Tuesday, May 31, 2011

Industrial Recruiting

When a woman has an affair with a married man, and finally convinces him to leave his wife and marry her, she never realizes that when she becomes the new wife, he will eventually cheat on her. "But he loves me. He never loved her." Adultery is rarely based on finding someone you love more. It is based on an illness or character flaw.

As a community leader, you might think you are so attractive with your low wages and educated work force that convincing a corporation to love you more than the current host community is a great idea. But eventually you will be the old wife, and another community with lower wages will woo them away again. Your town will be ex-wife #2. Or #3.

Every professional in the economic development realm seems to now agree that any effort spent recruiting factories to your community is a waste. 

Further, other problems exist with choosing the future of your local economy by 

How can you choose which industry is best suited for your region?
How can you decide which industry will be best situated for coming macro-economic changes?
How can you use taxpayer money to bribe corporations to relocate?

If recruiting factories is dumb, then trying to recruit a low-wage call-center operation is even dumber.  

Monday, May 30, 2011

I Like Pie

Do you view the pie as finite?  If someone gets a larger slice, does that mean your piece will be smaller? Or do you believe that by cooperating with other pie-eaters, you can increase the size of the pie?

This topic has been discussed by several commentators, but it really is a philosophical difference that divides humanity.

If a tourist visit a neighboring town, does that mean you have missed out on that revenue? Or could you work together, multiplying the tourist stream by many times what you could by yourself?

In tourism, the key to community development might be regional development.

Saturday, May 28, 2011


When the Black Death swept across Europe, the scale of death and suffering was so great, and the cause so invisible, that people could not cope with the horror. They needed a scapegoat.

So Jews were often rounded up and killed. It was not rational, but when you need to direct anger away from yourself, a scapegoat can be very convenient. Governments have used Jews for centuries to deflect blame for incompetent governing.

We still do it. The U.S. government created a ginormous credit bubble, then told investment banks they would be protected if they made stupid investment decisions. Those are the two main causes of our current crisis. Of course the people who control the microphones blame deregulation, corporate greed, or other sideline issues. "Pay no attention to the man behind the curtain," the White House yells.

But we also see this problem even in small communities. Local economies are being ripped apart by unstoppable global forces, but unfortunately we often look for local scapegoats to blame. Immigrants, city councils, mayors, racial or religious minorities, infrastructure, brain drain, school principals, climate....

Blame is easier than solvency.

Friday, May 27, 2011

Ebay and Socialism

Dar eBay: you are not a monopoly.

Your company continues to act the part of a socialist government, envious of any citizen who turns a profit.

The company learned that some of their sellers are earning profits, and seek to harvest them. So you again raise your rates. Your announcement was couched in doublespeak. More sellers will flee to competitors. And you will raise them again in the future. And lose more sellers that time as well.

Your base might be growing as the market grows, but your share of the market is shrinking. Someday you'll be Chrysler, a company still probably atop the minivan market.

Thursday, May 26, 2011

Branding and Socialism

Our community's entrepreneurship committee is working on a project to help local artist's sell their wares. We have been working on a way to help them market their products by combining efforts. Here are some relevant issues:

 - Artist co-ops rarely work. Asking predominantly right-brained people
   to agree on marketing could be difficult.
 - Artists can't imagine that their products are unwanted by consumers.
   Who will tell them and hurt their feelings? The other artists?
 - How can you keep the brand consistent? Various types of art may not
   be compatible within the same brand. Example: will you sell children's
   lullaby collection books alongside pornographic works?

The Animal Farm model is difficult and usually breaks down. The way to succeed is not to sell things that artists want to sell, but to sell things that people want to buy.

The best method is for an independent team to establish a firm, create a brand, then source products from the artists, and sell them. This is the Henry and David model. Pottery Barn would never tell everyone that they can sell anything they want through their store channels. Pottery Barn has buyers, who are expert at understanding consumer wants and buying behaviors, procure what they know will sell.

We plan also to form a "farm club," a group of students and artist hopefuls who can sell their wares through a separate brand as they learn how to respond to customer tastes. That way we respond to the need to help people become self-employed artists without diluting the exclusive brand.

Wednesday, May 25, 2011

Dear parochial seller

Dear Entrepreneur on the Prairie successfully selling your wares on the internet. We congratulate you.

Here are some numbers that will obviously surprise you: two billion people now use the internet. The U.S. population is 300 million (including infants and the infirm). It seems a lot of people outside the U.S. can buy online. Why are you so afraid to sell to them? So afraid of being scammed by Nigerian mobsters that you lump everyone outside the U.S. together, calling them all mobsters?

Buck up, keep a stiff upper lip, and learn how to lower your scam risk. And make money.

Tuesday, May 24, 2011

Roll the dice on disaster

I recently perused a body of research which indicates that people who look forward to the end of the world are those who feel unsuccessful in the current world. The End will not crush them, but will turn the tables. It will put them on top. "I might be a failure now, but you won't be laughing at me then."

History does not uphold the idea that huge upheavals bring the bottom people to the top. Some mixing up does occur, some people are brought low, but rarely is anyone switched to the top spot in the new order, simply because they were at the bottom before.

