It may be an understatement to say that life in the juvenile industry has not gotten any easier over the past few years. Not that there were ever true "glory days" when the business was easy and the profits flowed freely. But, it seems that the prolonged weak economy, increased costs and uncertainty associated with tighter regulations, and unrelenting pressure from major retailers have combined to create a lot of sleepless nights lately for many JPMA CEO’s.

During times like this, it’s always tempting to blame the economy, hunker down, and wait for things to get better. That may not be such a good idea. First of all, things may not get better quickly enough for you to stay alive. But, even if they do, you may actually be squandering a golden opportunity.

Think of an economic downturn as a stress test for your company—not unlike the monitored treadmill exercise used to detect heart abnormalities. Healthy companies should still do reasonably well when the economy is weak just like healthy people should be able to pass a cardiac stress test with no ill effects. However, there may very well be design flaws in your current business model that were all but invisible when the economy was booming but will stand out like blocked arteries in an angiogram when business slows.

Or, you may have been aware of the need to make painful improvements like reduce costs or make personnel changes but were reluctant to perform the necessary surgery while things were going reasonably well. [These medical analogies show I’m obviously spending too much time talking to my contemporaries in the industry.] 

If you’re not getting the financial results you’d like during the current economic malaise, here are some of the questions you might want to ask yourself:

Is your competitive advantage still strong enough?

Be honest with yourself. Do your products really have enough value superiority over your competitors such that you are the clear choice for your target customers? If not, how can you regain your edge? Accomplishing this will not only make your products more appealing to consumers but will also make you more important to retailers thereby putting you in a better price bargaining position.

Are you maximizing sales with your current customers—retail and consumer?

This is the low-hanging fruit. Are you putting in the effort to really understand the needs of your existing retail and consumer customers so that you don’t miss opportunities to gain ground. Could you be selling more products to consumers who are happy with what they’ve bought from you? What would it take for your major retail customers to expand your presence?

Are you missing opportunities to expand distribution?

Once you’ve maximized business with your current customers, what are all the possible new revenue streams you could create? If you’re a regional company can you become national? If you’re national could you be international? Are there new classes of trade that have potential? Be careful though. Some new markets may be costly to enter.

Can you eliminate or re-price programs, products, services or even customers that are not profitable?

I’ve always been a big advocate of analyzing profitability by customer, product, region, salesman, etc. If you’re not making money at these micro-levels, something probably needs to change.

Are you managing your cash flow as well as you could?

You can get away with sloppy cash flow management when things are going well. But it will come back to haunt you in tough times. Make sure you have a good cash flow projection process in place so you are not blind-sided by cash shortages. But, just as importantly, get innovative about what you could do to radically decrease your inventory requirements, reduce credit losses, ramp up collection speed, or get better payment terms from your suppliers.

Is it time to make those tough personnel decisions?

A business friend of mine used to talk about how, when business slowed, he would simply keep laying off employees until he was virtually the only one left. Hopefully, you won’t find that necessary. However, it might be time to objectively assess both the number of people in your employ and their productivity. This is not something that should be done without concurrently assessing the quality of the processes that your employees are operating within as well as the training you are providing.

Are you leveraging new and emerging technologies?

And, while you’re looking at your processes, are you taking advantage of software and automation that could reduce operating costs and improve quality? Are you staying up to date with what’s out there that’s working for others?

Have you read my earlier blog posts?

Excuse me for a little self-promotion, but if you haven’t already, you might benefit from reading or re-reading my previous blog posts where I offer a number of other revenue enhancement and cost reduction ideas. Or, even better, take advantage of JPMA’s CEO Mentor program where for a small donation to K.I.D.S. I’ll give you some objective feedback regarding your current business model. 

If you look at economic downturns as opportunities to improve rather than times to head for the bomb shelter, you can come out the other end as a much stronger company better positioned for future recessions. What’s this downturn telling you about your business?

Disclaimer: No warranties, express or implied, are contained herein. Purchasers, or users, of this information acknowledge that any errors or omission in the performance of the material contained herein or, any injuries resulting from its use, are the sole responsibility of the purchaser or user, and not JPMA or the author. Opinions expressed are those of the author only.

