Succession Planning: A Cautionary Tale (posted August 1st)
“Charles Sarkis, the eponymous owner of Charley’s Eating and Drinking Saloon and the Back Bay Restaurant Group, has built a formidable restaurant empire here in the Boston area over the past 40 years, with 33 restaurants and 3400 employees. Sarkis is reportedly one smart, tough business owner, but it appears that his unwillingness to address succession planning issues may lead to the demise of a company that has been his life’s work.”  Read more…

Steve Jobs on Leadership and Life (posted August 24th)
“We’re all trying to fit in a few days of rest and relaxation before the unofficial end of summer a little more than a week from now. But today, Steve Jobs, the co-founder and legendary visionary of Apple Computer, announced his decision to step down as the company’s CEO. So, despite the hour, I’m compelled to send this post.”  Read more…

Howard Lutnick on the Economy (posted September 11th)
“Last Thursday evening, I watched the President speak before Congress about his plan to reinvigorate the U.S. economy and to put millions of unemployed Americans back to work. Then, on Friday evening, I heard a fascinating interview with Howard Lutnick, the head of the investment firm Cantor Fitzgerald, that touched on the very same subject.”  Read more…

How Not to Drown Out the Opinions of Others (posted August 5th)
“As companies expand beyond their entrepreneurial roots, effective leaders must break out of the habit of making all of the decisions, and find ways to share leadership with the other talented people they’ve hired. But that’s tough to do, especially when you’ve called the shots from the beginning. And helping others to get comfortable with expressing their own views, particularly when those views are different from yours, can be tricky.”  Read more…

Seven Questions to Ask About Your Business Model (posted September 23rd) 
“Alex Osterwalder is a leading thinker and commentator about innovative business models, and the co-author of the best-selling book, Business Model Generation. Osterwalder dissects the key elements of a successful business model, which he’s captured in his Business Model Canvas, a one-page sheet that allows business owners to “describe, design, challenge, invent and pivot your business model.”  Read more…

What are your favorite Best Practices postings from the past few months?  Let us know by posting your comments here.  Thanks!

But this week’s posting is not about Jobs, whom we wrote about in late August following the announcement of his decision to step down from the helm of Apple. Instead, I’d like to share with you the story of another innovator from another era, who passed away in early September, and whose work possibly transformed our world as fundamentally as did Jobs.

His name was Keith Tantlinger, another California native and the son of a citrus grower in Orange, California. Tantlinger earned a bachelor’s degree in mechanical engineering from UC Berkeley during the Great Depression of the 1930s, eventually landing a job at the Douglas Aircraft Company during World War II. By the 1950s, Tantlinger was the vice-president of engineering for Brown Industries, a company which produced truck trailers in Spokane, Washington. And it was there in the mid-1950s that Tantlinger took a call from Malcom McLean, the owner of the Pan-Atlantic Steamship, that would change the face of modern shipping and, with it, the world.

Until then, transporting cargo by ship was a labor-intensive process that involved hand-loading hundreds of thousands of individual items, packed in sacks, crates and barrels, and then unloading them all over again at the destination port for transportation to their final destination. The earliest versions of the shipping container significantly reduced the labor required, but stacking containers from different manufacturers in a secure manner was impossible because of the lack of standard designs and coupling options. This constraint severely limited their usefulness on long-distance sea passages.

Tantlinger changed all that. Hired by McLean, Tantlinger designed a set of fittings to be welded to each corner of a container, along with a locking mechanism that would allow a stack of containers to be safety secured to one another on board container ships. The fittings also enabled cranes to hook on to individual containers to quickly and safely lift them on and off ships. And the locking mechanism could also be used to secure containers to a truck chassis or railroad car, for transportation to and from the port.

Once Tantlinger’s innovation became an industry standard, the speed and safety of sea cargo transportation increased dramatically. As a result, manufacturers gained access to markets around the world, and consumers benefited from a wider array of products at lower prices. Indeed, today’s global marketplace would not have been possible without Tantlinger’s seemingly small but monumentally significant innovation.

