Added On: Monday, January 19, 2009

American Gangster Wisdom

Winners Can Quit

This is the last in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


6_WinnersCanQuit

Setting the Scene:
Thanks to a misstep by Frank Lucas, who wore a “clown suit” Chinchilla Mink coat to the Ali/Fraizer III fight, the police became aware of Lucas’ success. The “Blue Magic” distribution arrangement with drug lords and mafia families resulted in an assassination attempt on Frank’s wife. And, the unique supply chain operations deal between the Vietnam-based heroin supplier and United States Army personnel was crumbling due to the American pullout from the Vietnam War.

Despite these major setbacks, Frank was recklessly determined to continue growing his “Blue Magic” business.


Winners Can Quit
No business is destined to live forever. Sustained success is difficult to achieve. Decades-long success is attainable. However, century-long success is nearly impossible to realize.

The average life span of a Fortune 500 company is less than 50 years. 33% of companies listed in the Fortune 500 in 1970 were gone by 1983. These businesses either died, merged, or were sold off as smaller business units.[SOURCE]

What goes up, will go down. We know this to be true from a basic understanding of both physics and business.

Lucchesse family Mob boss, Dominic Cattano, once warned Frank Lucas that,“Success has enemies.” It doesn’t matter if we’re talking mob/drug business or legitimate business, the more successful a business becomes, the more competition (or enemies) it will attract. And the more competition (or enemies) a business faces, the more difficult it is for that business to find sustained success.

A business is a means to an end. Nothing more, nothing less. The business owner(s) defines what the end is. This end could be about money, security, accomplishment, legacy, nearly whatever.

Frank Lucas defined his end as never-ending power and wealth.

By the time his supply-chain operations were crumbling due to the impending American pullout from Vietnam, Frank was a powerful and wealthy man. He was winning at the business game he defined. But winning wasn’t enough for him, he wanted to continue growing his “Blue Heroin” business by any means necessary.

Frank made a final visit to his heroin supplier in Vietnam. A rogue General in the Chinese Kuomintang army presided over the poppy farm where Frank purchased his heroin. Like Frank, this General was a wealthy and powerful man. Unlike Frank, this General understood business is a means to an end … and anend is inevitable.

During their last visit together, the General gave Frank Lucas brilliant business advice…

QuttingWhenAhead

Now that’s a line worthy of contemplation … “Quitting while you are ahead is not the same as quitting.”

In the must-read business book, “THE KNACK,” Norm Brodsky spends a chapter talking about the decisions entrepreneurs face when growing their business. He says, “Growing a business is a matter of choice, before deciding to grow, make sure you know why you are doing it.”

Norm continues, “Business is just a means to an end. The question is, what’s the end? Where do you want to go in your life? Where do you want to be in five years from a family standpoint? What do you want to earn? How much time do you want to take off?”

When you know why you’re growing a business, then it’s easier to know when to quit and totally reasonable to quit.

However, if you, like Frank Lucas, are growing a business for never-ending power and wealth, then you’ll never know when to quit. And thus, you will eventually lose in the game of business.

Frank didn’t know when to quit and he was eventually arrested. He was convicted of conspiracy to distribute narcotics and sentenced to 70 years in prison. Because Frank cooperated with government authorities leading to the arrest and indictment of crooked police and drug dealers, he served 15 years in prison.

The Loudest is the Weakest

This is the fifth in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


5_LoudestWeakest

Setting the Scene:
The big city street life was new to Frank Lucas’ brothers and cousins. They were used to country life in the backwoods of North Carolina before being recruited into Lucas’ drug empire. Once in the game, these young men had instant status and inordinate wealth thrust upon them. It’s hard to stay humble when fame and fortune comes so easily.

Huey Lucas, Frank’s oldest brother, became friends with the flamboyant and always dapper Nicky Barnes. Soon after their friendship was formed, Huey began to dress less like his conservative brother and more in the superfly style of Nicky Barnes.


The Loudest is the Weakest
Much of Frank’s success as a drug lord can be attributed to his conservative and sophisticated outward appearance. He dressed like a CEO of a Fortune 500 company. Tailored suits. Crisp shirts. Sharp ties. Classy, without being attention-hungry.

The one quality, above all, Frank wanted to instill with his brothers and cousins was to stay humble in appearance so that one’s actions would always speak louder than one’s clothes.

When Huey Lucas flaunted his Nicky Barnes-like superfly outfit at a nightclub, Frank stepped in and dressed down his dressed-out brother. Frank told his brother he was “making too much noise” by wearing a “clown suit” that acted as a billboard to the police advertising, “Arrest me.

Listen to me,” Frank said to Huey. “The loudest one in the room is the weakest one in the room.”

Wow! Great line and so applicable to marketing where the loudest advertiser in the room, probably has the weakest product in the room.

It’s reasonable to assume weak and unremarkable products/services need the loudest advertising because it’s the only way they will get remarked about.

We’ll be seeing lots of “loudest in the room” advertising during the 2009 Super Bowl.

