same stores were. If they used our wine at fundraisers or silent auctions, they would announce our presence in thanks. They would put us in their newsletter. They would give us a story that we could use to promote their cause right on our brand.

Suddenly, those people paying $200-400 a plate were receiving a pitch from us – not a commercial pitch – but why we supported their group or cause. Social reasons can be more powerful than traditional advertising. In fact, even when we had the budget to advertise, we never went there.

I think that was the moment when we realized the Barefoot spirit was more important than the wine. We discovered that worthy cause marketing helps build community, so we found worthy causes to support that resonated with the logo and with us. Many companies forget that in today’s transparent market, they have to stand for more than just the product they sell.

DG: Yet, even when you excluded advertising as a cost and began to build your brand, you still had a lot of other expenses. How did you address those?

MH: We thought hard about who our true strategic allies were. You have to align yourself with people who benefit if you benefit. We realized we had to sell a ton of wine to make a break even early on – This meant more printing, foil, glass, etc. So I went to the glass company and said, “We stand to be your biggest client,” and I explained the volume at which we would sell our wine. We were willing to be honest with them about our sales and make them an exclusive supplier. We laid out a plan with them in advance and treated our strategic partner as if they were our banker. You’re not alone when you’re an entrepreneur – you have to find out who’s running down the street with you.

DG: As your team began to grow, how did your culture grow with it?

MH: Performance of the company plays a huge role and we made sure everybody knew it was how they were compensated, including our strategic allies and other vendors we negotiate with. There are only two divisions in every company whether they know it or not  – Sales and Sales Support. Nobody is outside of those two divisions ultimately. I don’t care if you’re a receptionist or an accountant, everybody works for sales. It’s their job to keep the salespeople up to date with the information, supplies, marketing, and excellent products they need to succeed.

On Day 1 of their employment, we gave our people a “Money Map” that showed the money trail from the customer who bought our product from their local store, who bought it from the distributor in their city, who bought it from our company, and then all the people our company paid with that money and the portion that went to their check, benefits and bonuses. When they saw the big picture, they understand how they fit in and how they share in the cash flow. Without that early warning system, they may think the boss has a Big Rock Candy Mountain out behind his house where he can just grab more money any time he wants. Not so. All the money really does come from the customer. The more they appreciate that fact, the less they see their job as somehow isolated from the process.

In the Spring, Houlihan is releasing his new book on building Barefoot Wine and the lessons for entrepreneurs. He describes it as a “business adventure” story in how he and his partner faced failure in many ways but always found solutions in of a variety of surprising places – whether out of thin air, his allies, his own people or practically anybody else. You can go to Amazon and pre-order it if you like. But for readers of our blog, the CEO is giving us a special deal. Go to: http://www.barefootwinefounders.com/sample-tasting/

There, you can order the book from the Barefoot Wine Founders directly and download the book right now. Why? True to his philosophy of inviting feedback from every corner of his company, Houlihan wants to get people’s opinions on the book even before it gets formally reviewed. He’ll put several reviews online, with people sharing their opinions of the book ahead of time. It’s available right now at the link above for just $15.95. Go get it. I know I will.

6 Cultural Changes Inspired by Theo Epstein (pt. 2)

Continued from the previous post, here are 3 more changes you can consider for a stagnant culture that Theo Epstein might think about in instilling a winning Cubs culture.

4) Losing becomes a self-fulfilling prophecy. 

Essentially, if you believe you’re a bad team, you’re going to perform like one even though in reality you aren’t. Look, I don’t believe for 2 seconds that a curse has anything to do with the Cubs perpetual losing. It’s the same way in organizational cultures. Everything happens – or doesn’t happen – for a reason. If the management believes the team is as good as anybody or even better, yet the rest of the team doesn’t appear to believe it, where’s the disconnect and why is that happening? It could be lack of clarity or distant leadership. Lack of metrics that everyone understands. Lack of everyone in the organization understanding what’s valued most. Or lack of talent that just isn’t there and has been permitted to stay for far too long. And more.

“(In Boston), it wasn’t a curse. It was just the fact we hadn’t gotten the job done, and we identified several things the franchise had done historically that probably got in the way of winning a World Series, and we went about trying to eradicate those. That’ll be part of the process here.” 

