Category: Entrepreneurs

Can Burt’s Bees Turn Clorox Green?

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Louise Story:

IN the summer of 1984, Burt Shavitz, a beekeeper in Maine, picked up Roxanne Quimby, a 33-year-old single mother down on her luck, as she hitchhiked to the post office in Dexter, Me. More than a dozen years Ms. Quimby’s senior, the guy locals called “the bee-man” sold honey in pickle jars from the back of his pickup truck. To Ms. Quimby, he seemed to be living an idyllic life in the wilderness (including making his home inside a small turkey coop).
She offered to help Mr. Shavitz tend to his beehives. The two became lovers and eventually birthed Burt’s Bees, a niche company famous for beeswax lip balm, lotions, soaps and shampoos, as well as for its homespun packaging and feel-good, eco-friendly marketing. The bearded man whose image is used to peddle the products is modeled after Mr. Shavitz.
Today, the couple’s quirky enterprise is owned by the Clorox Company, a consumer products giant best known for making bleach, which bought it for $913 million in November. Clorox plans to turn Burt’s Bees into a mainstream American brand sold in big-box stores like Wal-Mart. Along the way, Clorox executives say, they plan to learn from unusual business practices at Burt’s Bees — many centered on environmental sustainability. Clorox, the company promises, is going green.

A classic American story.

Innovative Minds Don’t Think Alike

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Janet Rae-Dupree:

IT’S a pickle of a paradox: As our knowledge and expertise increase, our creativity and ability to innovate tend to taper off. Why? Because the walls of the proverbial box in which we think are thickening along with our experience.
Andrew S. Grove, the co-founder of Intel, put it well in 2005 when he told an interviewer from Fortune, “When everybody knows that something is so, it means that nobody knows nothin’.” In other words, it becomes nearly impossible to look beyond what you know and think outside the box you’ve built around yourself.
This so-called curse of knowledge, a phrase used in a 1989 paper in The Journal of Political Economy, means that once you’ve become an expert in a particular subject, it’s hard to imagine not knowing what you do. Your conversations with others in the field are peppered with catch phrases and jargon that are foreign to the uninitiated. When it’s time to accomplish a task — open a store, build a house, buy new cash registers, sell insurance — those in the know get it done the way it has always been done, stifling innovation as they barrel along the well-worn path.
Elizabeth Newton, a psychologist, conducted an experiment on the curse of knowledge while working on her doctorate at Stanford in 1990. She gave one set of people, called “tappers,” a list of commonly known songs from which to choose. Their task was to rap their knuckles on a tabletop to the rhythm of the chosen tune as they thought about it in their heads. A second set of people, called “listeners,” were asked to name the songs.
Before the experiment began, the tappers were asked how often they believed that the listeners would name the songs correctly. On average, tappers expected listeners to get it right about half the time. In the end, however, listeners guessed only 3 of 120 songs tapped out, or 2.5 percent.

Venti Capitalists

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PJ O’Rourke:

Taylor Clark ought to know how Starbucks got its roc-like wingspan. That’s the tale by which we want to be spellbound. Clark quotes a 1997 Larry King interview with Howard Schultz, the company’s chairman, where Schultz outlines what should have been the plot of Clark’s book:



“People weren’t drinking coffee. … So the question is, How could a company create retail stores where coffee was not previously sold, … charge three times more for it than the local doughnut shop, put Italian names on it that no one can pronounce, and then have six million customers a week coming through the stores?”

An Interview with Sam Zell

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Connie Bruck:

In April, 2005, Sam Zell travelled to Abu Dhabi to meet Crown Prince Sheikh Mohammed bin Zayed al-Nahyan. Zell is best known as a real-estate magnate, whose reputation has been enhanced by the sale, last February, for thirty-nine billion dollars, of Equity Office Properties Trust, the largest collection of office buildings in the country. Zell, who is sixty-six, delights in claiming that at the time the sale—to Blackstone, the private-equity firm—was “the largest single transaction that has ever been done.” But for decades his appetite for economic opportunity has lured him beyond real estate into investments in oil and gas, barges, insurance, wineries, cruise ships, department stores, waste-to-energy power projects, and radio stations. In April, he signed an $8.2-billion deal that would effectively give him control of Tribune Company, the giant media conglomerate, whose assets include the Chicago Tribune and the Los Angeles Times. For about a dozen years, he has also invested aggressively abroad, most recently in the Middle East. He spends about twelve hundred hours a year on his plane—the equivalent of flying from New York to London every few days. “I want to see everybody in their habitat,” he told me, in a low, rasping voice. “When these people see me come halfway around the world to meet them and spend time with them, it creates a level of confidence that translates into other things”—by which he means, he says, “successful business.”
Zell has made much of his fortune by identifying opportunity where others see only trouble. He says that he is constantly trying to “shut out the noise” of conventional wisdom, because, although it may not always be wrong, it is rarely profitable. In the mid-seventies, he bought about three billion dollars’ worth of distressed real estate in cities across the country for “a dollar down and a hope certificate.” He made hundreds of millions of dollars. In 1978, he published an article about his exploits in Real Estate Review, which he titled “The Grave Dancer” (“I was dancing on the skeletons of other people’s mistakes”), and this became his nickname. If Zell gains control of Tribune Company—the deal is expected to close before the end of the year, though obstacles remain—it will be the biggest distressed entity that he has ever acquired. In addition to the Chicago and Los Angeles daily newspapers, the company owns Newsday, six other dailies, and twenty-three television stations, as well as the Chicago Cubs. In part because of rapidly declining profits in the newspaper industry, Tribune’s revenues have been dropping for years. When Tribune’s directors put the company up for sale, in September, 2006, a number of prospective buyers examined its assets and walked away. By the time Zell made his offer, last March, his only competition was a less fully formed bid from the Los Angeles businessmen Ronald Burkle and Eli Broad.