Most Super Bowl advertisers make lots of noise showcasing their “clown suit” gimmicky advertising with the hopes of grabbing our attention. The louder these companies talk, the weaker we can assume their product/service is.

Perennial “loudest in the room” advertisers are the major beer companies. The only thing worth talking about Bud Light, Miller Lite, and Coors Light is their loud advertising, certainly not their boring beer.

A recent example of “loudest in the room advertising” comes from Toyota. Their “Saved by Zero” campaign played incessantly during October and November of 2008. No one I knew was talking about how great the Toyota Tundra is or how unique the Toyota Camry is. Everyone was talking about how obnoxiously loud the “Saved by Zero” campaign was.

Think about this … when people talk about your brand, do they talk about the products/services your company does? Or, do they talk about the advertising it did? If people are only talking about the advertising your company does, then your “loud” advertising is potentially hiding a weak product.

Like Seth Godin, Frank Lucas believes in spending money to make products stronger and more remarkable rather than spending those same dollars to make the “loudest in the room” advertising messages.

For Frank, as we learned in an earlier lesson, this meant spending time, money, and action to make his brand of heroin, Blue Magic, more remarkable.

The marketing adage of Actions Speak Louder than Advertising fits right in with the Frank Lucas way of doing business.

Leadership Qualities

This is the fourth in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


4_leadershipqualities

Setting the Scene:
“Blue Magic” has transformed Frank Lucas from a nobody to a somebody. Business is booming and Frank needs people he can trust to run his daily operation. For years Frank was estranged from his large extended family in Greensboro, North Carolina. However, family is family and he trusts his brothers and cousins to help him expand his heroin business. The Lucas family is uprooted from Greensboro to live and work in the new family business of “Blue Magic” heroin.



Lucas_brothers

Leadership Qualities
Frank’s brothers, Melvin, Huey, Dexter, Turner, and Terrance, were new to the drug business and to the informal social rules of street life. They needed mentoring, just as Bumpy Johnson once mentored Frank.

Frank spent quality time with his brothers teaching them everything he learned about growing a business, earning respect, and being honest. His brothers were in total sponge mode, soaking up every last drop of streetwise wisdom from their older brother.



In this pivotal scene, Frank Lucas shared the core necessities his brothers need to become successful businessmen:


Frank’s core business leader necessities include: Honesty. Integrity. Hard work. Family. Never Forgetting your Roots.

Plus, as evident in that scene, a business leader needs to make Bold, Audacious Moves in order to become a somebody.

Brand Dilution

This is the third installment in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


3_branddilution

Setting the Scene:
Frank Lucas’ “Blue Magic” heroin became the market leader in New York City. Rivals said he had “upended the natural order of things” by selling heroin that is twice as good for half as much. Competitors left the heroin market because“nobody wants to compete with a monopoly.”

To accelerate growth of the “Blue Magic” business, Frank arranged wholesale distribution agreements with other drug lords and mafia families. This shift in business strategy made competitors part of the “Blue Magic” family, with Frank Lucas as the all-powerful CEO and Chairman of the Board.


Never Dilute a Brand
Nicky Barnes competed with Frank Lucas and the success of “Blue Magic” hurt the financial viability of Nicky’s operation. Grudgingly, Nicky signed on as distributor of “Blue Magic.”

In an effort to increase profits of his “Blue Magic” sales, Nicky began diluting the purity of the heroin to increase his inventory and his margins. He sold the diluted heroin as “Blue Magic.” Frank Lucas wasn’t pleased and addressed his concerns just like a top-notch Chief Marketing Officer would to any rogue field marketing manager, maverick product manager, or renegade franchisee.

Follow the encounter from this modified script snippet...

Redmagic_script_3

Businesses “chop down” their products all the time. In the quest to maintain profits or possibly, grow profits, businesses make strategic decisions to dilute their offerings. And if done inconspicuously enough, customers will hopefully never notice.

Frito-Lay chopped down its 12-oz bag of chips to 10-oz. bags. Price remained the same.

Hellmann’s chopped down its 32-oz. jar of mayonnaise to 30-oz. Price remained the same.

Dial chopped down its soap bars from 4.5-oz to a 4.0-oz size. Price remained the same.

Bounty chopped down the number of towel sheets per roll from 60 to 52. Price remained the same.

Kellogg’s chopped down its Fruit Loops cereal package size from 19.7-oz. to 17.0-oz. Price remained the same.

Iams chopped down its 6-oz. package of cat food to a 5.5-oz package. Price remained the same. [SOURCES: USA Today ; New York Times]

However, customers have noticed all this chopping down. According to a Consumer Reports study, 75% of shoppers surveyed said they have noticed smaller package sizes from their favorite brands. And, 71% of shoppers believe the package downsizing is a clear attempt by brands to hide price increases. It's interesting to note, 50% of shoppers prefer brands stop chopping down their products and instead, keep their old package size and simply raise the price.[SOURCE: Consumer Reports]

The takeaway lesson is simple … when a business decides to dilute its products, it runs the risk of drawing ire from customers.