CEO’s are often understandably skeptical about the various management “movements” that come and go over the years. However, if I were running a company today, I would be totally embracing the so-called “sustainability” movement—not because it’s the latest rage but because it makes fundamental long-term business sense.

The movement arguably originated in 1983 when the U.N.’s Bruntland Commission was formed to address what was called “the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development”. They later defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

After getting relatively little serious attention from most companies, especially in the U.S., for many years, sustainability seems to finally be coming of age. In a winter 2012 study conducted by the MIT Sloan Management Review and the Boston Consulting Group entitled “Sustainability Nears a Tipping Point”, 70% of surveyed companies “have put sustainability permanently on their management agenda”. In fact, two-thirds felt it is a necessity to be competitive today and in the future.

Pressure from consumers has clearly been one of the driving forces. A 2011 Nielsen survey of 25,000 consumers globally revealed a high and in many cases rising degree of concern about sustainability issues such as water shortages and pollution, packaging waste, pesticides, air pollution, and climate change. It is true that while consumers may be favorable towards companies who adopt sustainability practices, they aren’t necessarily willing to pay a price premium. 83% of consumers surveyed wanted to see companies implement programs to improve the environment. However, only 23% would pay more for eco-friendly products. Nonetheless, green concerns are clearly influencing purchase decisions. While I couldn’t find a breakout specifically for parents or grandparents of young children, this target market for juvenile products would logically be especially concerned about “. . . the ability of future generations to meet their own needs.”

These same consumer concerns as well as visible environmental issues such as air and water pollution and water shortages have resulted in an increase in federal and local government as well as public interest group involvement worldwide. Past history tells us this will only increase as we go forward much like child safety regulatory activity over the past 40 years.

On the self-serving side, raw material price increases and volatility have also spurred business interest in sustainability initiatives such as energy and material use reduction that directly improve the bottom line. Not surprisingly, Wal-Mart has been leading the sustainability for cost reduction charge since 2005. The cost reduction aspects of sustainability fall right into Wal-Mart’s business model wheelhouse and, if you’re a Wal-Mart supplier, you have no doubt already been coaxed into making packaging changes that have reduced material usage or shipping costs.        

While responding to consumers and government agencies and reducing costs have been the primary factors driving companies towards the adoption of sustainability principles, I believe there’s actually an even more basic reason to incorporate these concepts into your management system. The fact is that the principles of sustainability represent a perfectly logical and desirable enhancement of a company’s business model development process. Embracing sustainability will cause you to take a broader view of the “system” in which your business operates resulting in the creation of a more robust and effective business model and resultant increased long-term business success.

In my next post, I’ll describe how you can embrace sustainability in a way that makes sense for your company. I’ll also talk about the role JPMA as a trade association might want to play in educating and supporting its members as well as interfacing with government agencies and NGO’s in the same way it has with safety issues.    

Disclaimer: No warranties, express or implied, are contained herein. Purchasers, or users, of this information acknowledge that any errors or omission in the performance of the material contained herein or, any injuries resulting from its use, are the sole responsibility of the purchaser or user, and not JPMA or the author. Opinions expressed are those of the author only.

I’ll be the first to admit I made a lot of hiring mistakes in my career. In fact, for me, personnel management in every aspect was probably the most difficult and stressful part of the CEO job. I’d always relish doing the fun stuff like formulating strategies, designing new products, or working on new marketing programs. But I frankly dreaded having to deal with staff performance reviews and issues, compensation decisions, or above all coping with the loss of a key employee.

I know I’m not alone. In discussions with other CEO’s over the years, I have been struck by how many of us struggle with the people side of the business. There are many reasons for this that I won’t get into now. But suffice it to say that your success as a CEO will be greatly determined by your ability to build and maintain a strong team. Here are some things I discovered over the years that you might find useful:

·         Recognize that finding the right people is and always will be an ongoing, high priority CEO responsibility.Depending on the size of your company, you may be hiring all the new employees yourself or only your direct reports. In any case, like it or not, it’s ultimately your responsibility to make sure you have the right people at all levels. And, the bigger your company gets, the more important it becomes. No matter how robust your business model is in theory, without staffing it with the right people you’ll have an empty shell or at least an under-performing business.

