August 2018

Episode #206: Interview with David Meikle

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David Meikle’s career in marketing communications spans more than two decades during which time he has worked with Grey London and Ogilvy & Mather and for some of this biggest brands and brand owners including Unilever, Ford, GlaxoSmithKline, Nestle, American Express and BP.

In 2003 David joined Ogilvy Russia as Group Managing Director. In less than four years Ogilvy Russia had become WPP’s largest creative group in the Russian Federation, increasing agency revenues by more than 500%.

Returning to the UK, David founded the marketing consultancy and intermediary, Salt Partners. While working for clients such as the Post Office, Bayer, BMI Healthcare and several leading creative and media agencies, he developed the strategic framework that would become The Monkey House and wrote his first book: How to Buy a Gorilla (2017), renaming his business after the book in 2017. David lives in Oxfordshire, with his wife, his son, a Russian-born Welsh terrier called Knopka, a whippet called Molly and a couple of chickens. 

Ed’s Questions

Marketing in Russia: Is that like selling snowballs in hell?

Put it in historical context for us. The famous ad “First Over the Wall,” by Saatchi & Saatchi. [You can see this in Paul Arden’s book, Whatever You Think, Think the Opposite, 2006]. In 2003, how long had Ogilvy been in Russia?

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How long were you in Russia?

So you’ve been out of Russia for 10 years. Do you still have friends over there?

Has it significantly changed in the last 10 years for advertising, with Putin, etc.?

One of things going on here in the US with Trump and Tariffs, and all that, one comparison I heard is we could have free trade with Russia but it wouldn’t stop the need to pay bribes to get things done.

This is one of the few books I’ve read, that actually mentions the theme music we use here at TSOE.

I work for Sage, the brand name is well known in the UK, but less well known in the USA. Many of the organizations, and listeners to the show, are partners of Sage. Let’s do a deep dive on the Spider Monkey, which is probably the type of advertising that these organizations should be doing. Do you agree with that?

The way Peter Drucker looked at risk, most small companies miss the risks they can’t afford not to take.

I’m going to steal where Ron was probably going to go: What’s it like to work with Rory Sutherland?

Ron’s Questions

Why do I want to buy a gorilla, and why did you write this book?

Explain the Gorilla ad for our listeners.

The Gorilla is high-impact, original, engaging, creative, transformative work. The rest of the Monkey House is:

  • Orangutan—some brands need to play it safe (defending market share)

  • The Spider Monkey—lower available media investment; punch above weight (growing/stealing market share)

Why is Gorilla advertising so rare? I was in Australia earlier this year presenting to advertisers, and I spoke with a creative from Saatchi and asked him which country was most creative in advertising. He said, hands down, New Zealand. What’s your take on that?

I love the “unholy trinity” analogy. In the book, you call it the Mexican standoff: each of the three—agencies, marketers, and procurement—are exclusively in pursuit of his own interest, prepared to kill the others to get it. Rather than focus on wishes/interests of agencies, marketing and procurement, you want focus on business problem that the three need to solve, but that doesn’t seem to happen?

Speaking of confessions of plagiarism, when you spoke in Toronto, and in your book, you talked about leading a class full of procurement people, and you asked two questions:

  • How many are personally incentivized to save money on marketing?

  • Keep your hand up if your bonus is any way contingent on the value of the marketing services you produce?

[That’s brilliant since Brand ROI > agency price + media + production, etc.]

You say we need to hold procurement to the same KPIs as marketing. But we don’t do this. Why not?

A lot of time we don’t say “no” to procurement, which is really frustrating.

There has to be a risk/return tradeoff with procurement, since it’s an investment.

You quote Stephen (M.R.) Covey’s book, The Speed of Trust:

“Without trust we don’t truly collaborate; we merely coordinate, or cooperate at best. It’s trust that transforms a group of people into a team”

How do you think the billable hour has played into the erosion of trust and the unholy trinity?

One of things I love about your book is that you continually say that marketing is about persuasion, it’s an art not a science. You wrote hourly billing is easy to measure, but we might as well evaluate an artist based on the amount paint they say they’ll need. It’s an input measure, not an outcome measure.

