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About The Benevolent Dictator

Beating the competition is never easy. Neither is running the gauntlet of a business start-up, which not only is a major challenge but can often prove fatal. Success for both depends on being a...

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The Benevolent Dictator

Sample Chapter 2

Chapter 2

Lesson #2: The best ideas can come from what’s right in front of your nose

In my view, some of the biggest — and occasionally easiest — money you can make in this world is often derived from the most obvious ideas.  Think about two fairly significant music-playing devices: record players and the iPod.  Each one is nothing more than a machine that plays the same kind of music that the likes of Frank Sinatra sang.  The brilliance is in the distribution method, the ability to change it, and the capacity to capitalize on those changes by leveraging economies of scale and developing different packaging that makes owning the product “cool” to a new generation.  When you really think about it, it’s the same music; it’s just a different way of sharing and listening to it.  But both inventions required someone to look at the obvious and come up with the idea of creating a product — or better mousetrap — that people would both want and perceive they needed.

One fairly reliable reality in life is that most people will find reasons not to do something.  They’ll look for a way to keep the status quo and not challenge what can easily be tested or improved.  It is the people who spend their time looking at what could be — based on the obvious — that rise above the rest.

However, even that kind of outlook doesn’t always ensure success.  Most people fail in the planning stage of a start-up venture because they make it much more difficult than it needs to be.  Whatever you end up doing — whether it’s selling something, developing a product, or finding a cure for cancer — it must first be something that people want and need.  They may not know they want or need it yet; that’s where marketing comes in.  Creating a demand for a product is about communicating why it’s a “must have” item and what’s in it for the customer.

Some of the best ideas — such as the ones in which I specialize — must be something so simple that they don’t require a lot of time or effort to educate people about why they should want and need it.  It’s got to be something they see or hear about and say, “Yes, I get it, I want that.”  It might even evoke the feeling that “I can’t live without it.”

My ideal business would have been to enter the toilet paper industry.  Why not? It’s a product that most people use daily, and it’s one that they keep buying and using until the day they die.  In terms of a cradle-to-grave product, it doesn’t get much better than this.

Ideas, in their most basic form, are like coffee or fine wine; you either have to let them percolate or age.  You take something you think somebody may need and determine whether there’s a market already in place for it. Or, you figure out if there is some way you can improve on how it’s packaged and delivered, or whether you can create something from scratch to replace what’s out there.

How do you do this? It’s simple: you listen – specifically, to the people who are users and who’d be your customers.  However, you also need to also interpret what they mean, because people don’t always say what they want, need, or are looking for in the exact words you’d hope to hear.  My favorite way to conduct market research is to walk around and listen and talk to people in the obvious – as well as the strangest –places. My other approach is just to read — not necessarily what you’d read for your own enjoyment, but material that gives you clues to what might be of interest to people in the market you’re considering serving.  Talk on planes.  Walk around.  Go to other retailers.  Watch TV.  Read newspapers and magazines.  Go on the Internet.  Keep your eyes, ears and mind open.  It’s really that simple.

My own method is a bit voyeuristic; I’m actually surprised I haven’t been stopped by the police yet.  I watch people’s habits.  I learn.  I find out the answer to one basic set of questions:  How do they do things, what are their needs, their concerns, and their sources of fear, satisfaction and utter joy? After I’ve gathered these facts, I then begin to analyze how they do things and start thinking about how it might be done differently and more efficiently.  I ask myself, what industry and new market could be created to improve upon what is already there?

This methodology applies to the process of creating most good ideas.  You find a need — or where you think there’s a need — learn what solution people currently have, and start inquiring as to whether there’s a better way to do this than what’s currently being done.  Then you start to modify the idea and give it some time to germinate as you continue to ponder it from various perspectives.

I used to work out late in the evening around 9 p.m. in the early days of OfficeMax, jogging six — sometimes seven — days each week.  I would use that roughly 45 minutes to ponder an idea. I’d start thinking about the problem and its possible solutions.  It was a valuable exercise (pun intended) that produced incredible results.