·         Hire based on the requirements of your business model.One of my favorite expressions is a paraphrasing of a statement from Alice in Wonderland’s Cheshire cat—“If you don’t know where you’re going, any path will get you there.” You can’t possibly hire the right people until you have decided what business design will enable you to get and sustain a competitive advantage. The requirements of that design (which includes the corporate culture you need to create) will dictate the talents and character traits needed in each key position. An obvious example—if you want your company to be a leader in product design, you obviously will need a world class head of that department.   

·         Hire people with a track record of appropriate accomplishments. Once you know the position(s) you need to fill and the things that the holders of those positions need to accomplish, hire people who have proven, based on past history, that they can accomplish it. Anything else is an expensive crap shoot. “Behavioral interviewing” is an important tool to have in your company’s recruiting toolbox to help find the right person—with not only the knowledge and skills needed to do the job but also the strength of character. If you’re not familiar with this technique, I’d recommend the book Hiring 3.0 by Barry Shamis. Done well, behavioral interviewing will reveal knowledge, skills, initiative, and character and has been proven to be more accurate in predicting success on the job.    

·         Don’t hire until you’ve found the right person. It is all too common to hire the best of the people you’ve interviewed rather than a person who can really do the job long term. Typically, you’re under pressure to fill a vacant position that’s causing you and your company a lot of pain until filled. Succumbing to this pressure is how a lot of hiring mistakes happen. In picking key employees or marriage partners it’s always better to wait for Ms. or Mr. Right to come along.   

·         Monitor the satisfaction of “stars” at all levels in the organization. Every company has critical employees in key positions. Make sure you know who the “stars” are and set up a process that minimizes the possibility of being blind-sided by having one of them move on unexpectedly. You can do this via regularly scheduled direct or skip-level 1:1’s or periodic informal discussions.

·         No matter how good you are at recruiting and retaining, you’ll make some hiring mistakes and you’ll lose some good people. While you certainly can and should do everything you can to minimize mistakes, you’ll never totally eliminate them. It’s just too difficult a process to always get right. 

·         Correct hiring mistakes quickly. When you have the wrong person in a key position, it is costly in multiple ways. It diminishes your company’s performance. It eats up your time. It demoralizes other employees. Fight the tendency to put it off because it’s too painful to make a change or you think you’re being too critical. The quicker you correct the situation, the better off your company will be. Believe me.

·         The time will come when someone who was the right person no longer is. This is a tough one. As your company grows and the world changes, some of your long-term, loyal key employees will no longer be the right people for the jobs they hold. What do you do? The best thing for the employees involved and the company is to take action, not ignore it. In my experience, it’s usually possible to offer them a lower level position that fits their skills and, if communicated properly, they will accept and in fact appreciate it. Most of the time they are well aware they are no longer doing the job.       

A juvenile product manufacturer CEO has a lot of things on his or her plate. None is more important than making sure you have the right people “on the bus”. Among other things, the emotional dynamics of personnel management make it perhaps your most daunting challenge as you go about managing your business. Giving it the attention it deserves will pay dividends.     

One of the most common challenges for my JPMA CEO Mentor Program clients is how to market their product(s) to consumers. How much should they spend to stimulate consumer demand? Should they advertise? What’s the role of PR? How effective is social media marketing? And, of course, this is all complicated by the fact that no company, small or large, has extra piles of money lying around waiting for a place to be spent.

As anyone who has read my previous writings or worked with me will recognize, I recommend that CEO’s adopt the mindset of having a business model that is a perpetual “work in progress” that you are continuously improving. Marketing should be looked at as one cog in the business model wheel. Based on my own experience and what I observe in the marketplace today, here’s a sequence of questions that could lead you down the right marketing path for your company. And, as you will see, I don’t necessarily think that conventional advertising and PR need to be a priority for most JP companies. Let’s start with the basics.

