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Hugh Hefner’s brainchild, Playboy, is out to reinvent itself. Will less smut mean more money-making deals?
Scott Flanders, 55, is the first CEO outside of the Hefner family to run the privately held Playboy Enterprises Inc. Flanders has shrunk the staff by 75 percent, outsourced much of the business, and moved company headquarters from its historic home in Chicago to Los Angeles.
After 60 years of American hedonism, Playboy is moving away from the seedier aspects of the brand and morphing into a licensing company. Flanders’ goal is to build an upscale lifestyle brand around an iconic bunny logo.
The new Playboy is both smaller and more profitable. The corporate home is filled with dealmakers but devoid of bunnies and playmates.
Playboy sold its TV channels and digital properties to Internet porn giant Manwin, according to the Wall Street Journal, and struck partnership deals with art and fashion leaders like Dolce & Gabbana to reposition the brand. Long barred from Apple’s digital storefronts because of its titillating past, Playboy will create a nudity free app for the iPhone that features lifestyle tips, beautiful women and articles from the magazine.
Playboy still has a ways to go to achieve the profitability it needs to satisfy its bankers and private equity owners. More licensing deals will help, but what Playboy doesn’t know about their brand might hurt them.
Probe for Your Own Vulnerable Spots
Not knowing your real reputation in the marketplace can kill deals. Here are some ways to probe for your perceived weak spots.
makes no secret of his love for hamburgers, french fries and Cherry Coke. When his doctor told him he needed to eat better or exercise more, he chose exercise: “The lesser of two evils.”
Now Buffett can have his fill of condiments for those burger plates. His Berkshire Hathaway has teamed with Jorge Lemann’s 3G Capital to buy HJ Heinz Co. for $23.3 billion, one of the richest deals ever in the food industry according to the Wall Street Journal. Sold in 200 countries, the wide array of brands include Heinz ketchup and sauces, Ore-Ida french fries, Bagel Bites mini-pizzas and even Weight Watchers SmartOnes meals.
Buffett, 82, was seeking deals after his company amassed a cash pile of $45 billion. Buffett has bet big on food before through equity investments in Coca-Cola and purchases of See’s Candies, Mars and Dairy Queen. Now he can add another Logo Deal: an iconic ketchup maker that traces its roots to the 1860s.
How to Pursue a Logo Deal Strategy
Regardless of your business, there is a Logo Deal Strategy opportunity for you somewhere. If that’s the end you’re shooting for, pick your ultimate target. Make it a company that is big in size and big in name. There is nothing wrong with making it the richest family in town or one of the top 100 companies in the world. That target is yours to envision and name.
Here is a path and a plan to get there, based on our book “How to Close a Deal Like Warren Buffett.”
First, think of those companies with whom you would like to do business.
America’s youngest female billionaire is a burger heiress and she has plenty of suitors. Lynsi Torres, the 30-year-old president and sole owner of the successful In-N-Out Burger chain, is not looking to get married. But she may be hunting for a deal to sell her company in five years.
Her family expanded In-N-Out from a single drive through hamburger stand in 1948 in Southern California into a fast-food empire worth $1.1 billion, according to a recent Bloomberg News feature on the low-profile Torres.
The restaurant chain has a rabid fan base, which one industry analyst calls a “kind of cu
lt following.” Because In-N-Out is a private company, any financial estimate is based on speculation. That being said, the closely held firm has 280 units in five states and probably has sales around $600 million a year. A Harvard Business Review article in 2005 estimates the company enjoys 20 percent profit margins.
Many companies would love to gobble up In-N-Out. That includes burger aficionado Warren Buffett, who according to the UCLA business school website, told a group of visiting students back in 2005 that he hungered to own the chain.
Torres came to control In-N-Out after a series of family deaths. She controls the firm that a trust gave her half ownership when she turned 30, and will give her full control when she turns 35. Whether Torres, a mother of twins, will want to maintain control in five years is the billion-dollar question.
How to Woo a Prospect
Think about the next deal you want to make.
There was a time we were so addicted we used to call them Crackberrys.
Before the iPhone arrived on the scene in 2007, the first smart phone that hooked many of us was the BlackBerry. Legions of BlackBerry addicts couldn’t resist the fix of easily checking company email whenever, wherever they went.
A grim joke went like this. How do you know when a corporate executive dies? When the BlackBerry drops from his hand.
Now BlackBerry is on the hunt to recapture its mojo. In fact BlackBerry maker Research in Motion (RIM) is making a bet-the-company move to lure us away from our new obsessions: namely, Apple’s iPhone and Google’s Android phone. This is an “all in” bet symbolized by the decision to even change the company name to BlackBerry.