I’ve found a fairly consistent habit when it comes to business ideas: most people will talk themselves out of any solution before they reach it.  They see the problem as a wall.  They hit it and say, “Oh, somebody’s most likely already thought of this.”  Then they give up and go back to the beginning and start with a different idea.

An entrepreneur is a completely different animal.  If he or she has an idea they think is great, they see that wall and say, “Well, I can go over it, under it, around it or just knock the damn thing down.  Okay, now how do I do that?”

That’s the real difference between the people who make things happen and those that just talk about it.  When you find that idea, you need to spend time thinking about how to nurture it and then figure out how to translate it into a reality.  And damned be the walls that you face along the way.

In the beginning, you have a jumping off point where you know the idea you’ve developed is viable and workable. You know you want to take it from concept to something actionable.  In order to make that happen you need resources, which come in many different forms – including time, money, and people.  Resources are also your own and others’ commitment to the idea.

The support you get from the people around you matters greatly. If you went to your husband, wife or significant other and said, “I’m going to write the great American novel,” your partner might say, “Terrific” But, if you added, “I’m going to quit my job and you’re going to have to get a second job working at night flipping burgers to make ends meet”; well, then their reaction might change a bit.  You need your own dedication — and that of others in your life as well — in order to move an idea forward.

Some of the resources and initial commitment I was able to I was able to secure came from my meetings with another accomplished entrepreneur. I met this man during November and December 1987 as I was preparing for my exit from Jo-Ann Stores. My soon-to-be-partner owned several companies over his career, and we initially discussed the viability of launching a retail chain.  He had heard about Staples and Office Depot, two regional office supply start-up chains, and liked the idea of selling office supplies.  Although there were about 18 other companies in this space that had all launched within months of each other, none were big players yet.  Where there wasn’t an upstart superstore chain, those smaller, traditional office supply stores cared more about selling goods to the customers when they wanted to sell them – instead of focusing on when the customer wanted to buy them.  They essentially lacked product depth and a variety of conveniences.  Entrance into this industry made sense to my potential partner and I because the customer was being underserved and, in most cases, gouged by high prices.

Our idea was to create something different.  We planned an office supply prototype that was bigger than life for the Midwest, where no other operators yet existed.  Our stores would offer the product that home office and small businesses wanted and needed, and we’d be open for them when they wanted to shop, without the usual restrictions.  We would feature lower prices and better service than the other guys, and make it an exciting place to shop.  We would bring the products to life by taking them out of the then-brown boxes, and put them on open display so people could touch, feel and experience using them.

We knew that if we could do all of that, we could replace those mom-and-pop office suppliers the same way supermarkets had replaced mom-and-pop grocery stores.

Ultimately, this way of thinking became a formula for an interloper like OfficeMax to spring up and fill an obvious void, initially in states like Ohio, Pennsylvania and Michigan.  Before we started, we went “to school” to learn from the things that Staples and Office Depot did right and wrong.

The deal between my partner and I was simple:  I’d be the benevolent dictator, and he’d be the money finder guy. And luckily for me, he was one of the best of the best.  His job was to find the first round investors to supply the funds necessary to get the business off the ground, and also to focus on the initial real estate selections.  My job was to put all of the pieces together to get the business moving, build the team, develop the marketing strategy, and work with banks and vendors.  I would also serve as the closer for the investors since I had the 15 years of retail chain experience, which added requisite credibility to our undertaking.

We literally took a blank piece of paper and began working on what would eventually become OfficeMax.  We believed that improving the state of office supplies was an obvious idea for a business; after all, it supplied something people needed, wanted and used every day.

However, after a relatively short time, we parted ways.  It wasn’t because I didn’t like my partner or wanted him to leave; it was simply a matter of style.  He was what I then thought epitomized the gun-toting entrepreneur.  He came on strong and got stronger.  He was good at what he did, because the word “no” wasn’t in his vocabulary.  That applied to me, too, in some ways; however, I was also a strategist who used facts and figures, and then processed them with my head, my heart and my gut to get to an answer. Though I admired his method initially, I knew that in the long haul we were in — as they say, — a marathon, and not a sprint. I could tell that his instant gratification style didn’t mesh well with my more patient approach.

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