Epstein talked about “a Cubs way of playing the game.” We’ve come to think of that as a bad thing. But his definition included better baseball fundamentals for better play.

5) Identify quality metrics for smarter decision-making.

In baseball terms, General Managers like Billy Beane, Epstein and others are part of a new breed that ties sabermetrics (objective statistics) to measure on-field contributions. I’m not sure that will translate into a signing of Albert Pujols or Prince Fielder, but if it does happen, it won’t be merely because of home runs, RBIs and the common statistics we read about in the papers.

In a cultural situation, the more that metrics are locked away so that the rest of the team won’t know what they are, the more they’ll be unclear on vision and goals. I recently read a book entitled “Employees First, Customers Second,” in which the CEO of an Indian I.T. company opened up a company of thousands to be able to see performance reviews of one another, even management. You’d think it would cause a major company revolt, but instead, it brought the employees together to work even harder – particularly managers who had no idea they were perceived that way. Everyone knew each other’s areas for improvement. If this notion scares you, what does that really say deep down about confronting your weaknesses? We all have them.

6) A winning culture needs to be continuously fed.

Epstein clearly believes that this involves the development of a strong minor league farm system that feeds talent to the big leagues regularly for lasting results. A business may not have a minor league farm system, but it does need to grow talent and brand ambassadors by giving them the opportunity to be the face of the organization – like engaging in social media on behalf of the company, for example. And it means feeding contributors regularly with rewards that they value for their own life, not just what management thinks they should value.

The thought of cultural change busting 103 years of losing is mighty exciting. But cultural change that creates quite the dynasty of your own? That might be even more thrilling.

What kinds of things are you doing to shift a stagnant culture? Share them with us! We could all use a little push out of our comfort zone.

What a Shoplifter Taught Me About Branding

Today’s post is brought to you by guest blogger Rob Jager of Hedgehog Consulting. Rob is an incredibly gifted management consultant and I’ve personally used his services to help channel my agency’s vision into tangible results. I’ll be co-presenting with him on how you can do the same next Thursday the 3rd at the Chicagoland Chamber at 7:45am. The event is free.

I used to work in retail. In retail, it’s no secret people steal. Sometimes it’s the employees; sometimes it’s the customer. It really doesn’t matter, they both taught me something I didn’t know before.

First, most shoplifters have a look or habits they have. Talk to any Asset or Loss Prevention department and they’ll give you a name or a description of each specific person they’re watching for. In fact, they’ll tell you that the thief behaves the same way every time.

Second, I found out that if you approach a shoplifter, greet them, ask if you can help them with anything at all, they will usually dump what they’ve taken because they know you know…and once they’re found out, they want out (the only exceptions being the absolute pros, who will lie to your face and then take some more).

So what does that have to do with branding?

Well, every business attempts to brand itself in some way of another – through logos, slogans, and other visible things. What you don’t see are the things that are internal as well. This is the part we refer to as culture. How the company behaves in varying situations. This is just as much a part of brand as any message a business puts out. When I think of shoplifters, I think of how consistent their habits are between visits to different locations and how it’s their brand. Their style. Their culture.

So I would ask you, what is your brand? Your culture? Your style? If you have employees, as many do, will they behave in as consistent a manner as you? If not, it’s time to give them some stories to help them better understand you. And that’s what a shoplifter taught me about branding.

About The Author:

Rob Jager started Hedgehog Consulting to help business owners get the tools they need to make more money. He has worked in the retail industry for 14 years and three years in the Quick Serve Restaurant industry. His experience in retail and restaurant operations taught him techniques in management, profit and loss accountability, logistics, budgeting and planning, increasing sales, creating consistency in operations, and maximizing profitability.

His accomplishments include turning a losing business into a profitable business within 1 year; a significant feat considering the loss was $1M per year.  Other accomplishments include improving work environments, fixing broken systems, assisting in leadership development, and improving overall clarity of business.

Using his MBA, Rob has both the experience and the academic knowledge to understand how to make things happen. Rob is currently working on his PhD to further his knowledge in the area of Leadership and Organizational Change.