Keep new products in the pipeline and ‘bearding the lion’ — making the difficult sell

Editor’s note: Mal Mixon, former chairman of Invacare Corporation and a well-known entrepreneur, will regularly share his business advice and experience with Smart Business readers. Ask him a question at [email protected] and your query could be the inspiration for his next column.

Q: I’d like to know your thoughts on the role R&D plays. What is a realistic percentage to spend on R&D? Is there a rule of thumb?

A: There’s no rule of thumb but a lot of the best medically oriented companies will spend around 10 percent. Even 12 percent in some cases is not exceedingly high.

I read an article once about the problems of sustaining R&D. When you are a CEO, frequently the new products you launch were developed with money spent by previous CEOs — because of the timeframe it takes to bring new products to market.

So you are enjoying your previous predecessor’s work. It is easy for the current CEO to cut R&D because these are longer-term dollars. If you are looking for immediate results, cut out your R&D, and it will just increase the profits by, say, 10 percent pretax. But in the long run, it will slow down new product development, and the company probably wouldn’t have the leadership later it enjoys today.

But you always want to offer something new. It generates excitement. As soon as Invacare introduced a new product, we started the design of the next model because everything can be improved. I don’t believe in the old saying that ‘If it ain’t broke, don’t fix it.’ It can be better, lighter, lower-cost, have better functionality and appearance.

When you are developing products, you really want to find the sweet spot where there is the greatest demand for the product. Sometimes an engineer will design a product that is so complicated no one will buy it. Other times the marketing department wants so many features on it that it is too expensive. So you’ve got to get both of them working together and find out what does the customer really want. You think people may pay for this feature but they may not want it.

But the essential thing is that you do have new products in the pipeline and that you do replace products.

Q: You’ve probably seen all types of sales people in your career, and I understand you started your entrepreneurship journey in sales. What’s your advice to achieve successful sales?

A: I was always delighted personally in using my ability to get an order where no one else was able to get one. It’s called ‘bearding the lion in his den’ — in the broad sense, confronting someone on his or her territory … you cut the lion’s beard off without it eating you alive.

You have to be persuasive, and you have to have good reasons for the person to buy from you. You need to be prepared for the call and deal with the reality of the situation. It may be that the person is basing his or her purchasing decisions on wrong information, as is frequently the case.

A lot of people would fear going into a messy situation or calling on a competitive account. But by taking that step, you stimulate your sales organization: if Mal can do that, I think I will try it.

Mal Mixon is the former chairman of Invacare Corporation. A complete story of Mal’s rags-to-riches journey is told in his book, “An American Journey,” published by Smart Business. It can be found at and on







Wal-Mart profit misses Wall Street forecasts as U.S. sales weak

BENTONVILLE, Ark., Thu May 16, 2013 — Wal-Mart Stores Inc.’s quarterly profit just missed Wall Street expectations on Thursday, with sales down 1.4 percent at its Walmart U.S. stores open at least a year.

The world’s largest retailer said U.S. sales suffered from a delay in income tax refund checks, cool weather, less grocery inflation than expected, and the payroll tax increase.
Shares of Wal-Mart fell 2.3 percent in premarket trading to $78. The stock had hit a new high of $79.96 on Wednesday.
Wal-Mart earned $3.78 billion, or $1.14 per share, in the first quarter ended on April 30, up from $3.74 billion, or $1.09 per share, a year earlier.
The analysts’ average forecast was $1.15 per share, according to Thomson Reuters I/B/E/S. In February, Wal-Mart had forecast a profit of $1.11 to $1.16 per share.
First-quarter revenue rose 1 percent to $114.19 billion.
Same-store sales at Walmart U.S. fell 1.4 percent, while the company had earlier expected such sales to be about flat. Visits to Walmart U.S. stores open at least a year fell 1.8 percent, while the average amount spent per visit rose 0.4 percent.
Wal-Mart forecast earnings of $1.22 to $1.27 per share for the current second quarter, up from $1.18 a year earlier.
The company said it expected second-quarter same-store sales, excluding those of fuel, to be flat to up 2 percent at Walmart U.S. and up 1 percent to 3 percent at its Sam’s Club warehouse store chain.

