FedEx’s ZapMail Service: Failure to Foresee

Innovation is Not Without Risk

How Federal Express's Zapmail System Works

One of the defining characteristics of great leaders is their knack for seeing into the future.

Innovation is not without risk. There are plenty examples of failures at companies. However, on the other side of the coin, if you’re too cautious and too late—all you have is a dinosaur business. Navigating that fine line between risk and innovation is very important.

FedEx's Zapmail System Case in Point: ZapMail Service was a system that used fax machines at FedEx offices to transmit documents for clients in different cities. After being introduced in 1983, when FedEx was known as Federal Express, the service was soon eclipsed by the rise of fax machines priced cheaply enough that most offices could purchase their own. In addition, ZapMail was based on satellite technology, which needed the space shuttle to work effectively. However, the space shuttle blew up, dealing a body blow to FedEx’s plans. FedEx folded ZapMail in 1986, taking a costly write-off.

No Innovation Without Experimentation

Commenting about FedEx’s ability to integrating new acquisitions into its fold after its purchase of Paul Orfalea’s Kinko’s franchise, journalist Michael Copeland commented in the Autumn-2006 issue of Booz & Company’s Strategy & Leadership magazine:

As with other acquisitions, Fred Smith saw something in Flying Tigers and American Freightways that others didn’t because his point of focus lay far beyond theirs. Mr. Smith doesn’t always get it right when he looks into the future. His expensive and ultimately failed experiment in ZapMail, a dedicated fax network that couldn’t compete in the early 1980s with the new, inexpensive consumer fax machines, is proof. “A guy like Fred Smith doesn’t build a company like FedEx without taking some risks and making some mistakes,” says Mr. Hatfield, the Morgan Keegan analyst, “but clearly the successes far outweigh the failures.”

Federal Express's Zapmail System There can be no innovation without experimentation, and there can be no experimentation without the risk failure. In addition, taking risk goes against the grain of many companies’ cultures. In the corporate world, there are powerful incentives for people to play it safe. However, leaders must work particularly hard to offset these forces and give their teams the consent to fail and the assurance to make their case and go out on a limb. Leaders must not only promote experimentation, but also encourage people to terminate faster on projects that are not working without fear of reprisal. That is to repeat the cliche “fail, but fail as fast as possible” and take the lessons learned to the next experiment.

Costco’s Winning Business Model Strategy

Costco Logo: Costco's Winning Business Model Strategy

Costco has built a devoted foundation of customers with low prices and workers with high wages. The discount warehouse services industry is highly competitive. There are several warehouse operators across the United States and Canada that offer similar merchandise quality, selection, and price.

At the end of financial year 2015, Costco managed 480 membership warehouse clubs in the United States, 89 in Canada, 36 in Mexico, 27 in the United Kingdom, 23 in Japan, 11 in Taiwan, 12 in Korea, 7 in Australia, and one in Spain. Base and executive memberships cost $55 and $110 per year, respectively. The company operates 557 warehouse stores, 406 of which are situated in 40 U.S. States and Puerto Rico. The rest are in Canada, Mexico, Japan, Taiwan, Korea, and the United Kingdom.

The internet has made it immeasurably easier for shoppers to chase for the latest deal—and a lot more demanding for brick-and- mortar retailers to command customer loyalty. However, Costco has managed to resist the tendency—with only 3% of its retail sales occurring from e-commerce. In reality, it outclasses other retailers when it comes to dependably increasing sales from its millions of loyal shoppers.

At the warehouse stores, forklifts relocate pallets into racks such that the first time an item is actually touched is when the consumer contacts into the shelf to collect the item and places it into their shopping cart.

Costco's Sustainable Competitive Advantage

Costco’s Sustainable Competitive Advantage

Costco’s objective has been to increase sales while cutting long-term costs (by trimming freight expenses, scaling its merchandise, negotiating prices with vendors, and reducing packaging) with the intention that it can pass those savings down to members. Costco has said that its “rule of thumb is to give 80% to 90% back to the customer.” Those efforts have paid off, with memberships reaching an all-time peak of 81 million members in 2015.

