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September 9, 2013 Biz Books

Crises, disruption offer business opportunity

“Hardheaded & Softhearted: Lessons from the Boardroom to the Break Room: by Rick Belluzzo and Krish Dhanam (Brown Books Publishing Group, $19.95).

Running a successful business requires IQ and EQ (emotional intelligence) because decisions impact people. Early in his management career, Belluzzo learned that lesson the hard way. He overpromised a Japanese supplier and when he humbly renegotiated, the supplier also insisted Belluzzo apologize to its workers. He found himself “accepting failure” in front of thousands of factory workers whose livelihood and community he had jeopardized.

Dhanam learned an EQ lesson from motivational guru Zig Ziglar early on, too: “Complimenting someone for a role in your success should not be hard.” You can never say “thank you” enough. “Recognition fuels motivation, and reward propels achievement.”

With a business world where change is the new normal, you need EQ and IQ to prosper. While disruption may be “the mother of opportunity,” it also creates people problems because many don’t like to do things differently, or do different things. EQ allows you to find ways to sell change that’s imposed from the outside. IQ helps you foster change from within by encouraging nontraditional ideas and challenging conventional wisdom.

Often change comes in the form of crisis when action occurs where IQ and EQ intersect (i.e. things need to be done and people are on edge). When crisis hits, companies often respond by belt tightening and hunkering down. Bad idea; as management guru Tom Peters states: “You can’t shrink your way to greatness.” The authors believe: “A good crisis is a terrible opportunity to waste.”

To capitalize on crisis, answer three questions: 1. “What can you do to take advantage of disruptions if you have no limitations?” The answer helps you identify possibilities. 2. “What are the barriers that keep you from acting?” While some are tangible (i.e. money, skills), fear of failure is emotional. 3. “Are the barriers really insurmountable?” Think about how you can remove them and who and what you’ll need to achieve.

Key takeaway: “We are free up to the moment of choice, and then the choice controls the user.” Choose wisely.

• • •

“Mission in a Bottle: The Honest Guide to Doing Business Differently — and Succeeding” by Seth Goldman and Barry Nalebuff (Crown Business, $23).

Graphic novel meets business book in this story of Honest Tea, a Maryland-based organic drink maker. The company’s co-founders, Nalebuff, a Yale management professor, and Goldman, Nalebuff’s student, brewed up an idea 15 years ago — organic, freshly-brewed, lightly-sweetened bottled tea.

Both were clueless about the beverage industry — especially why it hadn’t thought of selling real tea. They figured that out: The beverage makers were competing in a well-defined market they developed. “Big companies are designed to protect the mother ship.” That ship generated profits that could be cannibalized by another in-house brand.

Honest Tea was different; it was targeting an undefined market that it would develop. A daunting task because “traditional market research doesn’t work well when creating a new category.” Goldman and Nalebuff believed — and persevered.

They made mistakes — like the bottling plant. They thought owning a bottling plant would help them control costs, and when iced tea was out of season, it could produce beverages for other companies. The operative word was thought. The plant they bought was a cash-burning machine; the changeover to other companies’ bottles and labels burned more cash. It cost them more than $1 million to get out from under. Where’d they get the cash? An investor took an equity stake (i.e. diluted their ownership).

To get Honest Tea to the next level, the production and distribution networks needed to expand. Serendipitously, the fledgling market showed potential and Big Beverage took notice. A deal with Coca-Cola provided the needed funds.

Goldman and Nalebuff readily give credit for success to their employees who shared their passion for Honest Tea.

Jim Pawlak is a nationally syndicated book reviewer.

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