The current recession will probably get worse before it gets better. And natural disasters will probably increase in frequency, continuing the trend. But hoping for despair is a gamble of the worst kind. Punishing yourself further now, in the hopes that you will be chosen as a leader in the post-Zombie Apocalypse, is a scenario of such incredible odds that you should not ever consider it. Instead, gamble that the world will get better eventually.

And don't let anyone take advantage of your despair-wish. 

Monday, May 23, 2011

Forget Surveys

I am not a proponent of market research. I believe it has three weaknesses:

- People don't know what they like. No one understands themselves, why
  they make certain choices, or what they prefer.
- People don't respond genuinely. To use an example of class evaluations,
  students in my classes don't respond in useful ways. Outliers on both
  ends give feedback about me that "he is the worst teacher in the
  department," and "he is the greatest teacher ever." I receive more positive
  feedback about my wonderful hair than about information about how to
  improve the class. People have different ways of communicating, different
  agendas, and some are are suspicious of surveys.
- People don't understand unless they have a prototype in hand and have
  opportunity to use it in real life. So they need to experience your product
  or service, then decide if they like it. They need to test that new gold club
  by swinging it. They need to eat the food at the restaurant,

Observing people choosing your product from others on the shelf and then using your product--when they think they are not being observed--gives you information you can use.

Start the business, then learn and muddle through until you figure out how to make the business successful, even if success means significantly changing the business. Market research is often a method of procrastinating. 

Thursday, May 19, 2011

The Power of Free became a paid-subscription based news site in 2009. In the first six months, the site attracted 35 subscribers and earned revenue of $9,100. They paid $4,000,000 to design and set up the site. (Source: Mikal Belicove)

This week I am reading Chris Anderson's "FREE: The Future of a Radical Price." The book's contention is that you can often make more money by giving away your product or service for free. The issue is approached from many angles, and covers considerably more than that simplistic synopsis.

Read the book. Consider the implications. Don't be like Newsday. 

Tuesday, May 17, 2011

Taxation and small business

When governments are irresponsible, and develop habits such as taking money from producers in the middle class and using it to buy votes from takers, the money eventually runs out. Cash flow becomes negative.

In those times, small business owners need to alert. Large businesses can take care of themselves. They encourage legislatures in their employ to enact regulations which allegedly protect consumers, but are actually intended to prevent new entrants. It has always been done that way. 

But small businesses will be viewed as cash registers for hungry, desperate legislatures.

So be careful, and be smart. Follow the rules--don't cheat--but play the game as well as you can. 

Monday, May 16, 2011

Selflessness and Creativity

Want to be more creative? Of course you do.

Uber-author Dan Pink shared a great story this week, highlighting a recent research report on the topic. Apparently we are more creative when we are solving problems for other people than for ourselves, according to a study conducted by  Evan Polman and Kyle J. Emich. Quoting from the synopsis:

"...In Study 1, participants carried out a structured imagination task by drawing an alien for a story that they would write, or alternatively for a story that someone else would write. As expected, drawing an alien for someone else produced a more creative alien. 
"In Studies 2a and 2b, construal level (i.e., psychological distance) was independently manipulated. Participants generated more creative ideas on behalf of distant others than on behalf of either close others or themselves. 
"In Study 3, a classic insight problem was investigated. Participants deciding for others were more likely to solve the problem; furthermore, this result was mediated by psychological distance. These findings demonstrate that people are more creative for others than for themselves and shed light on differences in self-other decision making." (see the report here.)

In rural areas we have fewer people to help us solve our problems, fewer people on whom to test ideas. That is not a problem, because now they've invented something called the internet. You can connect with peers globally, and solve each other's problems.

Friday, May 13, 2011

Someone might steal your idea

"Neither do men light a candle, and put it under a bushel, but on a candlestick; 
and it giveth light unto all that are in the house."

Be careful, or someone might steal your business idea. Of course, if you focus on protecting your idea, it will not grow. If the thought of someone stealing your idea makes you anxious, then please release yourself from the thought.

Tell people your idea. Ideas are cheap. You might think your idea is so brilliant, but if so, why aren't you making money off of it? You're hiding it under a bushel. Share your idea with as many people as possible.

   - helps investors hear about it
   - commits you to following through (later, you'll be embarrassed if
     you didn't make progress when people ask, "so, what ever 
     happened with that idea?" 
   - gathers potential supporters, allies, and employees

Your biggest competitor is yourself. You can stop you before you've ever begun. Go ahead and spread the idea. 

Wednesday, May 11, 2011

If by chance you succeed...

If you succeed, if you "knock the cover off the ball," then your life will change.

   Some people will envy you, and stop being your friends.
   Your leisure time will decrease.
   Your stress level will increase.
   Your personal financial risk will increase.
   You might become a selfish workaholic like your father/
      neighbor/role model was.

You might not think you are thinking about the downside of success. But a little person inside you head is afraid of these risks, so will try to stop you from succeeding. That person just wants to protect you. He might be small enough to fit inside your head, but is still powerful. 