Shiny steel caskets exhibited amongst the stacks of snow tires and pallets of heavy applesauce, rose-scented toilet tissue, mentholated shaving cream, and mild-flavored salsa. However, in time, people may grow familiarized to the sight. By including these special deal items to the cart, the total spend at the cash register expands. This behavior diverges severely with the type of consumer who has the self-control to fill up on everyday consumables at everyday low prices. The latter type of consumer does win in the end even if the cost of the membership is factored into the equation. As one (rather demonstrative) instance, when reviewing the 1999 Kroger-Fred Meyer merger, the FTC vindicated this definition by asserting,

Supermarkets compete primarily with other supermarkets that provide one-stop shopping for food and grocery products. Supermarkets primarily base their food and grocery prices on the prices of food and grocery products sold at nearby supermarkets. Supermarkets do not regularly price-check food and grocery products sold at other types of stores and do not significantly change their food and grocery prices in response to prices at other types of stores. Most consumers shopping for food and grocery products at supermarkets are not likely to shop elsewhere in response to a small price increase by supermarkets.

What Makes Costco Successful

What Makes Costco Successful

Renewals of Costco’s $55 annual memberships stand at a remarkable 91%—a record high. On the word of financial analysts, the low price of memberships and a stable return of loyal members is what sets Costco apart from big box and department store retailers which persist to fight for market-share gains in a altering landscape of increased competition from online retailers led by Amazon. Costco’s ability to dependably drive increases in traffic is a key differentiator.

Everything at Costco is continually being evaluated for productivity. Costco manages a mix of distribution facilities to accomplish the overall objective of operating with an efficient supply chain. The company lately substituted the form of their milk cartons to get rid of the empty space at the top. They can fill thinner jugs all the way to the top, so they can get more gallons onto the same amount of space on a freight truck. The loss-leader abilities of Costco’s business model ought to endure to drive market share advances over the long term. However, it is possible that incumbent grocers could react to Costco, Sam’s Club, or Walmart Supercenter entry along one or more of these non-price dimensions, in which case their prices could continue unaffected or rise.

Costco’s philosophy is to provide its members with quality goods at the most competitive prices. It does not concentrate its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority,” or constantly providing the most competitive prices. This question is actually quite complex in that it has multiple answers that boil down to individual consumer behavior. The reality is that Costco has perfected a purchasing strategy known as the “treasure hunt” which means that there are always new items and tempting deals that extemporaneously come and go. The consumer who walks every aisle knows what I mean by this because they are subconsciously on the treasure hunt.

During the next 10 years, warehouse openings should move the number of primary cardholders to 65 million–75 million, up from 45 million in the most current fiscal year. In spite of having warehouses that spanned three acres, and piles of merchandise stacked to the ceiling, Costco carried only 4,000 carefully chosen products at a time. Three-quarters of the items were such “basic” products as batteries, laundry detergent, and instant noodles. Then there were the “high-end” name-brand products, which might be stocked at Costco one day and then gone the next.

Costco Employees Happier with Wages and Benefits

Costco Employees Happier with Wages and Benefits

While Walmart and Target just recently began increasing take-home pay for their employees, Costco has been an industry trendsetter for years. With starting hourly pay at about $11.50 and a company average of $22 per hour, Costco’s compensation costs beat the competition. Costco has asserted that paying employees well can be more advantageous eventually by keeping turnover low and capitalizing on employee efficiency. Actually, turnover stands at about 10% compared with the industry average of 55%. For employees who have been there more than one year turnover drops to just 6%. Employees rarely leave: The company turnover rate is 5% among employees who have been there over a year, and less than 1% among the executive ranks. Costco management has asserted that loyal employees bring about better customer service.

Costco purchases the majority of their merchandise promptly from manufacturers and routes it through a network of cross-docking facilities, which act as merchant consolidation points to move goods in full truckload volumes to the stores. Sam’s Club carries about 4900 items and Costco around 4000; by comparison, the normal grocery store carries approximately 50,000 and the average Walmart about 100,000. Furthermore, the shopping experience at warehouse clubs is unusual—members pay a fee for access to goods stacked high and sold in wholesale quantities in low-amenity environments. Warehouse clubs are very spartan in their accommodations. They do not bag consumers’ purchases, and a club employee checks all shoppers’ carts and receipts on exit.

