The Business of Free Stuff

Giving away free stuff seems to go against the main purpose of a business - to grow and make profits. It's somewhat counter-intuitive that a company could gain or benefit from giving its customers something for free. Companies have interestingly found ways to be able to give away items for what is perceived as free, but ultimately does end up costing the consumer in some way.

(1) We'll give you free stuff if you remain loyal to us.

Anybody who has ever gotten the fifth sandwich free after getting a card punched four times knows about this one. Another example is the free airline ticket after you've accumulated a certain number of airline miles.

The most ubiquitous example is probably the free cell phone you get when you sign up and promise to stay on a mobile phone plan for two years.

(2) We'll give you free stuff if you pay attention to us (advertising)

This one is a little more subtle, but Google uses this one. You get to use Google's Search engine (a service really) for free, their maps are free, and all the other products are free. Quite remarkable when you think "when was the last time I used Google products (probably daily), and when was the last time I wrote a check to Google (probably never). Also, when at a convention, have you ever stood in line waiting to talk to the booth representative, so you can get yet another cheesy water bottle that you will never use ?

The most painful example of this category is the "get a free weekend getaway and listen to us for 3 hours harp on you to buy a timeshare". OUCH.

(3) We'll give you free stuff if you try it - and please spread the word how good it is.

Some of the fast food chains gives a free food item (fries, taco, milkshake, burger, whatever) when they're launching a new item - so you can experience how good it is. Photo labs used to give away free film so you would try their film processing. The toy in the cereal box is another example. My previous blog on the grand opening of the Movie Theater was a great example of a "free trial" at a soft opening of a new business. It definitely got me to try

(4) We'll give you a chance at really good free stuff if you give us your personal data

One Word: Sweepstakes. You know them. You love them. You have entered in them, and you never won any of them. The only thing you got was more junk mail. Ha ha.

(5) We'll give you free stuff because you're famous and we want the public to think you are associated with us.

Ironically if you want to really get great free stuff, become super rich and famous. When you no longer have to worry about whether or not you can pay for stuff, it automatically becomes free (sometimes). Donald Trump once stated that he can't count the number of times he's been offered a free meal, just because the owners were happy that he came to their establishment. Donald probably paid the bill anyway, because he is a truly classy guy.

I hope someone comes up with another scheme for how to make money in a business and still give away free stuff. We all love free stuff once in a while.

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The Importance of Strategy in Business

Recently, I had the privilege of going to Stanford University to study topics in Business at one of the esteemed programs. I was honored to meet so many great leaders, including my professors, managers at Apple, Tapulous, and other Palo Alto luminaries.

Many of these folks I spoke to were very intently focused on the Strategy of their organizations. They wanted to make sure that the right decisions were being made, and the correct paths were being pursued to grow their businesses.

What is Strategy, exactly, and why are the executives of a company so concerned with it ?

Simply stated, strategy refers to a plan of action designed to achieve a particular goal. If a business were continually reactionary in its activities -- simply reacting to daily events, then you can see how the company would only be chasing "operational viability" and not controlling its own destiny.

Strategy for a business is in its simplest form:

1. Knowing where you are NOW,

2. Knowing where you want to BE.

3. Knowing and having a plan on how to GET THERE.

The first part is relatively simple, but not always. A good leader knows his / her company strengths and weaknesses and general capabilities. We'll use the auto industry, and specifically General Motors, as an example.

The GM leadership knows how many cars they can produce, what kind of cars, and the general costs and features of those cars. That's part 1.

Next, knowing where you want to be is tricky. It involves some ability to know where trends are going, and where the marketplace in general is going. To achieve this, Leaders use the skills of Research specialists, and Competitive Intelligence colleagues. They can slice and dice any industry data, generate surveys, and come up with an Answer.

Our GM leader could (for example) hire a Research specialist who would be able to determine that based on research, the world's demand for electric vehicles is coming to a critical tipping point - people are getting ready to spend big time on alternative energy vehicles. The Competitive Intelligence colleague would be able to determine that competing companies like Toyota and Honda are spending considerable money on research as well, clearly indicating an interest within the industry. The decision is born and GM leadership's "aha moment" is to decide to spend money on creating an electric vehicle.

The third component - knowing how to get there - is a straight line role of a project manager. The project manager can bring in Business Analysts, and other team members to lay out the plan to "make it happen". A skilled project manager is critical to any company, and a new discipline called "strategic engineer" is emerging.

GM leadership would hire one (or multiple) project managers to set up a "Program" for creating electric vehicles. The Electric vehicle Program would consist of many different Projects all leading up to an Electric Vehicle STRATEGY for GM !

Strategy for any organization is critical, because it allows leadership to control the destiny of a company, rather than to continually play victim to shifting trends and competition.