Tuesday, May 10, 2011


I define burnout as the state you eventually reach when you give, give, give without receiving. You lose your energy, your passion, your umph.

Most magazines and books on entrepreneurship generally mention advice on avoiding burnout. Take time for yourself, don't push yourself too hard. Communicate with your spouse about expectations. Pace yourself.

But sometimes you will need to push it. You will need to work 24 hours without stopping in order to finish a project under deadline.

Just don't do it too often. Don't pace yourself based on fear.

Monday, May 9, 2011

The Tyranny of the Lottery

Public lotteries are the most regressive of taxes: the poor spend a far disproportionate amount of their incomes on lottery tickets.  Lotteries erode the culture of the state, and they are not the most efficient way of earning public revenue.

But they pander to an itch that is alarming. We want a huge payoff for little effort. The lottery mentality, unfortunately, pervades the thought processes of many people.

    "if we could recruit that tire factory to our town, we would solve all of
    our unemployment and tax coffer problems"
    "if I can just get someone to design my site, it will become the next
    "if a very influential tourist were to happen into our town, then we
      would be discovered"

Please, don't be a Lottery Person. Just be diligent, after you get moving in the right direction. 

Friday, May 6, 2011

Winning Friends and Influencing People

In the adult world, people hurt our feelings. Sometimes they do it intentionally, sometimes not. But it happens either way.

If you work with a particularly horrible person, they will eventually go away. That is something I have learned over the years: one of you will quit or be fired or be transferred.

But the community is not a company. You live near each other. If someone hurts your feelings, or if you hurt someone else, you will likely have to live with that person for a very long time. Your children might attend school together. So be tough, and be sensitive. Don't let people hurt you, and be careful about how you communicate.

Thursday, May 5, 2011


These thoughts apply to anyone whose business name contains the name of their town, or anyone trying to build the town's own brand.

Brands and like plants. They want two things: nurturing and time. Also, brands don't like being stomped on by careless hikers.

So you nurture your brand, the way Steve Jobs developed the Apple brand. You care for it, love it, feed it. And you are patient.

In your situation, an extra risk exists. A careless person in your community might harm the brand.

I have a friend who lives in a very small town. For a while, when he introduced himself and where he was from, people would say, "Farmington? Isn't that where that teacher was sent to prison for, how do they say it, inappropriate behavior with children?" He wanted to stand up and yell, "no, it is where we have a wonderful farmer's market, and we have exceptional historic sites!"

But all he could do was to wait. The incident tarnished the town name, and the brands of anyone who used the town name as a brand, then eventually the mud splattered all over the town reputation washed off in subsequent rainstorms. The brand now shines again.

Be patient.

Wednesday, May 4, 2011


You only have enough funding for one program. But several projects need cash to launch.

So we are often tempted to create a program, build a facility, or plan an event that covers several potential projects. It becomes like a spork.

A spork is a combination of spoon and fork. Fast food restaurants sometimes provide them, but they are more cost effective than providing both for salads and soups. But the talked-up spork is not excellent at anything. We often end up trying to cut our steak with a spork, rather than reaching for a knife.

Multi-use programs sound attractive, but for a tough steak you want a real knife. 

Tuesday, May 3, 2011

The Long Term

Here is an addendum to yesterday's post. 

If you are want to replicate the success of Austin, Texas by doing what they did 40 years ago, it means you might not see the fruits of your efforts this year. Or next year. By the time you create a community that others try to emulate, you might be dead. 

John Maynard Keynes was quite a quotable bloke, but his most famous quote was that "in the long run we are all dead."

That is why all governments use the bandage approach to governing, rather than creating long-term value. Voters insist on immediate improvement, so politicians give them cosmetic solutions. The politicians themselves probably want to see some value in their labor before they die, so they go along with the pressure for short-term results.

As a community leader, you have the same choice. You can build libraries, which build minds, which build businesses. Or you can organize monthly swap meets in your town, which will bring in revenue now. 

Monday, May 2, 2011

Focusing on priorities

Currently, my town is determining which of two priorities should be funded (like many communities, we don't enjoy limitless funds, so we chose to concentrate resources.)

The choices:
1) building a library
2) building a retirement home

To some people these might seem like random spending opportunities, but to me they represent competing philosophies about the future. So I've attached relevant defining slogans to the projects to represent the community:

"Farmington is preparing for a bright future"

                 - or -

"Farmington: a great place to die"

Senior citizens deserve our support and resources. They deserve our love. If we don't support them, we won't be supported when our turn comes around, and knowing that may make us less motivated to support our community now. A senior home here would make it easier for locals to visit their ailing parents, so resolve an inconvenience.

But the first option, the library, builds the community's productive capacity. It makes the community into a place people want to live in, so they will stay near their ailing parents instead of moving to where the jobs are. A
nd it increases the likelihood of innovation. The retirement home option, but contrast, manages symptoms. Surgery vs. bandage. Vitamins vs. medication. 

And because Nauvoo, to me, represents any community that wants to move forward, I share the dilemma as a microcosm. Are you spending community coffers to make people comfortable, or to develop a better future?