Our colleague Tim Williams [See Episode #23 and #133] believes in differentiation and specialization. Is that what you advise your agency customers as well?

Should the marketing community get over this conflict of interest concept, that if we work for Coke we can’t work for Pepsi. But these companies both hire McKinsey?

Have you finished The Americans?

Episode #205: Interview with Mark Skousen

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Mark Skousen, Ph. D., editor of Forecasts & Strategies, is a nationally known investment expert, economist, university professor and author of more than 25 books. In 2018, he was awarded the Triple Crown in Economics for his work in economic theory, history and education, and has been identified as one of the 20 most influential living economists (superscholar.org). He earned his Ph. D. in monetary economics at George Washington University in 1977. He has taught economics and finance at Columbia Business School, Columbia University, Barnard College, Mercy College, Rollins College and Chapman University, where he is currently a Presidential Fellow. He also has been a consultant to IBM, Hutchinson Technology and other Fortune 500 companies. He is the producer of FreedomFest, “the world’s largest gathering of free minds,” which meets every July in Las Vegas. (www.freedomfest.com). FreedomFest attracts several thousand people from around the world.

Ed and Ron are honored to interview economist Mark Skousen, one of Ron’s favorite economics author. He is a former analyst for the Central Intelligence Agency, a columnist to Forbes magazine and past president of the Foundation for Economic Education. His economic bestsellers include: The Structure of Production, Economics on Trial, Puzzles and Paradoxes on Economics, The Making of Modern Economics, The Big Three in Economics, EconoPower, and Economic Logic, a market-friendly textbook. In 2009, The Making of Modern Economics won the Choice Book Award for Outstanding Academic Title. Based on his work The Structure of Production, the federal government began publishing a broader, more accurate measure of the economy, Gross Output (GO), every quarter along with GDP.  It is the first macro statistic of the economy to be published quarterly since GDP was invented in the 1940s.

In honor of his work in economics, finance and management, Grantham University renamed its business school, “The Mark Skousen School of Business.” Dr. Skousen has lived in eight nations and traveled and lectured throughout the United States and 70 countries. He grew up in Portland, Oregon. He and his wife, Jo Ann, and five children have lived in Washington, D.C.; Nassau, the Bahamas; London, England; Orlando, Florida.; New York, New York; and Orange, California.

What We Discussed Before Mark Came On

Mark’s Economics in One Page Essay, which we discussed in the first segment before Mark came on the show.

We also discussed Mark’s book, The Structure of Production: New Revised Edition, Mark Skousen, published in 2015, which explains the U.S. Department of Commerce’s new data series, “Gross Output by Industry.” 

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  • Cato Podcast with Mark Skousen, George Gilder, Steve Forbes

  • The production process, not consumption, is most important aspect of economic life (Marx’s wanted to nationalize the means of production, not consumption)

  • On April 25, 2014, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce announced a new data series as part of the U.S. national income accounts, and the BEA began reporting “Gross Output by Industry.”

  • Measures spending throughout the entire production process, not just final output.

  • Measures total sales volume at all stages of production, includes all business-to-business (B2B) transactions that GDP leaves out.

  • Third quarter of 2014, GO hit $31.3 trillion, almost twice the size of GDP, which was $17.6 trillion. GDP measures the “use” economy, GO measure the “make” economy.

  • According to Mark, GO is now approximately $43 trillion dollars (GDP is $20 trillion), and is a leading indicator, it’s more volatile than GDP.

  • GDP is comprised of consumer spending, government spending, investment, and net exports, with the first two of these being the biggest contributors.

  • Overemphasizing consumer and government spending as the driving force behind the economy, ignores supply-side benefits of saving, business investment, and technological advances.

  • “Household spending generates more than two-thirds of total economic output, latest U.S. data on GDP, $17.6 trillion, consumer spending $12 trillion (68%), government spending at $3.2 trillion (18%), Private investment $2.9 trillion (16%), (Net exports at -2 percent.)

  • GO consumers less than 40 percent ($31.3 trillion), Spending by business $16.6 trillion, more than 50 percent of economic activity.

