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Marketing & Positioning the “Second Look” September 30, 2010

Posted by David Dirks in business strategy, marketing.
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Talk about making lemonade from lemons, this is just pure marketing genius.  Banks, under pressure to expand lending, especially to small businesses who’ve seen their lending resources just about dry up the recession, have created the ‘second look’ option.  The second look option allows either the bank or the borrower to ask for another review of their loan request after the first time it is turned down.

Ok, let me see if I get this straight.  I ask you for a business loan and you say ‘no’.  Then, if I want, I can say, ‘hey, look a this loan request again, I think you made a mistake’.  On the surface, it seems that this ‘second chance’ on a loan makes sense.  I mean people who work in banks can perhaps overlook something or calculate a ratio wrong, or interpret an underwriting policy wrong, and on and on.

Of course, what borrower, after getting their loan request rejected, wouldn’t want to take a chance on another look from the bank?  They might get lucky.

Of course, the banks are not stupid.  They see the political pressure they are under to lend more and so they realize they can market this ‘second look’ and look like champs.  Wait a minute.  The bank reviews a loan, says ‘no’ and we should be grateful for the ‘second look’?

It just begs the question:  Why didn’t you work to get my loan underwritten and reviewed right the first time?  Why don’t you build the ‘second look’ into the ‘first look’ as a process?

Is the ‘second look’ just a substitute process for trying to get it right the first time?  I believe so.

In the meantime, the banks have brilliantly positioned the ‘second look’ in print ads as the white knight to help turn ‘no’ into a ‘yes’.  It reminds me of the Champion lending ads of years ago:  “When Your Bank Says No, Champion Says Yes”.  Remember that gem?  It built quite a lending empire on the backs of a lot of bank ‘no’.

The marketing of the ‘second look’ is excellent marketing by any standard.  When you can take a broken lending process and thread it into gold, you’re one smart banker.

‘Model It’ for Small Business Leadership September 24, 2010

Posted by David Dirks in Leadership.
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Someone recently asked me what I thought was the best quality of a leader.  Trick question?  No, but usually one that evokes a multitude of platitudes that we’ve all heard or seen before.  Then it occurred to me that they were asking for MY opinion on the subject of leadership.  I thought about it for a moment.  Then I quickly realized that there was one quality that over my life so far has proven to be the one thing that makes a leader that others respect and will follow.

Not rocket science here folks but plain common sense.  My answer: modeled actions.  I’ve learned, sometimes the hard way, that people will watch you more carefully than you  think.  Most people can spot someone who says one thing but their actions say another.  That’s what I call ‘hollow’ leadership.  Looks like a leader on the outside but empty on the inside.  If we don’t follow through with what we say or we aren’t willing to go the extra mile when someone on our team needs some help, we can’t expect people to do the same for us.

Although widely conferred, titles may convey leadership but is often a mask for leadership.  Instead, others will rise as the informal leaders because they model the behaviors  or as it’s commonly known, they ‘walk the talk’.

I’ll follow you to the ends of the earth if you demonstrate to me that you know the way.  It doesn’t matter if we have 2 or 200 employees.  They are watching us.  They can spot the flaws.  They can smell fake leadership.  They are measuring what we do against what we say.

They are using their common sense.

Retail Mega Giant without Brick & Mortar? September 23, 2010

Posted by David Dirks in business strategy, Solving Business Problems, Strategy.
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The era of brick & mortar is being tested by some of the biggest players in brick & mortar stores.  Now Wal-Mart, in its drive to capture more urban market share, is experimenting with shipping online purchases for free from its website.  Working with Fedex, Wal-Mart is offering free delivery of online purchased products directly to a Fedex location.

So, without having to invest in urban brick & mortar locations, Wal-Mart gets a chance to sell product to those mostly younger buyers who are not inhibited to make online purchases.  This is also a smart move for Fedex who gets to develop the same distribution service for other large retailers as well.

I like this on several levels.  First, it proves that you can weld an idea from common elements.  Merging online selling with the distribution power of your delivery service is great example of this.  Secondly, it proves that even big dogs like Wal-Mart can think out of the box to solve key challenges.  Third, It once again proves that there are other ways to conduct business than by investing in retail structure.

Wal-Mart and Fedex are thinking beyond the usual in looking for ways to grow their businesses.  So should we.

Chrysler Business Strategy: Move away from the cliff September 17, 2010

Posted by David Dirks in business strategy.
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The underdog of the automotive world, namely the company called Chrysler, is a case study in what business strategy NOT to pursue.  Even before the economic crisis, Chrysler has been the well-known laggard against global competitors like Ford, GM, Toyota, and just about every other car maker you can think of. It’s been a rough road for an American icon.

So what was Chrysler’s business strategy?  Beats me.  No one is quite sure what the target market was for cars like the troubled Sebring were aiming for.  Doesn’t much matter because Chrysler has long stubbed its toes in three critical areas: quality, fuel economy, and interior design.  I can’t think of three core areas of a higher order of ‘worse’. 

You could also throw in the fact that Chrysler’s previous financial condition (and its previous hedge fund owners) precluded it from refreshing the brand with new or even updated models in a very long time. 

Times may be changing though.  Enter the dynamic and passionate Sergio Marchionne, the new CEO of Chrysler who also oversees the Fiat empire.  Marchionne took over Chrysler when it looked like there was nothing left to do but turn out the lights. 

According to most reports, Marchionne dived in and reached an immediate conclusion:  we have to fix what is obviously broke and fix it fast.  Stabilize Chrysler sales and start building the resources needed for market development through increasing profitability. 

You need to see what Marchionne did here to see how business strategy is more evolutionary than revolutionary.  His deep dive into what ailed Chrysler pointed to many key priorities and lots of places he could have invested time and resources.  What he did instead was prioritize and limit his focus to those three areas first.  Marchionne wanted to move Chrysler away from the cliff it was on the very edge of.

When faced with more internal things to fix than you can shake a stick at, often the best business strategy is to fix those areas that will then allow you to attack other challenges.  Marchionne knew immediately that nothing was going to get Chrysler on the path to sustained growth without fixing those three issues first and foremost.

Whether Chrysler succeeds is a matter of many other variables, some of which are beyond its control.  Still, the lesson here clear:  When your business is on the edge of a cliff, focus on moving a few steps away from the cliff as your first priority.