The action step is also simple … if you find yourself saying or thinking, “A customer will never notice that.” Chances are, they will. Be prepared to deal with their reaction.


That's just one angle to this "Brand Dilution" lesson from Frank Lucas. I'm sure you can think of other lessons. Share them in the comments.

Launching New Products

This is the second in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


2_launchingproducts

Setting the Scene:
In the early 70s, heroin was widely available in the streets of New York City. Common practice was to dilute the heroin with sugars, chalk, flour, or powdered milk. By diluting the heroin, dealers were able to significantly stretch their product inventory and maintain their high prices without upsetting their customer base. Customers had come to expect lower potency heroin as the only choice despite a growing number of dealers.


Launching a Remarkable Product
Frank Lucas understood heroin customers would appreciate a richer, more potent product at a lower price.

To create such a remarkable product, Lucas had to go outside the established heroin supply chain. He cut out the middleman wholesale supplier and went straight to the source by forging a direct business relationship with a heroin producer in Saigon, Vietnam. He procured 100% pure heroin product and smuggled it into New York City using the US Army as the transportation channel.

And, instead of following the standard drug dealing practice of diluting heroin with adjuncts, Lucas made the strategic decision to differentiate his product by selling 100% pure heroin.

Plus, Lucas smartly packaged his heroin in small blue baggies and stamped each bag with the brand name, BLUE MAGIC. (“Blue Magic” references the purity of the product. When tested with chemicals, pure heroin turns blue.)

Frank Lucas simply followed the Purple Cow approach and the ZAG approach to creating a remarkable product.

Out-of-the-box thinking all-the-way. Just like other “Blue Magic” products and businesses … iPod … Starbucks Coffee … Method soap … Whole Foods Market … In-N-Out Burger … Amazon.com … and the list could go on and on.


Mentors Matter

This is the first in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


1_mentorsmatter

Setting the Scene:
Bumpy Johnson was an organized crime kingpin in Harlem. His considerable wealth, street smarts education, penchant for violence, and charitable community efforts made him a larger-than-life figure. For over 15 years, Frank Lucas served as Bumpy’s driver, bodyguard, and collector. Everything Frank learned, he learned from Bumpy. So when Bumpy suffered a heart attack, Frank vowed to continue what his mentor started.


Frank Lucas on Bumpy Johnson
“He was my boss. My teacher. He taught me a lot of things. He taught me how to take my time, Taught me that if I was going to so something to do it with care, with love. Taught me to be a gentleman.”

Mentors Matter
The benefits of having a mentor cannot be understated. Developing a one-on-one relationship with someone you respect for their know-how and daily demeanor is a critical factor for many successful businesspeople. Mentors offer guidance, connections, criticisms, and support that can only help someone reach their professional goals.

Lisa Denny Compton was my mentor. She was also my boss. Without her patient counseling and marketing coaching, I shudder to think where my business life would be.

A mentor doesn’t have to be your boss. Mentors can came from anywhere … your co-worker, your neighbor, your pastor, your aunt, anyone. If you respect someone for what they have done/are doing, they can be your mentor. You just have to watch, listen, and apply the lessons they teach you.

American Gangster | Business Lessons

Over the Holidays I watched AMERICAN GANGSTER again. Great movie. Great story, Great acting. Great cinematography. Great business wisdom.

Yes. Great business wisdom.

I know what you’re thinking … AMERICAN GANGSTER is a film about a drug dealer (portrayed by Denzel Washington) and the New York City cop (portrayed by Russell Crowe) who busted a big-time heroin ring. Business lessons to be learned?

Oh, yeah. Lots of business lessons to be learned, including: Mentors Matter, Launching New Products, Brand Dilution, Leadership Qualities, The Weakest Talk the Loudest, and Winners Can Quit.

[FYI … Long-time Brand Autopsy readers will recall a series of posts from February of 2004 highlighting STREET CORNER SELLING LESSONS from a book called Dealing Crack (Bruce Jacobs). So this isn’t new territory for Brand Autopsy.]

Americangangster_businesslessons

American Gangster synopsis:
Following the death of his employer and mentor, Bumpy Johnson, Frank Lucas establishes himself as the number one importer of heroin in the Harlem district of Manhattan. He does so by buying heroin directly from the source in South East Asia and he comes up with a unique way of importing the drugs into the United States. As a result, his product is superior to what is currently available on the street and his prices are lower. His alliance with the New York Mafia ensures his position. It is also the story of a dedicated and honest policeman, Richie Roberts, who heads up a joint narcotics task force with the Federal government. Based on a true story. [SOURCE]


AMERICAN GANGSTER | BUSINESS LESSONS

LESSON ONE
Mentors Matter (Jan. 8)


LESSON TWO
Launching New Products (Jan. 9)
LESSON THREE
Brand Dilution (Jan. 12)
LESSON FOUR
Leadership Qualities (Jan. 14)
LESSON FIVE
The Loudest is the Weakest (Jan. 15)
LESSON SIX
Winners Can Quit (Jan. 18)

Labels:

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home