  • Consumer spending is largely the effect, not the cause, of prosperity

  • GO over $23 trillion in 2014. GO significantly more sensitive to the business cycle than GDP. 2008–2009, nominal GDP fell only 2 percent, GO fell by 6 percent and B2B spending collapsed by 10 percent.

  • BEA’s measure of GO does not include all sales at the wholesale and retail level.

  • Wholesale and retail trade figures are included in GO only as “net” or value added.

  • Serious omission, more than $7 trillion dollars in business spending in 2014.

  • We need to include gross wholesale and retail trade figures. They are legitimate B2B transactions that deserve to be counted.

  • I created my own aggregate statistic, Gross Domestic Expenditures (GDE), includes gross sales at the wholesale and retail level and is therefore significantly larger

  • GDE in 2014 at over $37.5 trillion, 25 percent higher than GO and 120 percent more than GDP.

  • Consumer spending actually represents only about 31 percent of the U.S. economy.

  • Adoption of Gross Output most significant advance in national income accounting since World War II.

  • GO is a reflection of Say’s law, a supply-side statistic, while GDP is a symbol of Keynes’s law, a demand-side number

  • “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts”

Ron’s Questions

Mark, we met at Laissez-Faire Books in San Francisco upon the publication of your book, The Making of Modern Economics: The Lives and Ideas of the Great Thinkers, now in its Third Edition (2016). It’s a fantastic book. You discuss the economist’s ideas, but also their little peccadillos.

Explain the Gross Output statistics? (See discussion above).

With this measure, you destroy that old trope that consumer spending is 2/3 of the economy, which is absurd. Either consumers aren’t spending enough, or they’re not saving enough.

Behavioral economics has become a massive field of study within economics. What is your take on behavioral economics and its findings so far?

You wrote your own economics textbook, Economic Logic, which is excellent. What does it tell us about the state of economic education that Alexandria Ocasio-Cortez can get a degree in economics and be a devout socialist, without being able to coherently explain it, other than that everything is free and the wealthy should pay for it all?

Economics on Trial is another fantastic book you wrote. What about the compromise idea that you are responsible for health care up to 15% of your income, and after that, single-payer?

Ed’s Questions

From an economic policy perspective, what grade do you give to the first 20 months of the Trump presidency. Another way of saying it is do you think your colleague Larry Kudlow is pulling what’s left of his hair out?

You’re one of the few economists who have successfully integrated micro- and macro- economics. Since most of our listeners are business owners, what economic principles do you think are most important for small and medium business owners to understand?

What are your thoughts on blockchain technology, and Bitcoin?

What are your thoughts on the “Gig Economy,” is this a major shift, or just a tweak on the way things are done?

What does A.E.I.O.U stand for?

Mark has signed a couple of Ron’s books with A.E.I.O.U. It comes from the tombstone of Frederick III, the first Hapsburg emperor. Many believe it is Latin or German for “Austria will rule the world.” For Mark, it means, “Austrian Economics Is Overall Universal.”

Thank you, Mark Skousen, for appearing on The Soul of Enterprise!

Episode #204: Interview with John Stossel

Biography

John Stossel is an American consumer television personality, author, and libertarian pundit, known for his career on both ABC News and Fox Business Channel. Stossel's style combines reporting and commentary. It reflects a libertarian political philosophy and views on economics which are largely supportive of the free market.

He began his journalism career as a researcher for KGW-TV, was a consumer reporter at WCBS-TV in New York City, and then joined ABC News as a consumer editor and reporter on Good Morning America. Stossel went on to be an ABC News correspondent, joining the weekly news magazine program 20/20, going on to become co-anchor.

In October 2009, Stossel left his long-time employment at ABC News to join the Fox Business Channel, as the host of a weekly news show on Fox Business, Stossel, which was broadcast from December 10, 2009, to December 16, 2016.

Ron’s Questions

You went from a crusading consumer reporter—who won 19 Emmy’s and lots of other awards—to a leading voice in the libertarian movement. How’d that happen?