The new BlackBerry is an all-touch device running on a new operating system. Sorry Crackberry diehards, that physical keyboard you loved so much is gone, replaced by a virtual keyboard.
The old operating system was great for email but a poor platform for app developers. As any iPhone or Android user knows, apps are where it’s at.
How to Win Friends and Influence Partners
So BlackBerry is going to need to make many deals if this bet is to pay off. The new and improved BlackBerry Z10 is launching with a fraction of the apps available from Apple and Google. Look for the phone to go on sale in mid-March. A second phone, with a physical keyboard to placate the truly addicted, is due out in April.
Getting your prospect to say “If it were me…” might be the best path to removing a stigma that is holding up your deal.
When Chief Executive Officer Terry Marks was hired in 2011 to make over the Hooters chain, he found women were steering clear for more reasons than buxom waitresses in tight uniforms. Wives and girlfriends also avoided Hooters because the menu was stale, the restaurants were dated and the food was overpriced.
Can Marks, a former Coca-Cola exec, remove the Hooters stigma so men aren’t embarrassed to put the chain on an expense account and women aren’t as quick to veto a meal there? Attracting women is critical because Hooters is facing strong competition from other so-called breastaurants including Tilted Kilt Pub & Eatery and Twin Peaks.
To convince the females that Hooters is going from frat frenzy to family friendly, Marks needs to change the conversations about the restaurants. Perhaps advertising that gets women to say, “If it were me, I would change the menu and make it more up to date.” “If it were me, I would add more lunch deals.” “If it were me, I would redecorate the restaurants and make them more appealing to women, like bringing light into the restaurants.”
Then Marks and team can show that Hooters is taking all these steps.
Recommend the questions you want prospects to ask
Maybe you need to reposition your brand in the mind of the prospect to land a deal. The conversations you want to encourage are those that begin “If it were me….”
These are the words that you want to plant into your prospect’s ears. This has to be done carefully. You are not running down your competitors. Your role is to be an objective adviser to the prospects. You are advising them on what they should be looking at in the solutions. The “If it were me…” approach must be objective.
“Bartering has been around since the dawn of human existence,” says Michael Dalton Johnson. “It’s a smart and easy way to get what you need by trading something you have. Bartering is especially smart in today’s economy.”
Maybe they don’t teach bartering at business school, but it is part of the curriculum at the school of hard knocks. And Johnson is proud of his alma mater.
“Who would you rather be lost in the woods with, Albert Einstein or Davey Crockett?” asks Johnson, author of the recent McGraw-Hill business book “Rules of the Hunt.”
Johnson’s point is street smarts are often preferable to book smarts. His book is in the tradition of real-world, street saavy works like “Swim with the Sharks Without Being Eaten Alive,” by Harvey MacKay, and “What They Don’t Teach You in Harvard Business School,” by the late Mark McCormack.
At the age of 15, Johnson dropped out of high school to take a full-time job. He joined the Army at age 17. After his service in the military, he worked as a ranch hand, factory worker, and construction laborer before venturing into the business world. He has never taken a business course and brings an unpretentious outsider’s view to the subject of business.
“Rules of the Hunt” has much to say about deal-making subjects, including negotiating and motivating people. One of the subjects he covers is bartering, an often overlooked topic.
According to Barter News Weekly, almost one-third of all small businesses in the U.S. and 65 percent of corporations listed on the NYSE are involved in some form of bartering. The U.S.
Good news for junk food junkies. Hostess Brands
has final approval from a bankruptcy judge to seek suitors, setting the stage for Twinkies, Wonder Bread and Ding Dongs to find a second life with new owners.
Hostess said in court that it’s in talks with over 100 potential buyers for its brands that have disappeared from store shelves. This once-in-a-lifetime deal-making opportunity will allow some fortunate company to snap up an iconic multi-billion dollar brand without the burden of debt or the costly labor contracts.
Because the bread business has been consolidating over the last few decades, the deal for Hostess may come down to the three major players that are left: industry leader Grupo Bimbo SA; No. 2 Flowers Foods; and good old Pepperidge Farm, which is owned by Campbell Soup Co. The competition to make a sweet deal for Hostess will be intense.
Bring On the Murder Board
If you are faced with intense deal making competition we recommend you prepare with a Murder Board: a committee of selected peers and teachers, preparing a student for oral exams by posing anticipated questions to the student and then providing a critique of the answers. This same process is now used by politicians who are preparing for debates, and we hope you will use it for preparing for key presentations. (Warren Buffett has his own version of a Murder Board: that would be his partner and vice-chairman, Charlie Munger.)
