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Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy Authors: N Published year: 2004 Pages: 5-7/130 |
Mark L. Yoseloff
Chairman
&
CEO
Shuffle Master Company
The key to building a business is to begin with a well- articulated strategic vision. Often this can be stated in very few words, but those words are the basis for all that follows . So, for example, two entrepreneurs may decide to enter the dry cleaning business. For one, the strategic vision is to provide the absolute highest quality service, while the other envisions offering the absolute lowest prices in the market. Although both of these businesses are in the same category, it is clear from the outset that they will take two very different courses based on the strategic vision upon which each is founded.
Our company was founded upon an innovative idea, leading to a single product in one category of business. From there we have consistently expanded and diversified our product offerings. Twelve years later, we offer numerous products in four different categories. Yet, throughout this period, our strategic vision for the company has remained the same: namely, to provide easily measured improvements in operating results for our customers through innovative entertainment and utility products and through world-class customer service.
Growth is crucial to maintaining a successful business. We have grown and will continue to grow our business by both expanding existing business segments and adding additional segments that fit our selection criteria. Having built a franchise in a particular business segment often allows for added products in the category. Typically, this is done by differentiation. For example, with automatic card shufflers, we began twelve years ago with a single model. We now have five models, each with a specific use. Additionally, we have created a product life cycle based on constantly improving the technology of the products. Therefore, while our underlying philosophy and business strategies have not changed, we are always seeking changes that increase the value and quality of our products.
In considering new profit centers based on either expanding a category or entering a new category, we begin with a simple question: How does each new product ultimately add to our profitability?
When evaluating new product opportunities, we are guided by four categories: margin, intellectual property, distribution channel and return- on-investment. First and foremost, we seek high margins and minimal competition. This generally leads us to design our products for specific niche markets. In doing so, we avoid the primary danger of an increase in productsa decrease in specialization, or the corollary problem of moving toward less innovative, lower margin commodity products. In this analysis we are much less concerned with growing revenue for its own sake than we are with the profitability of the revenue generated.
To protect our unique products, we take advantage of the only legal form of monopoly in the United States and elsewhere in the world, namely patents. One characterization of our company is that we are in the business of commercializing our growing portfolio of intellectual property. Within 12 years , we have over 125 issued patents and over 100 pending patents. Patents provide a significant barrier -to-entry for competitors . We add further protection through our numerous trademarks and copyrights.
Considering your distribution channel is also essential to finding potential products and profit centers. Although we operate in five business categories, all of them are in the general category of Casino Equipment. Our regulatory licensing, sales force and reputation for quality and service have been built by selling into this channel. As we evaluate new opportunities, it is important to be mindful of the competitive edge that we have built in this business area and not stray from this strength. In exploring new opportunities, you must maintain the same strong points that made past ventures successful.
Finally, we analyze each opportunity for its return-on-investment. Before a business segment is accepted, you must carefully examine the costs associated with entering and maintaining it. We generally favor low risk, low investment opportunities over capital- intensive products.
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Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy Authors: N Published year: 2004 Pages: 5-7/130 |