Were there certain books, or authors, who influenced you towards libertarianism?

In your book, Give Me a Break (2004), you discuss the FDA announcing a new heart drug that will save 14,000 lives per year. Not one journalist asks: does that mean you killed 14,000 people per year delaying the approval. Why do you think that is—that people think the government can do no harm?

I think of all the government regulations—like the Consumer Product Safety Commission, the ultimate in mamby-pamby-eat-your-vegetables Nanny statism, designed to create a riskless world. But as you point out in the book, it’s not the Nanny State: It’s the Nurse Ratched State (from the movie, One Flew Over the Cuckoo’s Nest). It seems like regulations have gone too far to the other side. Do you agree with that?

We hear a lot about “market failure.” But I’ve learned from economists that a lot this failure is due to no market existing (KFC is not going to let chickens become extinct). In the book, you talk about fires, and today in California fires are burning 455 square miles. A UC Berkley study said there are 100 million dead trees, which is kindling. [Private forests are not likely to burn. If it did, the CEO of International Paper would be public enemy number one, and his company would face bankruptcy, etc.] And yet people will call for government to control more land. Isn’t it frustrating?

We have a mantra here at TSOE: The only antidote to poverty is wealth creation, and you point out that poverty is the number one killer on the plant, more so than smoking, driving, murder, fires, toxic waste, flying, etc. Capitalism has lifted nearly 1 billion people out of poverty in the past 10-15 years, yet this story is unreported in the main-stream media. Why do you think that is?

In the book, you write “I told Donald Trump he was a bully when he tried to force Vera Coking out of her home so he could expand his casino in Atlantic City.” “Nobody talks to me that way,” he said. She kept her home. How would you grade President Trump so far?

The moral hazard of government: FDA, SEC, etc., gives its imprimatur, and consumers/investors think all is well, engage in the risky behavior.

In the book, you quote H.L. Mencken: “The urge to save humanity is almost always only a false-face for the urge to rule it.” What is your take on Climate Change?

Do you think there’s a strain in the environmental movement—the so-called water melons, green on the outside but red in the inside—since the call is always for more taxes, government, etc.?

When you see the popularity of Bernie Sanders, and Alexandria Ocasio-Cortez (the person that would result if Chauncey Gardner had a child), and she’s got a degree in economics and international relations from Boston University, and a majority of young kids support socialism, are you optimistic with respect to liberty and freedom in the future expanding?

Ed’s Questions

You had a piece on Reason.tv yesterday on the economic ignorance of Bernie Sanders. Sometimes it seems as if the libertarian party can’t get out of our own way. What’s your observation?

One of the first reports you did for Reason.tv was on saving the rhino, and you confront the environmentalist on the use of artificial horns. You seemed to get very perturbed with her, since she insisted on a total ban.

In a more recent interview with Jordan Peterson, he seemed more angry than anywhere else I’ve seen him. Do you think he’s being worn down by all that is happening to him?

Another piece I just love you did around June, you had a confrontation with the Mayor and City Council of Edgewater, New Jersey about a housing development they are not allowing to be developed because they didn’t know the right people. Any update on that situation?

Another challenge many people have is seeing the difference between capitalism and cronyism. I think these terms have been conflated. Is that your observation as well?

Bill Gates seems to have been chased away by the Department of Justice, accused of giving away a product to consumers for free.

One of the things that just makes me crazy around the holidays is the notion that businesspeople have to give back, which implies a taking that never took place.

There’s a great theory that economist Mike Munger makes [See our interview with Michael Munger, Episode #190]: The Unicorn Theory of Government. How the government is going to solve their problems. We also have to be open to the fact that the libertarians have our own unicorns—the free market will solve everything. Do you see some role for government, or are you moving more towards anarcho-capitalism?

Clearly what you do is incredibly creative process, tell me how you work—how does your team go out and vet stories, what’s that process like for you guys?

What do you try to do differently than what you did at the larger networks; is there anything different to the process?

How many videos are you working on at any given time?

Do some not make it at all?

Looking back on the last year, what were some of your favorite videos?

When did you first read Ayn Rand’s Atlas Shrugged?