To get the most out of your Murder Board, follow this framework:
1. Assign the voices. You probably know the people to whom you will be pitching. For this reason, assign those people’s perspective and personas to members of your Murder Board. This can be funny, but that’s not the point. The real issue is that you want finance questions from the finance guy, technical questions from the tech person, and so on. This also allows your Murder Board participants to be more focused in their listening and challenges.
I love talking to people in the business of closing big business. Through a friend, I came in contact with Nick Oulton, CEO of m62 visualcommunications- an expert in winning the biggest sales. These are 6 – 10 figure contracts won in all sorts of industries with a breath-taking 76% win rate. I always want to know what the best of the best do that makes them more successful. Here’s what was distilled from a wealth of insights on the critical “final presentation.”
- Don’t bid
- Don’t present
- Don’t DIY
- Don’t trust
- Don’t play fair
- Don’t preach
- And whatever you do: Don’t use bullets
I’ll let Nick explain:
The last $Billion contract I worked on cost the bidder £4million, which even at a low percentage profit of, say, 5%, is an amazing ROI – but for each winner there are at least two losers, and in the last case there were six! And they didn’t get a good return; they got nothing (although I think some of them may have got fired…).
In my experience No Bidding fleshes out the real deals from the smoke screens, gains you access to the right people, and allows you to focus on the deals that are real and winnable rather than just desirable.
Purchasing need to run a process, and in order to run a process, they need you to bid. So for any potential supplier, and especially if you are the market leader, saying no generally gets an indignant “Why Not?” – which gets you in at the C-suite to talk about why the bid is flawed and how, as it is, it will fail.
“From the time you get up in the morning until the time you go to bed at night, you are continually negotiating, communicating, persuading others to cooperate with you to do the things that you want them to do,” says negotiating expert Brian Tracy, top-selling author of more than 45 books.
Tracy lives to see the world and has traveled and worked in over 80 countries on six continents, and speaks four languages. He estimates more than five million people have heard him speak
Prior to becoming an internationally known keynote speaker and seminar leader, Tracy was the chief operating officer of a $265 million development company. He has had successful careers in sales and marketing, investments, real estate development and syndication, importation, distribution, and he continues to provide high level consulting to several billion-dollar plus corporations in strategic planning and organizational development.
Five Ways to Better Deals
Tracy has studied, researched, written and spoken for 30 years in the fields of economics, history, business, philosophy and psychology. Culled from this research, here are his five top tips for making deals:
- Prepare thoroughly. The most important negotiating tactic is thorough and complete preparation in advance of the negotiation or discussion. Before I go into a negotiation, I know exactly who I am speaking with and precisely which points I would like to discuss.
- Deal making never stops. Negotiation is the way that individuals with differing values and interests find constructive ways to live and work together in harmony. The ability to negotiate successfully with exemplary interpersonal skills is essential to success in all your interactions with other people.
A seven-year-old book about deal making in the White House, “Team of Rivals: The Political Genius of Abraham Lincoln” by Doris Kearns Goodwin, has climbed back on the best-seller list.
Credit has to go to Steven Spielberg‘s megahit movie “Lincoln,” about the deal making behind the passage of the 13th Amendment, outlawing slavery. Goodwin, a Pulitzer Prize-winning historian, is struck by how much the film, based in part on her book, has “become part of a national conversation.”
Three Deal Making Lessons from Lincoln
One of the aspects being discussed is what “Honest Abe” was willing to do to make a deal. Congressman Thaddeus Stevens has a movie line that sums it all up: “The greatest measure of the 19th century,” he says, “was passed by corruption, aided and abetted by the purest man in America.”
We don’t recommend corrupt politics to make a deal. But that doesn’t mean you have to play fair either. Here are some strategies:
- Make them a one-more-time offer. If a deal is important but seems lost, don’t give up even though it appears your final offer was rejected. Now, we do not recommend anything underhanded, like the film’s trio of dubious lobbyists that are responsible for outright corrupt deal making, as they are authorized by Secretary of State William Seward, and later by Lincoln himself, to offer patronage jobs in return for votes. Rather, we recommend a one-more-time final counter offer that can come in the form of price, speed, service, or guarantee. This offer has to be made to the highest-level person in the prospects’ group. It has to be made directly. You also have to be prepared to answer the hard question, “If you were willing to make this offer, why wasn’t it in your original solution?” We have seen a lot of deals won after the award with the one-more-time offer.