Whole Foods store sales accelerate, shares rise

AUSTIN, Texas, Wed May 8, 2013 — Whole Foods Market Inc. said store sales have rebounded as it expands efforts to lower prices and reach beyond its core of upscale shoppers by adding more locations, and its shares rose more than 8 percent after hours.
The news from the largest U.S. natural and organic grocery chain dispelled concerns that its store sales were slowing due to competition and sluggish U.S. economic growth.
Same-store sales, a key gauge of performance for retailers, rose 6.9 percent for Whole Foods’ fiscal second quarter that ended April 14. So far this quarter, those sales are up 9.4 percent.
“The demand for fresh, healthy foods continues to grow,” John Mackey, co-founder and co-chief executive officer of Whole Foods Market, said in a statement.
About three weeks into the second quarter, Whole Foods had said its same-store sales growth had cooled to 6.4 percent, dampened by winter storm Nemo and a shift in the day of the week of Valentine’s Day. Analysts also attributed the slower growth to the U.S. payroll tax increase that lowered take home pay.
This quarter’s sales results got a 200 basis point boost from Team Member Appreciation Double Discount Day, but still showed the kind of improvement investors were seeking.
“Even though the 9.4 (percent gain) is more like a 7.4 (percent gain), it’s still a pick up,” BB&T Capital Markets analyst Andy Wolf said.

Ravi Kathuria: An elephant-sized issue — How to realize that realigning perspectives is a key to departmental teamwork

Ravi Kathuria

Ravi Kathuria

Have you read the ancient Indian story about the elephant and the six men? The story holds an important lesson for organizations.

In the story, six friends blindfold themselves and play a game where they try to identify objects they come across. As they venture out, they come across an elephant. As the story goes, none of them had seen an elephant before. Each one of them proceeds to feel different parts of the elephant.

After careful analysis, the first man declares the object is a large drum. He was touching the elephant’s stomach. The second man objects vociferously. It is a rope, he asserts as he feels the tail. The others vigorously forward their assessments: the trunk of a tree, a fan or a curved stick.

Finally, when they cannot agree on their assessments, they take off their blindfolds to discover that the object they were envisioning and the real object are starkly different. While their individual assessments were based on valid information gathering and analysis, they realize they could not have been more wrong.

Different points of view

The different teams and departments in a company more often than not act like the six blindfolded men. They view the company and the issues it faces from their distinct perspectives, which leads to different assessments of what is important or what is urgent and, unfortunately, sometimes a lack of respect for the viewpoints and capabilities of the other teams.

For instance, in many companies, sales and operations departments do not share a high opinion of each other. The operations team may feel the sales team makes unrealistic promises to customers. The sales team, on the other hand, may feel the operations team is unable to deliver the quality and timely performance necessary to thrive in the marketplace.

The issues exist at all touch points and involve all the teams. While teams have their heart in the right place and want to contribute, they are caught up in their way of thinking and fail to see the big picture. Their hard-nosed assessments do more harm than good.

Re-engineering and realigning perspectives

As a leader, you must recognize the severity of the problem and address the issue diligently. Ensuring that your teams develop a broader perspective and solve problems from a company perspective rather than a departmental perspective is a crucial component of your job.

Changing the perspectives of successful departmental leaders who have a good measure of self-esteem (read it as ego) is an excruciating task. To encourage a company perspective, invest heavily in cross-functional, companywide initiatives. For instance, develop, crystallize and propagate a detailed and meaningful mission to unite the teams. A strong mission would serve as a higher purpose than individual departmental interests and concerns.

Emphasize improvement and performance themes that are cross-functional in nature and scope. Hoping that the teams will just rally around companywide goals is not a good strategy. Generate a vigorous discussion with all the teams present so they can appreciate the goals and develop joint ways of achieving them.

For example, achieving revenue goals cannot be the sole responsibility of the sales department. If it is perceived that way, the probability of success is lower.

Similarly, efficiency cannot be a goal of the operations team alone. All the other teams, from sales to customer service, HR, IT and accounting have to understand and respect the value of operational efficiency and provide their full support, ideas and active cooperation and contribution.

Help your team members recognize and appreciate the elephant so they are not lost in their individual parts. ●

Quoted in The Wall Street Journal, Barron’s and WorldNews, Ravi Kathuria is a recognized thought leader. Featured on the “BusinessMakers” show, CBS Radio, and “Nightly Business Report,” he is the author of the highly acclaimed book, “How Cohesive is Your Company?: A Leadership Parable.” Kathuria is the president of Cohegic Corporation, a management consulting, executive and sales coaching firm, and president of the Houston Strategy Forum. Reach him at (281) 403-0250 or [email protected].

Chrysler posts best February U.S. sales in five years

DETROIT, Fri Mar 1, 2013 — Chrysler Group LLC said Friday its U.S. sales of 139,015 in February rose 4 percent from 133,521 a year before and were its best February sales in five years.

The sales tally barely missed the consensus estimate of 140,159 from analysts surveyed by Thomson Reuters.

The automaker, majority owned by Fiat SpA, said sales of the Dodge, Ram Truck and Fiat brands posted year-to-year increases, while the Chrysler and Jeep brands saw declines from a year before.

Chrysler is the first of the major automakers to report February sales.

Industry sales in February were expected to show a fourth straight month of seasonally adjusted annualized sales above 15 million vehicles, for the first time since early 2008, a sign of a sustained recovery after the recession.