Some of her insights were so prescient, and seem to be becoming a reality?

Are we going to get another book from you, or are you mostly going to concentrate on the videos?

Episode #203: Interview with Stephan Liozu

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Check out the “commercial free” edition of The Soul of Enterprise at www.thesoulofenterprise.com/patron, where you can subscribe to the show, receive each episode commercial free, and listen to bonus episodes.

Stephan's Biography

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Stephan M. Liozu is Chief Value Officer of the Thales Group (www.thalesgroup.com) and Chief Marketing Officer of Thales North America. He is also an Adjunct Professor & Research Fellow at the Case Western Research University Weatherhead School of Management. Stephan holds a Ph.D. in Management from Case Western Reserve University (2013), an MS in Innovation Management from Toulouse School of Management (2005), and an MBA in Marketing from Cleveland States University (1991). He is a Certified Pricing Professional (CPP), a Prosci® certified Change Manager, and a Strategyzer Business Model Innovation Coach. Over the past few years, Stephan published academic articles in the Journal of Revenue & Pricing Management, Business Horizons, MIT Sloan Management Review, and Industrial Marketing Management.

He has also written several articles on strategic pricing issues for the Journal of Professional Pricing and is a regular presenter at Professional Pricing Society conferences in Europe and North America as well as the Strategic Account Management Association conferences. He authored four books, Value Mindset, (2017), Dollarizing Differentiation Value (2016), The Pricing Journey (2015) and Pricing and Human Capital (2015). He also co-edited three books, Innovation in Pricing – Contemporary Theories and Best Practices (2012) and The ROI of Pricing (2014), and Pricing and the Salesforce (2015).

Ed’s Questions

Tell us about your background, and what led you to become a pricing expert in the first place?

Do salespeople make lousy pricers?

One of the things I’ve learned in consulting is to replace advice with curiosity, looking at your online videos on YouTube, one of things you mention is curiosity one of the most important characteristics of people who value sell.  Why is that? It’s not something businesses normally look for in the hiring process.

You make a distinction between value-based selling and negotiating around value. Explain?

In addition to being the CVO at Thales Group, you’re the author of several books and an adjunct professor and research fellow at Case Western Reserve University, how do you see the intersect between your background in academia and private industry, how do they complement each other?

You do a lot of work with leadership development, and I’m interested in the overlap between that and your work in pricing?

Another key success factor you talk about is finding the right customers. What are your thoughts on the marketing aspects of trying to attract those customers who get value and want to have that conversation about value?

Our colleague Tim Williams teaches that a brand can stand for only one thing—you can’t be both Ruth’s Chris and McDonalds at the same time.

You were once a CEO. How did that work out, did you have control over pricing?

Do you think pricing is more art or science?

Ron’s Questions

Do you believe pricing is now a profession? Only 9% of universities offer an emphasis on pricing.

Why do you think it is the case that, according to data from the Professional Pricing Society, that fewer than 5% of the Fortune 500 have a full-time function exclusively dedicated to pricing [Stephan’s believes it’s now 10-15%]?

How important is the CEO and C-Suite support to the pricing function?

I know you have the title of Chief Value Officer, how do you define that role, what does it mean to you?

Ideally, who do you think the CVO, or CPO, should report to?

In the book Innovation in Pricing – Contemporary Theories and Best Practices

(2nd edition, 2018) which you edited with Andreas Hinterhuber, you have a chapter with Kellie Ecker titled “The  organizational design of the pricing function in firms: a center-led management approach,” wherein you lay out four possible designs of the pricing function:

  1. Centralized

  2. Decentralized

  3. Center-supported

  4. Center-led

You prefer Center-led, why?

Tell me about your book Pricing and Human Capital (2015), since that’s a big theme of this show and Human Capital is some 80% of the world’s wealth?

Since the Great Recession of 2008, corporate profits have done relatively well, even up over historical levels. Do you attribute any of that to the pricing skills that have entered organizations?

The incidence of price wars has also decreased due to these skills.

During the break, we asked Stephan what industry he believed is the best at pricing. His answer: chemicals.