1.      Do your products really, truly have a competitive advantage at the price you are charging? No amount of marketing is going to make a weak product successful. If your products aren’t up to snuff, fix that first before wasting resources on building demand. In today’s world of easy access to product quality and price comparison information, you can’t fake it. And, be honest with yourself. It’s very easy to fall in love with your own creations even when competitive products are objectively superior.

2.      How and where do your consumer customers make their buying decision? Whether the product is a self-purchase or a registry/gift item, it’s probably accurate to say that the mom is the decision-maker. But, how does she make her decision regarding your product(s)? If you don’t have a handle on this (and aren’t periodically checking to see if things are changed), you’ll be possibly wasting a lot of marketing dollars.

For some categories like nursing, car seats, or monitors, moms often most trust recommendations from friends with babies or reviews from resources like Baby Bargains or Amazon.com. For cribs and other furniture, in-store personnel might be a big influence. For products like rattles and teethers, the purchase decision may well be made by moms without much outside input and not until standing in front of the display. Whatever your consumer’s buying process is, it should determine where you concentrate your communication efforts.

3.      How much of your resources can you afford to spend on marketing? I don’t believe in marketing on faith. Every company ultimately has to live within its means. And every dollar you spend needs to provide a return on the investment. So, when it comes to establishing a marketing budget, you need to look at the cost and benefit sides together. The questions are, (a) specifically what measurable things are you trying to accomplish in what time frame, (b) how much will it cost, and (c) does that make financial sense? Beware of marketing agencies that say, tell me how much you want to spend and we’ll spend it. Instead, they should be asking what outcomes you are looking for, telling you how much it will cost to achieve those outcomes, and holding themselves accountable for achieving them.

4.      What’s the most cost-effective marketing process for you? Once you’ve made sure your products are in fact superior to a sufficient segment of the market, you understand how consumers decide whether or not to buy your stuff, and you know what marketing needles you are trying to move and how much you can afford to spend to move them, you’re ready to design (or redesign) the marketing process portion of your business model. Given the importance of word-of-mouth in the juvenile marketplace, one of the first and most cost-effective opportunities you might want to look at is leveraging your existing consumer customers—as few or as many of them as you may have. They could easily become your “consumer sales force”.

One of the best marketing programs we ever created at The First Years was what we called the “Parents’ Council”. It started in the early 70’s as just a periodic gathering of moms who used our products and lived near our headquarters. Eventually it expanded via the internet to include many thousands of parents (mostly moms) nationwide. To this day, I run into people who tell me they were proud members of the Council and really appreciated the way we interacted with members. If I were doing it all again, I would be even more aggressive in trying to get everyone who bought one of our products to join the Council and even more diligent about making sure every member became a raving fan and enthusiastic spokesperson for our brand.

The way you can fuel the word-of mouth engine is first by having great products, but then by establishing ongoing positive relationships with the people who buy and like your products. If you’re nice to them, they’ll have positive things to say about your brand and the ball will start rolling. You can sign up people via inserts in packages, on your web site, or via social media. Once they’re on board, maintain an ongoing mutually beneficial dialogue. Help them with their issues, provide member benefits and purchase incentives, provide member-only information, ask their opinions, get reactions to new designs, make them realize you care. And, if you sell multiple infant/toddler products as we did, you can bring your other products to your customers’ attention on an age-appropriate timed-release basis. Finally, (see question #3) you can track effectiveness by seeing how many new members of your “club” were influenced to buy your products by existing or past club members.

Hopefully, this gives you some new things to think about when it comes to spreading the word. Don’t be afraid to try new marketing approaches compatible with the rest of your business model and institutionalize what works.  

Disclaimer: No warranties, express or implied, are contained herein. Purchasers, or users, of this information acknowledge that any errors or omission in the performance of the material contained herein or, any injuries resulting from its use, are the sole responsibility of the purchaser or user, and not JPMA or the author. Opinions expressed are those of the author only.

