Apple Watch = Must Have for 2015

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The reviews are creeping out. The Wall Street Journal, Forbes, and CNET have all spent some time with the device. Their voices are a mixed bag of nerdery. Techie gals criticizing the clumsy computerized fashion mash-up. Fashionistas wondering when such practicality has been packaged so well. Regardless of where you or your favorite reviewer land, the Apple Watch will be THE MUST HAVE for 2015.

The average U.S. man has 5 watches. #Metrosexual

The average U.S. man has 5 watches. #Metrosexual

Some detractors wonder out loud “Who’s going to want another watch, nonetheless one that costs triple the price?” But the market is already there. Wrists are yearning to be gauged on their health and appearance.  Did you know that 3.3 million fitness bands and activity trackers have been sold between April 2013 and March 2014 in the U.S.? The Fossil Group, Inc., which operates over 10 global timepiece brands across a variety of price spectrums, sold $1.5 billion in watches in 2014. The wristwatch market is STRONG as Bloomberg reported in February that the average male U.S. consumer owns 5 watches.

Detractors will point out that the Apple Watch isn’t a stand-alone product, but rather a pricey accessory requiring the newest iOS mobile operating system. How limiting of a factor might that be? As of October 2014 Apple has sold over 105 million iPhone 5’s, and as of Q1 2015 Apple sold over 74 millions iPhone 6’s. That’s a large customer base, and it’s growing at a pretty aggressive rate with deeper cellular discounts and 0% finance programs to facilitate upgrading and first-time client acquisition. “Who’s going to want another watch, nonetheless one that costs triple the price?” Apple customers. That’s who.

It’s the most customizable watch, or computerized device, EVER. From a watch perspective, brands like Michele and Fossil have offered customization in a variety of bands and metals. None of these brands offer the multiples of customizable variations that the Apple Watch and its small retina-raving face will promise. Can you imagine the visual capabilities the Apple Watch customer will have once the third party venders check in with a new phalanx of covers, bands, and apps for deeper customization of the product? “Who’s going to want another watch, nonetheless one that costs triple the price?” Another watch? It’s all of the watches you planned on buying in the future wrapped into a 42mm case. Take the cumulative cost of those five watches the average U.S. metrosexual owns, toss in a FitBit or two, and you’ll most likely arrive between $500 to $1,200 (unless you have premium Tag Heaer taste). It’s easy to conclude that the Apple Watch brings great value as a complete substitute.

Some critics seem obsessed with the reality that Apple will release future iterations of the device, and this truth is waved in your face  while demanding you wait for the Apple Watch 2 and it’s ignorantly assumed enhancements. Don’t soil your bell-bottoms when I tell you this, but obsolescence exists in the world of fashion and those trends can move just as quickly as shifts within the tech sector. Not wearing your “Don’t Tase Me Bro” t-shirt anymore? The Apple Watch will be as durable to natural shifts in trends and technical abilities or limitations as ANYTHING ELSE you already buy over-and-over again as the seasons zing by.

I believe it was 2010, weeks prior to the launch of the first iPad, that I heard critics declare “Who’s going to want a large iPhone that doesn’t take calls?”
Me and my hundreds of millions of minions.

Holiday Lay-Offs, How to do the Unthinkable

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The holiday season’s focus is dominated by positive distractions, but once in a while you may find yourself grappling with the crushing reality of corporate layoffs at the end of the calendar year. If you care about your organization and employees, even when layoffs are the right or only thing to do, we hear our inner voices asking ethical and operational questions. The experienced manager will handle “poorly timed” layoffs with the mature calm of a professional voice-over actor describing the hunt of a leopard chasing down a deer. For the less experienced, they will feel like a deer wearing a leopard costume. Here’s my “How To” guide for making a tough situation a teaching moment, a barometer for talent, and less painful for all involved.

Team Alignment

Our careers take us down all sorts of unexpected paths, and it’s common to have managers in the world of business who have degrees in Art, History, and Sports Therapy. These talents have never had the themes of “Shareholder Wealth” pounded into their thought process and might struggle with strategy and tactics designed for this role. As their leader, this is your responsibility to make sure they understand this bedrock of corporate management. Additionally, if we can directly connect layoffs to the benefits of customers, we should do that too. Either way these conversations need to be had behind closed doors while in front of the team. Get everyone’s fears and misconceptions out in the open. Once everyone is on the same page they will be mentally ready to digest the next steps.