Secret to Costco's Success Lies in Supply Chain Efficiency

The Secret to Costco’s Success Lies in Supply Chain Efficiency

Big-box retailers Costco, Sam’s Club, BJ’s Wholesale, and Walmart, along with full-service and fast food restaurants, are significant contributors to the nation’s obesity outbreak. Costco continues to productively increase its businesses, on account of its low prices and robust customer loyalty. Its ability to provide quality products, at a reasonable price, should appeal to most consumers in North America and around the world. While competition in the market remains ferocious, Costco’s leadership is taking the right steps to guide the company into the future. Over the years, Costco added departments, growing further than the traditional discount warehouse offerings. A large majority of the stores featured a drugstore, an optical-dispensing center, one-hour photo services, a food court, and the ever admired and low-priced hot-dog stands. More than half-offered hearing-aid centers and a handful were equipped with print shops and copy centers. More generally, not all big-box chains are created equal. The big-box retail literature has fixated almost exclusively on Walmart, examining its effects on a wide range of outcomes, including prices, labor market consequences, small business activity, time use, obesity, and social and cultural pointers.

Using city-level panel grocery price data matched with an exclusive data set on Walmart and warehouse club locations, customers find that Costco entry is associated with higher grocery prices at obligatory retailers and that the effect is sturdiest in cities with small populations and high grocery store densities. The competitive response need not be to reduce prices; conversely, as segmented-market models with a mix of brand-loyal and price-sensitive consumers have shown that in some cases incumbents can increase prices in response to a low-cost entrant.

The lesson to be learned from Costco for every manufacturer, distributor, or retailer, regardless of industry, is to figure out how to eliminate the fingerprints within the respective supply chain and within internal processes.

Why is Costco so Successful

Why is Costco so Successful

Costco established the warehouse club retail business model, which relies on bargaining power, a no-frills shopping atmosphere, supply-chain efficiencies, and customer-friendly typical markups on branded products. Now, Costco is transforming its no-fuss wholesale business into a global brand.

Membership Fees

Costco has become a significant shopping destination for consumers across all income levels, as well as small businesses. This is foremost because Costco derives approximately 75% of its operating profits from membership fees.

Costco derives nearly all of its profits from membership fees, allowing the firm to sell many of its products at little to no margin, and sometimes at a loss. These loss-leading capacities are reinforced by the firm’s deployment of gasoline to drive store traffic. When blended with membership renewal rates above 85%, these characteristics give Costco a defensible competitive advantage.

Succeeding Overseas

There is little room for more household penetration because Costco already has more than 70 million members; historical sales and earnings growth forecasts may not be justifiable.

In 1985, Costco opened its first warehouse outside the U.S. in Canada. Currently, Costco has 187 locations in Canada, Mexico, the U.K., Japan, Taiwan, Korea, and Australia. Overseas sales more than doubled from 2008 to 2013. While other traditional American retailers grapple to stay competitive in international markets, Costco’s no-fuss warehouse-shopping model is a new experience for international consumers. Remarkably, people in Asian markets are acclimatizing well to shopping in bulk—although it means fastening pallets of toilet paper and enormous teddy bears to the back of their motorbikes as they whizz away from the Costco parking lot.

A Good Living Wage for Employees

Costco has long been known for paying higher wages and offering more liberal benefits than its rivals have—and generating greater sales per square foot, too.

Unlike most retailers, Costco does not see raising employee salaries and growing profits as opposing objectives. While the average hourly wage for a full-time worker at Wal-Mart is $12.81, Costco pays its workers an average of nearly $21. Costco sees the return on this investment in its low employee turnover rates: Just 10% in 2013 and 7% for employees who have worked at least one year. High employee retention permits Costco to reduce considerably on training costs.

