Is Greed Good? | A Look at Business Vision and Profit

Originally posted at Pro/Vision Coaching.

As our friend Gordon Gekko once pointed out, “Greed is good.” It is the oil that keeps the economic machine running, the grease that lubricates our free market, and the sludge that is produced from our toxic waste sites. I contend to you, how good is greed?

http://www.youtube.com/watch?v=PF_iorX_MAw

Our free market economic system relies on one very simple premise: supply vs. demand. Without demand, there would be no reason for supply. Without supply, demand would rise so high that even reasonable adults would transform into raving lunatics running on pure bloodlust for the next Tickle-Me-Elmo. Welcome to the holidays.

“After Target decreed that Black Friday would start at midnight Thanksgiving night and that employees must report to work at 11 p.m., an Omaha worker, Anthony Hardwick, posted a petition at Change.org asking the company to move the official start of Christmas shopping back to 5 a.m. Friday. Response from workers and others has been stellar: 192,000 signatures by Monday.” CNN.com

Each year we have watched these stores open earlier and earlier, tempting shoppers with great deals at horrible hours. It’s simple (and good business): this time of year there is an inherent rise in demand for the holidays. Because of that rise in demand, supply becomes in danger. Small stores cannot keep supply on the shelves and the wholesale market caters to those who can continue to keep demand on the rise. Big-box stores such as Target and Walmart have the infrastructure to handle holiday demand, keeping a relatively decent supply of products on their shelves for the shoppers. Obviously they want to sell more than other stores, so they compete with each other; if Target opens at 4am, Best Buy will open at 3.

The people that stand to be hurt are the employees, all of whom have significant gripes against their big-box employer (see americanrightsatwork.org to see examples of offenses). Not only do people have to be there during open hours, but stocking, delivery, preparation and clean-up work are needed also. Can you imagine shopping in a Target ravished by holiday shoppers with no clean-up? Not fun. Truth be told, though, in this instance, the stores are only responding to the public. If no one shows up to go shopping at 2am, do you think Target would remain open at that hour? No.

Thus, the question remains. Who is to blame? Is it the big-box stores? Is it ourselves? Is it a flawed economic system? Is it Cap’n Crunch’s? Gordon Gekko was right. Greed IS good – at least to a point. Greed is the emotion that pushes us to be the best doctors, inventors, teachers, producers, etc… in a free market economy. This is based on the simple principle of competition. I want a better life and to reach it must do better than others. Good business coaching focuses on this – VISION. This can be a good thing, because in order to reach that, we need the help and cooperation of other people. Thus, the “if you profit, then I can profit” ideal was born. As communal greed grows, life grows. It builds cities, national parks and green energy.

This philosophy fails when restraint dies, giving us no control over our material desires. Greed without restraint pushes us to dangerous ends that destroy others and search for our good at the cost of others as opposed to the good of all. It is this mentality that leads to corruption and is the cause of many of the symptoms our economy currently faces. When we look to help ourselves with the point of doing it at someone else’s expense, we cross the line. That greed does not rebuild our economy.

Maybe the best lesson this holiday season is a classic proverb that can help us look at things from a different approach. “It is better to give than to receive.” If we all give, then we all will receive; if you profit, then I can profit. After all, I would want my children to receive the best education possible so they have the opportunity to reach their potential. If I keep cutting the wages of our teachers, then I am not promoting good greed that grows a community (and my children’s future), I am just being selfish.

Selfishness is not vision. Vision for a better life for yourself and others is a great thing and the ultimate description of profit.

Whether it’s Baseball or Business, it’s All About the Numbers

Take me out to the ballgame; take me out to the crowd.

Buy me some peanuts and cracker jacks; I don’t care if I ever get back.

What a beautiful stanza to a gorgeous song that represents all that is right with this world. Baseball. The greatest game ever played, especially if you are in business.

I can already see the bevy of comments that will hit me on this post about my obsession, and specifically why I chose to write an article like this at this time, so at least I’m prepared. Yes, I just attended an entire series at Safeco Field in Seattle, though for the sake of my current city popularity, I will decline to admit my favorite team. The first comment to guess correctly wins a prize that will be revealed at the end of this post.

While attending these baseball games, one cannot avoid being smacked in the face at a seemingly constant stream of statistics. “In June 2010, Felix Hernandez won the American League Pitcher of the Month Award for his flawless portrayal of Felix the Cat in the local theater’s rendition of Rent 3D: Alley Cat. This was his 5th AL PoM Award in 6 possible months.” Obviously that means he had a good year. You know he did well because NUMBERS DON’T LIE, at least not like your Uncle Herbert.

So what? Who cares that I can make up odd baseball and pop culture connections? Here’s why: it’s all about the numbers. If you need to know how many baseballs you need to sell in order to keep your store open, you must rely on the numbers. Take a look at this – did you know that the average operating budget for a Major League team was $84 million dollars in 2009? The Seattle Mariners’ budget was at $98 million. Their average ticket price was $30. So how many seats did they need to sell to cover their expenses? Knowing they play 82 home games, the equation becomes simple:

(# of tickets sold x $30) x 82 games = ticket income If ticket income had to match operating expenses, the equation would look like this: 98,000,000 / 82 = 1,195,122 (income needed per game) / 30 = 39,837 (seats that must be filled)

Safeco Field has a seating capacity of 47,878 for baseball games. That means Safeco would have to be at least 83% full each home game to make budget. In 2009 (according to ESPN), Seattle averaged 27,116 tickets sold per game. Going back to the original equation, that means Seattle pulled in $66,705,360 in ticket income in 2009. Put that into the next equation: income – expenses = profit. $66,705,360 – $98,000,000 = $-31,294,640

OUCH! It’s a good thing they have other ways of generating income. Do you? Do you know what your income needs are and where they are coming from? The moral of the story is this: numbers are cold, hard, and factual. They will tell you the real story of your business in a way that would make J.K. Rowling look like your Uncle Herbert. Use them, do not be afraid of them, hate them, but above all trust them. The best businesses know it’s all about the numbers.

And, by the way, the prize is a cup of coffee and a pleasant conversation.