Practice the Conversation

How do you breakup with someone who loves you? You interviewed them, hired them, trained them, they stayed late for you, and they helped you achieve personal and professional goals. You like their personality. Crap. YOU REALLY CARE ABOUT THEM! Dare I say, love them? These conversations need to be practiced with a script of bullet points explaining “Why” this is happening and “What” is happening next. The conversation, as painful as it can be (sometimes), must be professionally respectful and brief. Work with leadership or a human resources teammate to develop talking points, but practice delivering the news out loud. Your shaky voice will benefit from saying the words and getting more comfortable with this new reality.

Team Support

You should be able to gauge where managers stand on the spectrum of comfort during the prior two steps. Once you have identified the managers who are really affected by having to deliver this news, support them by conducting a few of these conversations along-side them. Intuitively decide how much of the dialogue should be shared based on physical cues (damp eyes, twitching hands, pale face, etc.). Take control of the conversation if it goes off the rails. Afterwards, take a moment to review what just happened; identify how the manager feels, calm them down, and ask them how they could have improved. Praise their efforts and gently make suggestions to help the receiver of the message. This is actually a very calming exercise that refocuses both of you for the next conversation.

Team Review

A day of this can be emotionally draining. It’s not rare for the remaining employees to go grab a drink at a nearby bar with those same victims of the circle of business. Sometimes managers will slink away from their desk to have a private moment in their car. Before everyone goes in separate directions it’s important to collectively depressurize by reviewing what just happened. In a team review you should ask out loud:

  • How did it go?
  • What conversations were hardest?
  • How are you all feeling?
  • Leader: Express your gratitude
  • Does anyone need to talk one-on-one after this?

These questions will most likely sterilize the raw emotion of the moment, and allow people to find a healthy perspective to grieve towards (including leveraging internal resources for help).

Guilt Management

In this digital age résumés share the spotlight with LinkedIn endorsements and public recommendations. If you really do care about these people there are more options than ever to help them find the next opportunity or connect with people who can do likewise. Although some companies have strict human resources policies regarding employment verification processes that ask about employee performance, you still have a right to do what’s best for yourself. Just like a company.

P.S. – I’ve had my fair share of corporate Holiday lows. This scene always makes me laugh. No matter what side of the conversation you’re on, hang in there! There’s a lot of opportunity out there for you in this amazing country.

Sneakerheads or Science? The Footlocker Billion Dollar Formula!

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The mens athletic footwear industry is experiencing a period of strong and rapid growth as men expand their wardrobe with a variety of colors to satisfy the trendiest metrosexual, and collectors scoop up limited edition designs and “retro” styles for personal storage or resale on eBay. But how did we get here?

Footlocker shared its latest business results this past May by announcing to shareholders that sales improved 14% to $1.87 billion, bolstered by a same store sales jump of 7.6% (a huge metric in retail). Is this just a bunch of Sneakerheads gobbling up all of the goods? NO! It is retail science at its finest.

Let’s take a look at some of the strategies used by Footlocker to glamorize and accessorize their in-store experience and products. The most noticeable tactic is what I call the “Museum-ication” of the product. When you walk into a Footlocker store you are immediately greeted by new styles under glass. Think of the Hope Diamond at the Smithsonian, under glass and highlighted by just the right lighting. That’s what we’ve got here. Talk about creating value. It’s a beautiful way to celebrate the product’s excitement factor, whether it be a brand new product or a limited edition product.

Glamorous Footwear

The next tactic is what I call “The Mannequin.” Not all men have the patience or skill to piece together a trendy outfit featuring a theme from head to toe. Footlocker aims to make this process a lot easier for all customers. A gentlemen looking to spruce up his gear can walk into Footlocker and simply buy “The Mannequin”, a preassembled option of outfits centered around a specific sneaker’s design cues. The boost in sales results isn’t just due to a handful of t-shirts, as they have a TON of clothing options. These options are brand specific, so the Nike shirt matches the exact pattern in the Nike shoe. It’s a fashion alley-lop that results in fast-break cross-sell momentum.

