Using Rap to Run Companies; Launch on the Cheap; Ownership Thinking; RH Workshop Schedule
February 23, 2012
Best Website; Ultimate Question; Good Profits; Australian Growth Summit Next Week
March 8, 2012

China’s Biggest Challenge; No Contracts with Suppliers; Why Buffett Hopes Stock Underperforms

"…keeping you great"


China's Biggest Challenge…at least for growth firms, is employee retention which is running around 6 months for many firms. I'm here with a large group of CEOs and executives of growth firms and have heard from almost everyone the challenges of recruiting and retaining talent. Some positions are rotating every three months; leaders are hiring anybody they can just to fill positions; and workers know they are in the driver's seat so they show up late for interviews, display a carefree attitude, and then leave jobs early to go on more interviews. And headhunters are running rampant.

Apple's Factories Double Wages — over the last 36 months, wages have more than doubled at the China Foxconn factories, from 900 yuan/month to 2200 yuan/month ($144 to $352). Since Apple has fatter margins than Dell or HP, this is putting huge price pressure on Apple's two competitors. And while Foxconn factories have thousands of potential employees lined up outside their recruiting center, other smaller factories have been suffering for labor since the beginning of the Chinese New Year. All of this craziness will put upward pressure on inflation globally since the US and other developed nations have relied on inexpensive Chinese goods to bolster the purchasing power of their citizens.

350+ Referrals and 100 Offers — all with 10 days to spare. Take 4 minutes to read the latest "Growth Guy" column on Talent Acquisition and the case study of how Singapore-based QuEST recruited 100 engineers in the US in less than a month – and it was over the holidays! Almost every client I talk with is in a hiring mode, so take a page or two from QuEST and engage everyone in the firm to help out and resulting in more, and a wider range of, candidates. Notes Ajay Prabhu, COO, "One particularly interesting referral was a high-school science teacher, someone we might have never found." Looking for a career change, she had made it to the last round of interviews at the time of this writing.

No Contracts with Suppliers — Notes Reed Holden in my favorite pricing blog, McDonalds works "with their key suppliers without contracts, instead with a simple handshake. As you would expect, trust is a key component of that relationship-and it is mutual trust. Everyone works for the betterment of the customer, the franchise, and the company." And I wasn't surprised to read that Steve Jobs' deal with the music industry was contracted on a single page. I personally can't stand lengthy contracts – writing them, reading them, defending them. Take 3 minutes to read the details behind McDonalds' relationship and pricing structure with suppliers – then figure out a way to cut your contracts down to a simple page.

Why Buffett Wants Stocks to Underperform — last Saturday Warren Buffett released his latest 22-page letter to the shareholders of Berkshire Hathaway. If short of time, go to the bottom of page 6 and read why Buffett hopes IBM's stock, of which it owns 5.5%, languishes for the next five years. It's a powerful lesson in investing. And then read the rest of the letter for more insights.

Australian Growth Summit March 14 – 15 — after China this week, I'm off to Australia. Jim Collins, Fred Reichheld, Jack Daly, and some outstanding Australian gurus headline the program.

Verne Harnish
Verne Harnish
Verne Harnish is founder of the world-renowned Entrepreneurs’ Organization (EO) and chaired for fifteen years EO’s premiere CEO program, the “Birthing of Giants” and WEO’s “Advanced Business” executive program both held at MIT. Founder and CEO of Gazelles, a global executive education and coaching company with over 150 coaching partners on six continents, Verne has spent the past three decades helping companies scale-up. The “Growth Guy” syndicated columnist, he’s also the Venture columnist for FORTUNE magazine. He’s the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored The Greatest Business Decisions of All Times," for which Jim Collins wrote the foreword. Verne also chairs FORTUNE Magazine’s annual Leadership and Growth Summits and serves on several boards including chairman of The Riordan Clinic and the newly launched Geoversity. He is an investor in many scale-ups. A father of four, he enjoys piano, tennis, and magic as a card-carrying member of the International Brotherhood of Magicians.