The complete story of Tantlinger, McLean, the shipping container and their contributions to global commerce is wonderfully documented in Marc Levinson’s 2006 best-seller The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, which I highly recommend. You can read the obituary of Keith Tantlinger as published in the New York Times by going to our Resources page at www.bestpracticesforbusiness.com/Resources, and by clicking on the link under the heading “Innovation.”

One of the most insightful and thought provoking presentations I attended was the one given by Alex Osterwalder, a leading thinker and commentator about innovative business models, and the co-author of the best-selling book, Business Model Generation.  In his presentation, Osterwalder dissected the key elements of a successful business model, which he’s captured in his Business Model Canvas, a one-page sheet that allows business owners to “describe, design, challenge, invent and pivot your business model.” (A free copy of the Business Model Canvas can be downloaded at www.businessmodelgeneration.com.)

There’s no substitute for reading Osterwalder’s book and applying the filter of his Business Model Canvas to your business model. But, in a recent blog posting, Osterwalder posed the following seven questions that may help you to get to the heart of what’s working, and what’s not working, about your approach to business:

1.  Does your “switching cost” prevent your customers from churning?  The more costly it is for a customer to switch away from your services to those of a competitor, the less likely it is that they’ll switch. And remember that “cost” can mean time or energy, not just money.

2.  How scalable is your business model? Scalability allows you to expand your business without increasing your cost base (such as web-based business models). But even traditional businesses should think about scalability when it comes to new products and services.

3.  Does your business model produce recurring revenues? Think King Gillette, and the razor/razor blade model, or printers and ink cartridges. You incur the sales cost only once, and continue to reap the benefits from the initial sale with minimal additional investment.  

4.  Does your business model enable you to earn money before you spend it?  It’s always better to earn before you spend. Osterwalder points to Dell Computer’s early modeling of this approach, building computers only after an order is placed.

5.  How much of your business model leverages the work of others?  Here, the model is IKEA, which sells you furniture parts that you take home and assemble, or online networking sites, where information posted by participants actually builds value for the company.

6.  Does your business model protect you from competitors?  The strength of your business model can actually deter competitors from entering your space. For Osterwalder, Apple is a prime example of a company whose strength makes partnership a more inviting option for potential competitors.

7.  Is your business model based on a game-changing cost structure? In the airline industry, Southwest pioneered a cost structure that enabled them to effectively compete on price. More recently, Skype has built a business on the model of a software business instead of a telecommunications company with major infrastructure investments.

You can read the complete text of Osterwalder’s blog, entitled “7 Questions to Assess Your Business Model Design,” at http://www.businessmodelalchemist.com/2011/09/7-questions-to-assess-your-business-model-design.html.

How does your business model measure up to these questions? What changes could you make to your current model to improve your competitiveness and your profitability? Post your comments and ideas here.  Thanks!

Of course, the challenges I dealt with were miniscule compared with those facing companies with employees and tangible assets such as equipment, machinery and inventory.  So I began asking some of you about your contingency plans for dealing with all manner of natural disasters and man-made tragedies, and the processes you have in place to ensure that your employees remain safe and your business operational.  It’s probably not surprising that the extent of planning is all over the map.

So, to prepare for your next business emergency, check out www.ready.gov/business, the website of the U.S. Federal Emergency Management Agency (FEMA). There, you’ll find a ton of information, publications and templates that you can use to develop and implement an emergency plan for your company. At the very least, take a look at the FEMA publication, “Every Business Should Have a Plan” (http://www.ready.gov/business/_downloads/ReadyBusBooklet_12pg.pdf).

For those who are more ambitious, FEMA has also produced an “Emergency Management Guide for Business and Industry,” which provides a step-by-step approach to business emergency planning and recovery. Finally, the September issue of Inc. Magazine has a list of 12 products to help keep your business running should catastrophe strike.

You can access copies of the last two items by going to our Resources page, and by clicking on the links under the heading “Business Continuity.”

How prepared is your company to survive a natural or man-made emergency?  What plans do you have in place to maintain critical operations?  If you have plans, do your employees know about them, and what they’re supposed to do?  Post your comments here.  Thanks!