Musings on Business Optimization, Economics, and Vocations

In the Economics courses I teach each semester, before we dive into the mechanics of supply and demand and after we establish what the science of economics is, we discuss the various types of economic systems around the world.   We spend at least a couple of classes discussing the economies of the world on a spectrum between those that are command and those that are market economies.   One source we use to feed our discussions is the Index of Economic Freedom , which ranks the economies of the world. About five years ago many of my students assumed that the United States was at or near the very top of the list.   They were wrong (as I had also been before diving deeper into the facts).   The United States left the index's highest “Free” category in 2010 and has been in the lower “Mostly Free” category ever since.   ( Interestingly, as an anecdote of how public perception has changed, today most of my students come to class expecting that the United States is not at the top of

Unfortunately more often than not we see businesses that not only aren't able to focus on their profitable core, but they often aren't even able to articulate what their profitable core is. Fortunately this is fixable. It's easy to get distracted by glittery opportunity after opportunity that adds revenue to the top line but distracts from the company's ability to grow its profitable core.  Many business owners fall into the trap of thinking that they are bringing X in profit to their company by chasing a peripheral opportunity when in reality they may be losing 2X in profit because their most profitable core is eroding. But don't take it from us.  These quotes from turnaround expert Gary Sutton in his book The Six-Month Fix pretty bluntly hammer the point home: The last, and most toxic comment you'll hear in most troubled businesses is silence. That will be the response you'll here when you ask each executive to fill in the blank for this sentence.

This is a re-post from Guy Kawasaki's recent post on LinkedIn - https://www.linkedin.com/pulse/choosing-advisor-separate-contenders-from-pretenders-guy-Kawasaki .   These are almost the exact questions I often receive from growing companies.  Great wisdom as usual from Mr. Kawasaki.   Choosing an Advisor: Separate the Contenders from the Pretenders   Once upon a time there were two engineering PhDs who were clueless about how to start a company. All they knew how to do was code. They were so desperate for money and adult supervision that when an experienced businessperson showed interest and offered to help raise money, they, in their own words, “followed him like dogs.” However, this adult didn’t know much about tech startups and caused them to make many mistakes in legal and financial matters. They parted ways but only after much aggravation and the significant legal expense of undoing incorrect decisions. This is not an unusual story, and it’s an understandable

Dashboards have been a hot topic in business literature lately. Recommendations that business owners implement a dashboard for their business abound; however, advice on how to implement a dashboard is scant. I can relate to this dilemma. Occasionally, peers and potential investors would ask relatively simple questions about my aviation training company like, "What percent of your customers are repeat customers?", "What is your breakeven point?", and "What is your customer acquisition cost?" At the time, I was only slightly embarrassed that I didn’t know the answers to these questions. Regretfully, this led me to dance around the questions a bit, change the topic, and soon forget about my ignorance. I was good at flying airplanes and assembling a team of flight instructors. That's really all I needed to know. So I thought. My ignorance couldn't stay hidden forever, and I soon realized how I was hampering the growth of my company by not divi

In this social media crazy-world, the consequences of not treating our customers well are larger than ever. We, as those running or coaching businesses, need to be fully attuned to the quality of service we are providing. Customers can be classified into four groups: 1) Customers who have been offended 2) Unsatisfied customers who showed up today, but will abandon our business as soon as they get an opportunity 3) Mildly satisfied customers 4) Raving fans who spread word of our product or service every chance they get We shouldn’t rest until all of our customers are raving fans. We need this not only because a word-of-mouth testimonial from a satisfied customer is one of the best forms of marketing available, but also because there is no way for us to tell the difference between groups 2 and 3. They rarely identify themselves.   Consider this scenario: You visit a restaurant that provides inedible food and even worse service—the waiter even openly mocks you. Y