Superior Customer Experience

  • A guarantee of quality. Their model promises fundamentally “100% satisfaction” and they mean it. Their return policy stands out among the best in many retail categories and they are exceptionally relaxed about fulfilling it. Costco will take back an empty package of any food, if you are not satisfied, and give you your money back.
  • A extraordinary selection of products that is a bit more refined than most but at a pretty good price. A typical Costco store only carries about 5,000 items, and there is a bunch of those items that rotate regularly.
  • The “treasure hunt” model. The store does have a layout, but within that layout, everything is rotated frequently to keep you looking. This would never work at Walmart or Target —because you’d get frustrated. However, at Costco, it’s part of the fun to “treasure hunt” a new find. They have a very wide selection of very different merchandise types which offers an unique convenience level as a shopper.

CEO Jim Sinegal once said, “If that stuff doesn’t really turn you on, then you’re in the wrong business.” Costco caps margins at a sacrosanct 14% on branded goods, pushes buyers to find creative ways to lower prices and add value, and gets store managers to crank up their efficiency efforts. Under Sinegal’s leadership, Costco has gained a reputation for bargain prices and surprise designer goods.

Southwest Airlines’ Brilliant Marketing

Southwest Airlines' Brilliant Marketing

More than anything, Southwest Airlines deserves credit for its exceptional marketing strategy. For decades, Southwest Airlines has convinced American consumers that it have the lowest fares, which is hardly ever the case. Southwest’s average fares have outpaced the industry by 12% since 2009.

Nevertheless, I hear repeatedly “I need a cheap last minute ticket; I suppose I’ll try Southwest Airlines.” Being able to create that perception among consumers is invaluable.

Southwest Airlines began service in June 1971 with the objective of stimulating demand through low fares and, in forty years, has become the largest domestic airline in the United States. Southwest Airlines used to be cheaper when they first started out but currently many of their flights cost more than the other airlines. Many attentive customers do not consider Southwest Airlines a discount airline anymore.

Southwest Airlines gained a low-cost advantage by flying one aircraft type on a point-to-point network to less congested secondary airports. This enabled the airline to maximize aircraft utilization and employee productivity. It’s simple fare structure allowed customers to purchase and alter their travel plans more easily than with legacy carriers. Another distinctive competitive advantage that Southwest enjoyed for years was a hedged fuel position that was the envy of the industry. Over the last decade, Southwest has lost this particular cost advantage, and has generated results that have more closely mimicked those of legacy carriers.

Southwest Airlines No Longer Low-Cost Airline

Moreover, Southwest is no longer the lowest-cost provider that it used to be, even not including fuel costs, as measured by costs per available seat mile excluding fuel expenses. Competition and surging fuel prices proved that Southwest’s low-cost advantages were merely temporary. Over the years, competitors like Alaska Airlines, Spirit Airlines, Allegiant, and JetBlue have entered the fray and mimicked this strategy.

Over the last decade, three distinctive business models have emerged in the US airline industry: (1) global network airlines, (2) hybrid airlines, and (3) ultra low-cost airlines. Southwest Airlines has purposely avoided identifying itself with a specific strategy. Instead, the airline has chosen to persist amplifying its maverick low-fare image.

Southwest Airlines revealed a modern new look

Southwest Airlines revealed a modern new look and logo on Monday. Gary Kelly, Southwest Airlines CEO said, “our collective heartbeat is stronger and healthier than ever, and that’s because of the warmth, the compassion, and the smiles of our People … The Heart emblazoned on our aircraft, and within our new look, symbolizes our commitment that we’ll remain true to our core values as we set our sights on the future.”

Creating a Winning Corporate Strategy: Jack Welch’s 5 Key Strategy Questions

During his adored tenure as Chairman and CEO of General Electric, Jack Welch created a strategy development framework that was implemented across the vast organization. managers across General Electric used the winning corporate strategy model to gauge their businesses and make decisions about where to go next.

'Winning' by Jack Welch, Suzy Welch (ISBN 0060753943) Jack Welch advocated that strategy is not something that should be left to the management and strategy consultants. He called strategy “a living, breathing, totally dynamic game.” In his book “Winning” (with wife Suzy Welch,) Jack Welch declares the key to success is to “pick a general direction and implement like hell.”