At Chrysler, Dodge brand sales in February rose 30 percent to 55,639. Ram Truck sales were up 2 percent to 23,827 and Fiat 500 sales were up 2 percent to 3,302.

Jeep brand sales fell 16 percent to 31,164 and Chrysler brand sales dropped 7 percent to 25,083.

Chrysler said some Jeep vehicles have been in short supply, with the discontinuation of the Liberty last summer and the recent launch of the 2014 Grand Cherokee.

Jerry McLaughlin: Live outside the box

Jerry McLaughlin

Jerry McLaughlin, CEO,

Most business leaders want to greatly improve customer loyalty, and I am no different.

To drive loyalty to my promotional products business, we have tried all the usual means — low prices, free shipping, membership club benefits, discounts and exclusive product offers.

Once, we even tried sending a vase of fresh flowers after each order. None of these initiatives resulted in the dramatic improvement that we sought. Over the years, we have engaged a series of expert consultants to find even more ideas to try. But in our business, customer loyalty remains a tough nut to crack.

The pharmaceutical giant Eli Lilly & Co. struggled with similar obstacles when it came to problem-solving in their business. Many were scientific, and — even though Eli Lilly’s substantial R&D group is staffed with talented technical experts — some problems resisted a solution for years. However, the company did invent a way to solve some of its problems quickly and cheaply.

Use expert advice — of others

Here is the gist of it: Eli Lilly discovered that it could solve a lot of the most intractable problems by giving them to experts from other fields. Simple? Yes. Counterintuitive? Yes. The surprise is that it seems to work.

The company put together an online network of thousands of scientists from other disciplines and “broadcast” their brain-stumping challenges to these experts from other fields. In many cases, the experts solved the problems by simply drawing on knowledge common in their own areas and applying it to Eli Lilly’s dilemma.

Eli Lilly’s scientists, we may presume, know just about all there is to know in their respective fields of expertise. Likewise, in my company, our experts know just about all there is to know about the industry, our products, our customers, competitors and so on. When the subject-matter experts can’t solve a problem, you need to cast a much wider net. If the specialists are stumped, then a solution, if found at all, will come from people outside the field.

Modify your individual process, if needed

Today, our company is using a version of Eli Lilly’s method in our business, which other organizations might also use to address their toughest problems. I didn’t have the time or means to put together a large team of experts from outside disciplines to work on my company’s challenges. So we use a modified Eli Lilly approach: We deliberately, routinely expose our in-house experts to nontraditional experiences and knowledge.

The idea is to see whether we can find our own answers by investing to acquire experiences outside those we normally encounter. In recent months, this new approach has involved my participation in a variety of eye-opening situations, including a meeting with the Cavalia producers, lots of museum visits, a guided tour of London graffiti and a design school workshop at Stanford University. On a personal level, I’m trying much harder to add new concepts and idea possibilities to my thinking.

I don’t know whether we’ll crack the customer loyalty problem in this way, but I can tell you that the ideas we discuss now are fresher than those we used to generate. That’s why my prescription for increasing the likelihood of solving the toughest problems is this: Live outside the box.

Jerry McLaughlin is CEO of, the world’s largest and lowest-priced online promotional products company. McLaughlin can be reached at [email protected]



Lockheed sees higher earnings, weaker sales for 2013

BETHESDA, Md., Thu Jan 24, 2013 — Lockheed Martin Corp., the Pentagon’s biggest supplier, said on Thursday that it expected higher earnings this year despite weakening sales, citing a record backlog and continued efforts to cut costs.

Lockheed, which builds everything from F-35 fighter jets, national security satellites to new coastal warships, said earnings per share had dropped 19 percent to $1.73 in the fourth quarter from $2.14 a year earlier, reflecting a large noncash pension adjustment, higher income tax expenses and a special charge for job cuts in its aeronautics division.

Analysts polled by Thomson Reuters I/B/E/S had expected fourth-quarter earnings of $1.82 a share.

Lockheed said it expected earnings per share to rise to between $8.80 and $9.10 in 2013, noting that its outlook assumed that the U.S. Congress would avert $500 billion in additional Pentagon spending reductions known as “sequestration” that are due to take effect over the next decade, starting in March.

Chain store sales point to a hit from tax hike

WASHINGTON, Wed Jan 23, 2013 — A slowdown in sales growth at many big U.S. retailers suggests a clutch of tax hikes enacted this month is already leading consumers to hold back on spending, putting a brake on economic growth.

Sales growth has cooled for three straight weeks when measured from a year earlier in the Johnson Redbook Retail Sales Index, data showed on Wednesday.

Similarly, the ICSC U.S. retail chain store sales index, which is the other major weekly barometer of retail spending, has showed weakening of growth in the last two weeks.

