Corporate Social Responsibility

Corporate Social Responsibility. CSR. I wish there was a better term for it.

CSR means to look past profit in the short run.

CSR means to put the interests of customers, shareholders, environment and other stakeholders in the business strategy.

Years ago I knew a man who ran a charter airplane business with one airplane. He was the pilot. This man was one of the most miserable and unhappy people I have ever known. He would frequently do things like beckon with his fingers towards himself and in a solemn manner say "Money coming this way. That's what it's all about." He was a bit extreme or was he?

A common philosophy has been:

"Get all you can, can all you get, sit on the lid, poison the rest."

CSR, or a better term if you can think of one, is a way of making more money by making it not just for yourself but for others at the same time. Resources are better used.

CSR is a basic of anything that is sustainable in the long run. A Cowboy Safety plan measures the use of all resources, in money terms and in some exciting new non-money terms. It also measures value created for society at large.

If I had to pick the opposite of CSR it might be Creative Destruction. Originally this was a word from Marxism. Then later it began to refer to things like downsizing. In today's economy I think it is evolving into the destruction of businesses that become obsolete due to inefficiencies. Inefficiencies that come from a totally selfish make all you can now approach.

CSR is becoming the standard even when the term is not used as such.

David Sneed

Simplicity is Better

The comic strip Pearls Before Swine today is about safety. There are eight valid safety rules that are presented. In the last frame the mouse says "I've never been so afraid of a toaster."

Do these rules really make a difference?

Several weeks ago at Yosemite National Park, three people in their 20s, not under the influence of alcohol or drugs, in the presence of about 100 others in their group, ignored the signs and the barriers, fell into the water and were swept over the falls to their death. Some are calling for more signs and barriers. The usual response to any incident is that the victims were not at fault. That attitude is why safety costs escalate.

At Vedauwoo near Laramie Wyoming there is a simple sign that basically says that if you want to climb the rocks go ahead but you could get hurt or killed. There is really no need to talk about personal protective equipment (PPE), training, classification of skills needed on each rock, guards, guides, or whatever.

David Sneed

Why Johnny Depp May Not Play the Part of Tonto

Walt Disney Studios has shut down production of The Lone Ranger that was due to have Johnny Depp as Tonto. The reason given is that if the Directors cannot cut the budget to $200 million from $250 million, Disney would rather limit its risk with fewer movies.

Movies, like farms, can be high on fixed costs. Fixed costs are incurred even if no one ever sees the film. A farm has a large fixed cost even if nothing is ever planted. Every venture has some amount of fixed costs. Risk is minimized by keeping the fixed cost as low as possible.

That fixed cost has to be amortized over time from the margin on revenues from sale of products and services.

Margin is the total sale less the direct costs of making that sale. In the grocery business the margin on a can of beans is the sale price minus what it cost to buy the can of beans wholesale. In the movie business the margin for the studio is whatever percentage it gets of the ticket price. Sometimes it is most of it. The theaters have to make it on popcorn.

The point at which the fixed costs equals the total margin is the break-even point.

After the break-even point is reached all of the margin is profit.

Is Disney concerned about margins? The Lone Ranger was due to be released in December of 2012. Does Disney have a concern about ticket sales in the future?

There is some belief that there are some structural issues in the economy that will affect margins. For many years the major factor affecting margin has been competition. There are new unknowns about cost of money, inflation, labor, commodities and taxes. Mandatory health insurance will soon be a factor.

It is true that in the long run all costs are variable and that in the very short run all costs are fixed. The new economy is making us rethink everything we have ever known. Is it better to be in a low margin venture with low fixed costs or a high margin venture with high fixed costs and bear the risk of not getting high margins?

There are tremendous opportunities today to minimize fixed costs and at the same time to have high margins with minimal risk. The ability to do just that has become a competitive advantage.

A Cowboy Safety business is open to understanding how this can be done.

David Sneed

Gordon Stoker and Tony Bennett Have Birthdays Today

Yesterday, August 3, Gordon Stoker was 87 and Tony Bennett 85. Always looking for irony I noted the difference in these two singers. I mentioned it at a meeting where the ages of the attendees ranged from 12 to 89. The young folks knew nothing about either of these men. The older ones needed a reminder about Gordon Stoker and his quartet the Jordanaires.

Tony Bennett, "I Left My Heart in San Francisco," is a well known singer. He is known for a distinct style that is not easy to duplicate. Using business terms, he is known for delivery of a consistent product experience that appeals to a certain demographic.

What is perhaps not so well known is that Gordon Stoker has at least 100 times as many recordings as Bennet and many more personal appearances. At one point in the 1960s Stoker and his Jordanaires were on 80 of the then current top 100 record singles.

Because my focus is on how to function in the new economy I spotted something here.

Jerry Garcia once said "Don't be the best at what you do. Be the only one who does what you do." I have always interpreted that as being the best in a unique way. Maybe that interpretation is too narrow.

Gordon Stoker and his male quartet the Jordanaires had started as a country gospel group. There were many such groups at that time. All were good though perhaps not "world class" quality. The market was becoming saturated with gospel singers, records and performances. Market share of any one singer or group was small.

The Jordanaires became backup for many "stars" over 45 years. They were with Elvis Presley during his most important first 14 years. When  Elvis began nightly performances in Las Vegas the Jordanaires could not meet the required schedule and still have diversity.

In one way of looking at it Gordon Stoker and the Jordanaires became unique in not aiming to become known for themselves and by diversifying inside of backup music. They did not have to incur large marketing costs.

In today's meta markets the Jordanaires business model is a good model.

David Sneed

Appropriate Technology - Part 1

I think it was Arthur C Clarke who said "Any sufficiently advanced technology is indistinguishable from magic."

By all means use whatever technology is appropriate to meet the customer need for a product or a service and to meet the desire for an experience.

I have hiked the Samaria Gorge on the island of Crete. The first mile is a switchback drop of about 4,500 feet. There there is a 10 mile walk through the bed of an extinct river and through a gorge that at the end is only 6 feet wide. Even starting early the path can become quite hot from the sun near the end.  Part way into town there is a small not so modern roadhouse that served cold beer. Not warm beer. Not cool beer. COLD beer. Why should that be such a problem in other places? The technology is fairly simple and has been around for a long time. No need for fancy taps, or lights or tvs or anything else. At that point everyone wants a cold beer. They get it.

Cowboy Safety developed during a time of shortages, no electricity, and the absence of many things. It became a way of meeting needs with whatever was at hand. Technology may have been crude but there was an application to meet every need.

In part two we will get into more detail about "appropriate technology" as distinguished from "technology."

David Sneed

Goal Setting in Sustainable Safe Business

This is an old piece that summarizes goal-setting and faith in a sustainable safe business.

"I bargained with Life for a penny,
And Life would pay no more.
However I begged at evening
When I counted my scanty store.
For Life is a just employer,
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task.
I worked or a menial's hire,
Only to learn, dismayed,
That any wage I had asked if Life,
Life would have willingly paid."

Author unknown