For Jack Welch, strategy was a “killer idea” or a “winning value proposition” that can provide any organization a general direction for durable competitive advantage. He described strategy as a living, breathing story about how your organization is going to win. In this pursuit, strategy should be a tool, that is agile and can change over time, but it is not arbitrary or indiscriminate.

Jack Welch's Questions for Strategy Planning

Jack Welch’s Questions for Strategy Planning

'HBR's 10 Must Reads on Strategy ' by Harvard Business Review (ISBN 1422157989) Conceptualizing and developing a successful business strategy lies not in having all the right answers, but rather in asking the right questions. Creating a winning corporate strategy is the process of asking (and answering) the question of what needs to change and why? Jack Welch proposes a rapid, practical questioning procedure to come up with a winning corporate strategy by probing for answers to five key questions:

  1. What does the competitive playing field look like?
  2. What have our competitors been up to lately?
  3. What have we done lately?
  4. What future events or possible changes keep us up at night with worry?
  5. And, given all that, what’s our winning move?

Theme 1: What the Playing Field Looks Like Now

  • Who are the competitors in this business, large and small, new and old?
  • Who has what share, globally and in each market? Where do we fit in?
  • What are the characteristics of this business? Is it commodity or high value or somewhere in between? Is it long cycle or short? Where is it on the growth curve? What are the drivers of profitability?
  • What are the strengths and weaknesses of each competitor? How good are its products? How much does each one spend on R&D? How big is each sales force? How performance-driven is each culture?
  • Who are this business’s main customers, and how do they buy?

Theme 2: What the Competition Has Been Up To

  • What has each competitor done in the past year to change the playing field?
  • Has anyone introduced game-changing new products, new technologies, or a new distribution channel?
  • Are there any new entrants, and what have they been up to in the past year?

Theme 3: What You’ve Been Up To

  • What have you done in the past year to change the competitive playing field?
  • Have you bought a company, introduced a new product, stolen a competitor’s key salesperson, or licensed a new technology from a startup?
  • Have you lost any competitive advantages that you once had—a great salesperson, a special product, a proprietary technology?

Theme 4: What’s Around the Corner?

  • What scares you most in the year ahead—what one or two things could a competitor do to nail you?
  • What new products or technologies could your competitors launch that might change the game?
  • What M&A deals would knock you off your feet?

Theme 5: What’s Your Winning Move?

  • What can you do to change the playing field—is it an acquisition, a new product, globalization?
  • What can you do to make customers stick to you more than ever before and more than to anyone else?

Strategy Questions for Global Competition for Resources and Market-Access

Strategy Questions for Global Competition for Resources and Market-Access

'Playing to Win: How Strategy Really Works ' by A.G. Lafley, Roger L. Martin (ISBN 142218739X) In the context of global completion, both for resources and access to markets, leaders need to identify factors and attributes that will shape the future of globalization. Such a framework should provide guidance to those who will make, influence, and predict decisions about the global economic structure and develop a game plan to succeed in an increasingly global environment. Here are Jack Welch’s five strategy questions modified for the global nature of business.

  1. What does your global competition look like over the next several years?
  2. What have your competitors done in the last three years to upset these global dynamics?
  3. What have you done to them in the last three years to affect those dynamics?
  4. How might your competitor attack you in the future?
  5. What are your plans to leapfrog the competition?

Applying a strategy-development framework can help companies focus their activities and goals in ways that are more efficient and lead to a more powerful approach to growing their business. The framework helps analyze the dynamics of the current line of attack, reveal the forces currently influencing the global competition. The framework works by, in part, by recognizing that the strategy must not only be understood by everyone in the organization, but must be acted on by everyone.