Matching Display

The final tactic I will highlight is what I call “Showtime.” This is the use of lighting to create more excitement and value. Typically, when I think of lighting techniques I think top-down, from the ceiling. But this technique leverages the reverse, bottom-up lighting, to make the product pop off of the shelves. The shelf is broadway and the lighting celebrates the star of the show: a $180 pair of Air Jordans!

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When the mens athletic footwear industry makes headlines about Christmas product releases that garner long lines sleeping outside of mall entries, I sense competitors in the footwear industry roll their eyes at the obsessive and unexplainable phenomenon of the Sneakerhead. The evolution of the Sneakerhead consumer is one born from the science of creating value and demand. Regardless of targeted demographics and product niches, take a look at what some of the competitors are doing and you’ll see and sense a major difference in environments. The picture below is from The Walking Company store in the same mall as my Footlocker photos. It’s a different product and a different vibe. It wouldn’t make sense to transfer every Footlocker product display tactic to The Walking Company’s floor, but some of these ideas display a creative effort that clearly does not exist outside of Footlocker. Bravo! The sneakerhead seems more and more like a well-timed creation.

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NBA Financial Player of the Year: David Stern

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Once in a while someone will introduce an intriguing sports debate: Who is the best commissioner of North American professional sports? Although former NBA commissioner David Stern has retired, I think he’s at least the NBA’s “Financial Player of the Year.”

The fact most often neglected when these debates unfold is the concept placing each league’s commissioners as employees working for the various groups of owners. Their job? Make sure things run smoothly and increase shareholder wealth. Fans usually neglect the aforementioned methods of measurement. Instead, we are naturally forced to focus on the decisions made on the surface (instant replay implementation, rules changes, equipment modifications, enforcing policies). After all, it’s difficult for fans to assess a commissioner’s financial impact on privately held firms spread out amongst very different markets.

The headline of the month seems to be the reported sale of the L.A. Clippers for $2 billion. This is an incredible outcome from the Donald Sterling scandal, which forced the new NBA commissioner, Adam Silver, and the existing NBA owners to enforce the expulsion of an owner and sale of his franchise. League members and fans will benefit from the exclusion of a man who is a complete cultural mismatch with the brand. Others will point to the bittersweet reality that Donald Sterling will rake in an incredible profit.

Although the league’s franchises are privately held firms, we get a glimpse of the numbers when a sale is made. To illustrate why I am applauding David Stern’s financial acumen, take a look at this timeline:

  • 2006 – Seattle Supersonics sold for $350 million
  • 2010 – NBA buys New Orleans Hornets for $300 million
  • 2012 – Memphis Grizzlies sold for $350 million
  • 2012 – NBA sells New Orleans Hornets for $338 million
  • 2014 – Milwaukee Bucks sold for $550 million
  • 2014 – L.A. Clippers receive bid to purchase for $2 BILLION

If you look at the NBA map you’ll notice that these transactions are happening all over the U.S. and the spread between them is tens and hundreds of millions of dollars. What you won’t see is how David Stern leveraged every available financial resource to react to a fluctuating economy. He made a variety of decisions to preserve franchise values and avoid market corrections on the hedge that the domestic economy would recover. What were those moves?

Starting in 2006, the Seattle Supersonics sale established general market pricing ($350 million). The New Orleans Hornets’ owner went broke in 2010 and couldn’t afford to maintain his business. He tried to sell, but no one was able to meet his price. The risk of settling for a number too far south of the Sonics’ $350 million sales price was a reality that Stern avoided. Stern convinced the NBA to buy the Hornets for $300 million. He also secured $200 million of additional credit for a league accessible emergency fund for all franchises to use. The NBA held onto the Hornets and waited out the most severe economic rain clouds. Two years later, the NBA sells the Hornets for $338 million, including $50 million in commitments from New Orleans to update their home arena ($383 million of ownership “value”). And then we see consecutive sales records occur just two years later, one of which is achieved in a smaller market (Milwaukee)!

This trajectory in NBA franchise sales prices is not an accident. It’s the result of a combination of factors, both economic and strategic. Here’s a fun question. What would have happened if Stern let the market dictate pricing for the Hornets sale in 2010? What if the best Hornets’ offer was $200 million?

It is with great honor I present this year’s NBA “Financial Player of the Year”, David Stern.