Top 12 Areas for Technology Innovation through 2025

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Social Technologies:

What will likely be the most important scientific and technological breakthroughs with significant commercial value and impacts on the lives of consumers out to 2025?
To begin to answer that question, S)T’s Technology Foresight program conducted a virtual, global focus group of experts in technology, innovation, and business strategy. The group included experts from the Association of Professional Futurists, Tekes, Duke University, Hasbro, Worldwatch, General Motors, Shell, Johnson Controls, and Oxford University, among others.
After consolidating input from the expert panel and analysis by Social Technologies’ futurists, what emerged was our list of top 12 areas for tech innovation through 2025:
Personalized medicine—With the initial mapping of the human genome, scientists are moving rapidly toward the following likely breakthroughs for gene-based products and services:

My Hero, Benjamin Grossbaum (Graham)

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James Grant:

It is a pleasure to be here this evening. I am under strict instructions from the rector of Grace Church, Brooklyn, not to let down the Episcopal side. Uphold the highest standards of the Episcopalian intellectual tradition, he told me. What that tradition might be, he couldn’t say, and neither can I. But I’ll do my level best.
My subject is Benjamin Graham: his life, his investment philosophy, his writings and his Jewishness. About his love life, I will say little, as my time this evening is limited—just three hours, I believe. Some years ago, Fortune Magazine, in a squib it published on the occasion of Graham’s induction into the U.S. Business Hall of Fame, said that the thrice-married father of value investing “leaped from blonde to blonde like an Alpine goat springing from peak to peak.”
I am a frankly worshipful admirer of Graham’s. I love him for his heart as much as for his head. Between 1929 and 1932, his investment partnership lost 70% of its value. Not until 1936 did it recoup all it relinquished since the Crash. Yet Graham persevered and, along with his partner, Jerry Newman, went on to achieve a brilliant long-term investment record—not excluding those three disastrous years. We have all heard the platitude, “The first rule of investing is not to lose money and the second rule is not to forget the first.” Very helpful. Well, Graham shows that a debilitating loss is no reason to give up. . . . Never quit.

Intuitive Decision Making

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Kurt Matzler, Franz Bailom and Todd A. Mooradian:

Should executives make decisions based on what their “gut” tells them? Lately that idea has lost some favor, as technology’s ability to accumulate and analyze data has rapidly increased — supplanting, according to some accounts, the high-level manager’s need to draw heavily on intuition. But intuition needs some rescuing from its detractors, and the place to start is by clarifying what it really is, and how it should be developed.
Intuition is not a magical sixth sense or a paranormal process; nor does it signify the opposite of reason or random and whimsical decision making. Rather, intuition is a highly complex and highly developed form of reasoning that is based on years of experience and learning, and on facts, patterns, concepts, procedures and abstractions stored in one’s head.
In this article, the authors draw on examples from the worlds of chess, neuroscience and business — especially Austria’s KTM Sportmotorcycle AG — to show that intuitive decision making should not be prematurely buried. They point out that although the study of intuition has not been extensively explored as a part of management science, studies reveal that several ingredients are critical to intuition’s development: years of domain-specific experience; the cultivation of personal and professional networks; the development of emotional intelligence; a tolerance for mistakes; a healthy sense of curiosity; and a sense of intuition’s limits.

Putting the Past to Work

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Jack Falvey:

IN AN AGE OF INFORMATION OVERLOAD, identifying the most useful information in a timely fashion isn’t easy — and it may be some comfort to know it never was. Yet by studying the adaptive skills of earlier captains of commerce, entrepreneurs in even the most cutthroat businesses can learn how to smack down the competition.
The key: Embrace invention — even that of your competitors — and use it better and faster than they do.
In the 1870s, John D. Rockefeller had a telegraph line run to his Euclid Avenue home in Cleveland. When he came home for lunch, he could stay in touch with his Oil City, Pa., contacts for updates on gushers and dry holes. He could then telegraph his brother in New York to adjust the price of kerosene for the European market, and his brother could pass the price on to Europe by trans-Atlantic cable.
Although Standard Oil employed telegraphers, John D. Rockefeller sent and received his own “e-mails.” Sending and receiving Morse code at commercial speeds were not easy skills to master, but Rockefeller was “computer-literate.” He had to be skilled in the current technology to have the best information and act on it.
The oil business of that day was not a fuel business. Standard Oil sold illumination. Tallow and whale-oil concerns were its competitors. Kerosene lamps, especially with mantles that burned white-hot, were a great advance in technology. Standard Oil produced a lamp-fuel kerosene of such purity that explosions were greatly reduced. Its five-gallon branded blue tins became known around the world. (Meanwhile, the byproduct of kerosene distillation, gasoline, was discarded as a nuisance.)

Georgia Plant is First for Making Ethanol from Waste

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Kathleen Schalch:

for curbing greenhouse gas emissions and pursuing energy independence lies in cellulosic ethanol. That’s ethanol that could be brewed from things like corn stalks, straw, wood chips — things we normally throw away.
Companies have been racing to find cost-effective ways to make this form of ethanol. A company called Range Fuels in Georgia is scheduled to break ground Tuesday on the world’s first plant for making cellulosic ethanol.

Audio
Range Fuels website.