Recommended Reading: Best Books for Strategy Planning

Recommended Reading: Best Books on and by Jack Welch

Strategic Success in Joint Venture Management

Joint Venture Management

A joint venture represents the prospect of two businesses that believe that they can collaborate to accomplish marketplace goals that neither could achieve single-handedly. Joint venture partnerships are essential to how multinational companies can best achieve their global business objectives and improve top-line and bottom-line growths. Alliances and joint ventures provide many benefits, including filling gaps in capabilities or facilitating entry to new markets. Through carefully structured joint venture partnerships and international alliances, businesses can combine mutual strengths and capabilities to gain the benefits of scale that they would be unable to realize without help.

Each company must strive to be exceptional in how it develops, manages, operates, and evaluates joint venture partnerships. Joint ventures frequently go wrong due to neglect of the first stage (development of strategy) and operating implementation. A frequent and detailed joint venture assessment can determine if the company’s partnerships are being operated and managed in a way that provide real value to end customers and the joint venture partners and to determine ongoing improvements to ensure that the joint venture represents a rapid and very effective mechanism for strategic growth.

Doing Business in China

Statements of Joint Venture Management Excellence

  1. The JV partners and the joint venture recognize the needs of the end-customers in order to present tangible business value.
  2. The joint venture partnership is structured and leveraged to generate multiple sources of economic value for each JV partner.
  3. JV partners pay particular attention to the ownership and governance arrangement of the joint venture.
  4. Business objectives, strategies, and processes of the joint venture partnership are aligned with the objectives, strategies, and processes of the respective JV partners.
  5. The support mechanisms and processes of each JV partner that are significant to the success of the joint venture partnership are documented, synchronized and controlled to generate measurable results.
  6. The JV partners set priorities, convey the underlying principle behind them, advocate them even when the outcomes are undefined, and provide the support that the management of the joint venture needs to stand behind those choices as well.
  7. Business and functional leaders of each JV partner offer best practices and capable processes, tools and people to sustain the joint venture partnership.
  8. The joint venture partnership is managed using best practices, processes, tools, and quality standards as established by the JV partners.
  9. Confidential information received or created by the joint venture partnership is defined and maintained in a confined environment.
  10. Regular and consistent communication and flow of information occur within the joint venture partnership and between all parties at numerous levels.
  11. Representatives of the JV partners engage in shared activities that develop mutual trust.
  12. The parties openly define the roles of the JV partners, the Board and operating management of the joint venture partnership, and then they authorize the management and operate according to the agreed definitions.
  13. Managements of cross-border joint venture partnerships consist of a diverse mix of local managers and locally capable expatriates. Companies that survive the experience of doing business in other countries can learn from this experience and develop a distinctive competitive advantage that will serve them well when entering comparable challenging markets around the world.
  14. The right environment within the joint venture partnership is established based on reciprocated trust and shared respect. By understanding the changing nature of business and the potential pitfalls of joint venture partnerships, businesses can collaborate stronger alliances that benefit both JV partners.
  15. JV partnerships operate in conformity with all governmental laws, regulations, environmental standards, and safety standards and with the codes of conduct of the JV partners.
  16. JV partners are treated as customers and favored suppliers. Profitable exploratory actions hold more meaningful lessons for companies than failures do.
  17. Joint venture partnerships use shared problem-solving tools as reciprocally agreed by the partners. Lean manufacturing and other reliable management principles are used to identify and deliver process improvements.

Businesses pursuing joint ventures would do well to contemplate on the lessons of other companies that have engaged in joint ventures to improve the chances of success.

Management Guru Tom Peters on Benchmarking

Management Guru Tom Peters

To grow, companies need to escape of the vicious cycle of competitive benchmarking, replication, imitation that’s so much in vogue today. A company cannot simply be remarkable by following some other remarkable business.

Here is a classic video of Management Guru Tom Peters discussing the pointless exercise of benchmarking:

I hate Benchmarking! Benchmarking is Stupid! Why is it stupid? Because we pick the current industry leader and then we launch a five year program, the goal of which is to be as good as whoever was best five years ago, five years from now. Which to me is not an Olympian aspiration.

Clearly, there is no tangible benefit from attempting to imitate another business that has excelled at something. If a business pursues the leading benchmark, the company will forever be a follower. In addition, the uniqueness of the product or service or process will no longer be as unique once many achieve it.