The lifeblood of many successful juvenile product companies is the regular introduction of innovative new products. Products have life cycles. At some point, whether because of new competitive entries or changing consumer tastes, sales of running items will start to tail off. So, if you want your sales to keep growing, and you’ve reached full distribution of your current line, you probably need to keep introducing new products to replace the tired old ones. Also, as I mentioned in an earlier post, it’s always safer to have a “diversified portfolio” of products rather than banking on just a few. Imagine then how much more successful your company could be if you could consistently generate a steady stream of great new product ideas year after year.

Many juvenile companies, even some larger players, rely heavily on submissions from outside sources or getting the US distribution rights for products found overseas. These are workable tactics and you certainly can be successful with those approaches. But, what if you didn’t have to depend on outsiders for great ideas? What if you could eliminate expensive royalties and limiting distribution contracts?

New product development is very much a numbers game. The more good ideas you can pour into the wide front end of the product development funnel, the more successful new product introductions will come out the other end. For consistency of quality and quantity year after year, you need a proactive idea generation process that keeps that funnel full of promising concepts. Here are some activities that could be part of your process to control your own new product destiny: 

·         Start with an understanding of your “corporate competitive advantage”. Before doing anything else, make sure you have a unique “superiority theme” that will run through all your products. For example, it might be exceptional durability, contemporary design excellence, superior facilitation of child development, state of the art technology, extended use for older ages, unparalleled convenience, or some other attribute that you can broadly apply. Having and consistently utilizing such a theme will both help you generate new ideas and help ensure their success in the marketplace.

·         Look for interesting products in the juvenile marketplace that would be even better if you put your stamp on them. This is one of the easiest and surest ways to generate new product ideas. If you have a sufficiently strong “superiority theme” (aka brand identity) of your own, you can succeed just by applying your secret sauce to a concept that already has shown traction with consumers. If you’re the “design aesthetics excellence” company, you could successfully compete by doing knock-em dead design versions of existing products. I’m not talking about “knock-offs”. That’s typically not a viable strategy. I’m talking about leveraging your unique brand strengths to create a product that is far more appealing to your target market than what the competition is offering. The reality is that often the company that first introduces a product concept is not the one that ultimately has the most success with it. What would be your brand’s version of that product is the actionable question.    

·         Immerse yourself in the consumers’ world and find ways to make their lives better. Every juvenile product company is in business for one purpose—to make the lives of new parents and their children better in some way. Parents perform multiple “processes” in their roles as caretakers—nurturing, feeding, bathing, grooming, educating, transporting, and so on. What if you approached new product idea generation as an exercise in parenting process improvement? What if you or your staff routinely observed how parents are performing these processes now and routinely looked for ways that they could do it with less stress, with more enjoyment, in less time, for less cost? Again, make sure you always look at things through your “superiority theme” lens. You’re bound to find ideas you can add to your list.

·         Proactively scan other marketplaces for new concepts that have juvenile product applications. One day a number of years ago, my wife came home from the supermarket with a new product for storing leftovers called GladWare. As you will recall, this Tupperware-like product was appealing because of its low cost and “semi-disposability”. Since my company was in the business of making cups, bowls, dishes, and utensils for toddlers, it occurred to me that there might be an application for this thin-wall injection molding technology in juvenile products. The Take and Toss line of products we developed quickly became by far our highest volume product group and is still highly successful today. Of course, it’s not necessary or desirable for you to wait for your wife, husband, or partner to bring home the stimulus for your next great creation. You and your staff could make a practice of doing periodic scans of new ideas and technologies in other fields. 

If developing successful new products year after year is important to you, you need to decide which techniques your company can best use to “mine for gold” and then apply them on a consistent basis. At The First Years, our marketing and design folks collaborated on idea generation using techniques like these as a part of their overall responsibilities. But, everyone in the company was encouraged to submit new product ideas and was recognized for it when they did. In future posts, I’ll be talking about how you can screen and enhance these ideas as they move through the product development process.   

Disclaimer: No warranties, express or implied, are contained herein. Purchasers, or users, of this information acknowledge that any errors or omission in the performance of the material contained herein or, any injuries resulting from its use, are the sole responsibility of the purchaser or user, and not JPMA or the author. Opinions expressed are those of the author only.