“We can very tentatively say that these numbers look consistent with our view that the increase in taxes at the start of 2013 led to a slowdown in consumer spending,” said Daniel Silver, an economist at JPMorgan in New York.

Washington this month raised taxes on most Americans.

The brunt of the tax hike came from the expiration of a temporary payroll tax cut. That cut — a 2 percentage point reduction in a levy that funds Social Security — was put in place two years ago to help the economy, which was still smarting from the 2007-09 recession.

About 160 million workers pay this tax, and the increase will cost the average worker about $700 a year, according to the Tax Policy Center, a Washington think tank.

Congress and President Barack Obama also allowed income tax rates to rise this month for households making more than $450,000 a year, a partial repeal of tax cuts put in place under President George W. Bush. The wealthy will also pay a new tax to help fund a health insurance reform passed in 2010.

These will have a smaller impact on the wider economy because they affect fewer people. But taken together, this year’s tax hikes could subtract a full percentage point from growth, JPMorgan estimates.

Some economic data appears to be bearing out economists’ predictions.

Compared to the same week one year earlier, the Redbook index rose 1.8 percent in the week ending Jan. 19, down from 1.9 percent in the Jan. 12 week and 2.1 percent in the Jan. 5 week. Sales were up 2.9 percent in the Dec. 29 week from a year earlier.


Boeing books 47 net new plane orders in latest week

CHICAGO — Boeing Co. said it booked 50 new orders for planes in the latest week, including orders for 31 of its wide body 777 jets, worth about $9 billion at list prices.

Customers also canceled orders for three planes – one 747, one 777 and one 787 — bringing the net increase in orders to 47 for the week. So far this year, Boeing has booked net orders for 1,115 planes.

The 50 new orders include four 767s for FedEx Corp., one 777 for the Republic of Iraq, and 15 737s and 30 777s for customers that Boeing did not identify.

The company did not say which customers had canceled orders.

How Experian found a place to grow in Allen

When Experian arrived in Allen, Texas in 1993, the city was “at the end of U.S. 75 and just starting as a community,” says Russell Tieman, vice president of facilities and administration.

The consumer credit services company has grown along with the city, and last year signed a lease extension to stay through 2025. That came on the heels of a 2010 agreement with the Allen Economic Development Corporation to invest $30 million in facilities in return for incentives totaling $1.5 million over 10 years. As part of the agreement, Experian plans to add 300 employees to boost its workforce in Allen to 1,000, with most being part of the national assistance call center or global technology services team.

“We have a great relationship with the city, and there’s a great, highly educated labor force here,” says Tieman.

Smart Business spoke with Tieman about Experian’s investment and what makes Allen a good location for its business.

What makes Allen a good location?

When Experian originally moved to Allen, there was nothing here. Since then, there’s been so much commercial and retail growth, as well as new housing. It’s been an up and growing suburban community, and Experian tends to be in locations outside of central business districts. For example, the company headquarters is in Costa Mesa, Calif., as opposed to a downtown area. Allen and the surrounding communities have good, safe neighborhoods and an excellent labor force. Quality of life is important and you want to limit commutes.

Did Experian consider other locations before renewing its lease?

Yes, but we conducted an analysis and it made more sense to stay. It was challenging to remodel an occupied space instead of building new. But, although we tested the local real estate market, we never considered looking outside of Allen. In the end, we chose to stay because of our long-standing relationship with the city of Allen and the deal we negotiated with our landlord.

What impact did the Allen Economic Development Corporation have on that decision?

They assisted as much with their customer service as the incentives that they offered. It’s very competitive among local economic development groups in Texas, and Allen works hard to keep and attract companies. They are really great to work with — the whole city, not just the economic development team.

What was involved in the $30 million investment made by Experian?

About $20 million has been put into remodeling in the past few years, with at least $10 million more going toward equipment and other assets. The space was originally built in 1993 with cubicles that had very high walls, and it was very dark and chopped up. The work plan is more colorful and energetic, and builds collaboration. There is a lot of meeting space, video conferencing, game rooms, TV rooms, quiet rooms and amenities that would not have been thought of in 1993. We had been working in a space based on 1993 technology and it was time to invest in the property.

There was surplus space, and the space that was being used is far more efficient with the remodel. The final phase of the second floor was recently finished and received all sorts of accolades. Employees who had worked in the old design have been saying, ‘This is fantastic.’

Would you recommend Allen to companies looking to relocate?

Absolutely, it’s a great community. The Allen Economic Development Corporation is a great group to work with and very helpful. That help would probably be even more beneficial to a company that didn’t already have experience in Allen. Any company should look at the North Dallas metroplex area, particularly Allen.

Russell Tieman is a vice president of facilities and administration at Experian. Reach him at (714) 612-0597 or [email protected]

Reach the Allen Economic Development Corporation at or call (972) 727-0250.

Insights Economic Development is brought to you by Allen Economic Development Corporation