Successful leaders don’t seek to learn from the “best in class” in their field. They seek to learn from companies outside their field as a way to innovate.

Did you know that AOL Missed an Opportunity to Acquire 20% Stake in Amazon.com?

Opportunity knocks but once. Opportunity offers no benefit to a business that is not prepared to see it, seize it, and use it to gain competitive advantage and financial success. Few companies have shunned more long-term opportunities in the pursuit of myopic strategies than AOL as illustrated by it’s failure to acquire a 20% stake in Amazon.com for half a million dollars!

Before Amazon became a powerful online retailer, AOL had an opportunity to become its most important partner.

AOL America Online For an investment of $500,000, Amazon.com founder and CEO Jeff Bezos offered AOL the opportunity to have Amazon be AOL’s exclusive retailer of books. According to the terms of the offer, AOL would split the revenues from sales of books to AOL members. Further, AOL would have an option to acquire a 20 percent stake in Amazon.com.

That same quarter, Barnes and Noble offered AOL $14 million yearly to be AOL’s exclusive partner in the book category without any prospects for revenue sharing and ownership.

Barnes and Noble’s deal would amount to $14 million of advertising revenue for AOL, while Amazon.com’s offer would amount to a $500,000 investment.

In the lookout for short-term gains, AOL chose the deal from Barnes and Noble. Thus AOL lost a chance at owning a 20 percent share of a company that pursued highly competitive businesses: first books, then electronics, then … you name it—anything retail, to become a retailing giant with an organizational culture obsessed with today’s customer.

'The Business of Happiness: 6 Secrets to Extraordinary Success in Life and Work' by Ted Leonsis with John Buckley (ISBN 1596981148) Source: Ted Leonsis in “The Business of Happiness: 6 Secrets to Extraordinary Success in Life and Work.” Ted Leonsis is the owner of the Washington Capitals and former group president and vice-chairman of AOL. When a plane that Ted Leonsis was on was preparing for an imminent crash landing, Ted he realized he might die unfulfilled and made a promise with God that if he would survive the crash landing, he would improve his life, give back, and pursue happiness. The result of Ted’s efforts are chronicled in this book. The six tenets of happiness identified by Ted Leonsis in his biographical “The Business of Happiness” are (1) life list, (2) multiple communities of interest, (3) finding outlets for self-expression, (4) gratitude, (5) giving back, and (6) higher calling. The core message is that business successes or financial accomplishments don’t necessarily bring happiness, but happiness can bring about business success and financial achievements.

The Worst Business Decision Ever (Hint: Xerox)

What crosses your mind when you think of an archetype of failing to recognize enormous business opportunities and renouncing innovations?

Xerox: The Worst Business Decision Ever

Xerox PARC, now an independent but wholly-owned subsidiary of Xerox, is celebrated for its pioneering technology inventions. It produced the first computer to use the desktop metaphor and mouse-driven graphical user interface (GUI) to let users interact with computers and software. They failed to capitalize on the huge opportunity. Someone else commercialized a large portion of Xerox’s ideas.

Xerox PARC invented the idea of icons, windows-based interfaces and dialogue boxes, point-and-click interfaces, local area networks, WYSIWYG (what you see is what you get) text editor and many other technological innovations that are at present part of the very underpinning of the personal computer industry. Years later, Xerox’s management even acknowledged, “whole companies have been built on inventions born at PARC.”

Xerox Palo Alto Research Center (PARC)

The fundamental flaw lies in Xerox’s strategy. Xerox’s leadership was preoccupied with determining ways to protect its mainstay, the copier business, from impending competition from Japanese companies. Xerox decided that it was a copier company and let go of the business opportunities in its technological invocations, even if PARC’s innovations had significant potential in the future of nascent personal computer industry. Steve Job’s innovation, the Apple Macintosh, borrowed from the work of PARC and created the first successful commercial computer with a graphical user interface.

The other choice that killed a great business opportunity was the decision by IBM that it was a computer company, not a software company. That made possible the rise of Bill Gates’ Microsoft Corporation, which went on to dominate the world of operating systems and applications software.