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If you’re like me, you
love road trips. And, if you’re like
most everyone, you appreciate hearing a good story.
Just imagine how intriguing it would be to
hear stories about six road trips. Six
road trips across the U.S. that produced dozens of stories about what local
small businesses on Main Street’s across America do that can inspire big
businesses on Wall Street – or Madison Avenue megabrands, or enterprise of any
size -- in today’s economy.
Well, that’s exactly what
you get when you read the new book, Roadside MBA: Back Road Lessons for Entrepreneurs,Executives and Small Business Owners.
- You’ll read those dozens of stories captured by three information-hungry economist/b-school professor buddies who traveled Memphis, TN to Omaha, NE; Charlotte, NC to Atlanta, GA; Chicago, IL to Cincinnati, OH, and so on.
Applying economic
reasoning to the strategic questions that challenge any business, the authors
reveal what real American small businesses can teach us beyond the bounds of
most MBA programs or curriculum.
The stories are grouped by lesson topics:
- Scaling a Business
- Establishing Barriers to Entry
- Product Differentiation
- Setting Prices
- Managing Your Brand
- Negotiating Effectively
- Hiring
- Delegation
- Battling the Big Boys
- Strategy is a Continuous Process
Mike Mazzeo
This week, coauthor,
Mike Mazzeo shared more insights about his book, and the journeys he shared
with coauthors Paul Oyer and Scott Schaefer:
1. What surprises
about small business did you learn during your road trips?
Mazzeo: We were continually
surprised by the creative strategies that small businesses had developed to
compete better in their markets. While most of the owners did not have
formal business education, they had internalized many of the key frameworks
that we teach to MBA students and made them work for their companies.
A great example was
Panhandle Converter Recycling, a company that we met with in Dothan, AL. The business extracts the precious metals from junked catalytic
converters -- going into our interview we expected a straightforward story
about buying, processing and reselling. Instead, we learned that
catalytic converters come in all shapes and sizes and it is impossible to know
-- without cracking it open -- how valuable the precious metals inside might
be. Panhandle developed its strategy around dealing with this
uncertainty. They kept detailed information on the contents of converters
they had processed in the past and turned this data into a system to ensure
they never paid junk dealers more than the value of the metals that they could
extract. We never expected that data analysis would be the key to success
for such a company.
2. What are the
two or three most common themes you heard during your road trips?
Mazzeo: One recurring theme was
about growth and scaling. For the small businesses we met with, growth
was a nearly universal aspiration. But growth was easier for some
businesses and more difficult for others. In large part, prospects for
growth were rooted in the fundamental economics of the business. We met
with a company in North Carolina -- Steele Rubber Products, Inc. -- that
produces replacement rubber parts used by collectors when they are restoring classic
automobiles. These rubber pieces are produced from a mold, so once the
company has fashioned the mold (which can be quite expensive) the costs for
making each part for sale is quite low. This is the kind of business that
is set up well for growth, because you don't have to keep making investments
and incurring expenses to sell more.
Another theme for small
business was how to think about strategy when competing against larger
companies -- we called it "Battling the Big Boys." These larger
companies have built in advantages like scale and marketing efficiencies; it is
crucial for a small business to build its strategy around things the "Big
Boys" aren't able to do well. In Spartanburg, SC we met
with Sims Bouwmeester who started a small PR/marketing company whose
competitors were large advertising agencies. These agencies typically
worked on big, multi-year retainers and weren't flexible enough to do smaller
jobs. Taking advantage of this weakness, Sims built her business around
being "project-based" and was willing to take on even the smallest of
contracts. In her first year in business, she had served over 100
different clients -- many of which wound up giving her more work later.
3. Do you think
you missed some valuable stories by having not traveled to Texas and all but
one place in California?
Mazzeo: There were great stories
to be found all over the country, so we certainly missed some in the parts of
the U.S. we haven't made it to yet. But, we aren't done taking road trips
-- in May of this year, we visited businesses in California and Arizona.
Texas is definitely on the list for future trips, as well as North Dakota.
4. What lessons did
you learn about people during your road trips?
Mazzeo: One interesting thing
that we learned was the successful small business owners are invariably great
story tellers. This isn't surprising, when you think about it -- to be
successful, you need to tell the story of your business to customers, to
bankers, to employees, just to name a few. We loved listening to the stories
about how these businesses got started and how their owners met the challenges
that they faced.
5. What lessons
did you believe were more prevalent during your trips that would have not
existed or been less existent prior to the economy's downturn in 2008/2009?
Mazzeo: As we traveled around the
country, we saw that different businesses were touched by the downturn very
differently. The downturn certainly made the business owners more careful
but it didn't dampen their optimism. And, you need that kind of optimism
to run a small business successfully because it is an uncertain endeavor even
in the best of economic times.
Thanks to the authors for sending me an advance copy of the book.
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