I just read an on-line article dismissing the value of Borders’ loyalty programs.

Can loyalty programs resuscitate the ailing chain?  Alone?  No….but they can help.  The primary value of Borders’ loyalty programs is that they provide digital mailing lists which can potentially be used to prompt customer purchases.

So far, however, Borders has not used those digital mailing lists effectively.  They appear to present a hodge-podge of offers rather than a targeted list.  If I were Borders (or any other bookseller), I would send two distinct kinds of emails:  one set that touted digital books that could be read on digital readers; another set that promoted printed books.

Can anything save Borders?  Too soon to tell, but my guess is that every serious reader is hoping that the chain will survive.

As a child, growing up in Omaha, Nebraska, I became a science fiction nut, and my interest in the future and what technology can achieve has endured.

In 1985, when I was in my MBA program, I took a course about “The Future.”  It was taught by Harold Linstone.   As a part of that course, each student wrote a scenario of what he/she thought the world would be like in 2000.  I have saved my copy (It was composed on my Apple IIe.   My sons were quite enthralled with it at the time, so it is preserved for all posterity in my safe deposit box.)

Among other things, I predicted that  by the year 2000, there would be “terrorist attacks on our shores.”  Am I prescient?  Not really–To prepare for the assignment, I  simply did a great deal of reading about trends at the time.

Some of my predictions were right; some were wrong.  Some were right, but I had NO  idea what they meant.  (e.g., I predicted that we would be communicating via electronic mail, but I had NO idea that we would call it “email” and that it would dramatically change our lives.)

So..for what it’s worth, I am going to start a series of blog posts containing my predictions about what will occur over the next ten years.  Some will be right; some will be wrong.. In any event I’ll be on-the-record, and it will be interesting to see the extent to which my predictions are accurate.

I have recently been asked by reporters, “What would you do at Harry and David?”

I responded with a description of the turnaround steps described below.  Those steps are always the same, but the specifics vary from project to project.  (When I spoke with reporters, I also discussed some of the situation-specific actions I would initiate.)

My S.O.P. (Standard operating procedure)

1. Get total control of cash
2. Prepare short-term cash forecast
3. Select Turnaround Team from key, existing management team members
4. Convene the team; go through financial statements line by line–first, looking for ways to improve short-term cash situation, second, identifying ways to increase revenues (and/or margins) and decrease costs — (note: understanding the financial statements inside and out is critical!)
5. The result is a written plan that includes a list of who is responsible for achieving what results by which dates and financial projections, which are the numeric representation of the plan.
6. Then, it’s time for the team to implement!
7. Design and begin  implementation of a sound management control system if one does not exist
8. In the meantime, there are generally crises to contend with and negotiations with a wide range of stakeholders.

In addition to the above, I also send a web-based confidential survey to all employees.  The employees know what’s wrong, what needs to be fixed, and often see things that people at “corporate” miss.  Surveys to vendors and customers can be equally enlightening.

The above steps make it sound like the turnaround process is an orderly one, but it’s not.  Leading a turnaround is like being a general on the battlefield.  It’s messy and fraught with peril.   You have a plan, but unexpected crises are constantly arising.  I always tell prospective clients that it will feel like the opening scene from Saving Private Ryan.  One of my favorite owner/clients used to stop by my office occasionally and say, “I’m having a ‘Saving Private Ryan’ day.”

After I published the post below, it occurred to me that you might be interested in a prior post about what leadership qualities are required in turnaround  situations.  Here is a link.

Someone submitted a comment about my February 16th post in which he pointed out that Kay Hong has been appointed Interim CEO of Harry and David and asked whether I know her and whether her appointment is a good thing.

I haven’t met Kay, but I do know that Harry and David is at a crossroads that definitely requires someone with experience in distressed situations and someone who is strong not only financially but also operationally.

Some comments  submitted in response to the Harry and David story in  the Oregonian today confirmed my suspicions about what is going on operationally at the company; e.g., complaints about poor product, poor customer service, poor internal systems, and lack of adequate inventory control.  All of those will need attention if the company is to prosper.

Most people here in Oregon are partial to our home-grown companies and are pulling for Harry and David to survive.  Many jobs and the welfare of the area will be affected by the outcome.

It’s easy to blame e-readers and associated technological changes for Borders’ predicament, but they are merely the symptoms and not the disease.

When companies face the double whammy of game-changing technology and a sagging economy, they simply must have a sound strategy and consistent, capable, visionary leadership. Since 2005, however, Borders has had 4 different CEO’s.  How could the company possibly develop or effectively execute a company-saving strategy while there was a revolving door at the entrance to the executive suite?

This morning, I was a guest on Bill  Meyer’s radio talk show.  The topic?  Harry and David and the problems facing the company.  You can download the podcast here.

Bill asked some interesting questions, some of which I’ll be addressing in future posts; e.g., why would a distressed company prefer to avoid bankruptcy when in bankruptcy they can shed leases and have other protection? How can you have higher profits with lower revenues?

In the meantime:  During the show, I promised to post some key financial  statistics for Harry and David from 2006 through 2010.  (Their fiscal year-end is approximately the end of June.)  Here they are:

The lesson:  If you want to invite people you know to “connect” on LinkedIn, don’t use the section that says, “Enter Email Addresses.”

This is a lesson I learned the hard way.

Recently, I uploaded the email addresses of my key professional contacts (people who were already receiving my periodic email updates) to LinkedIn so I could “connect” with those who wished to do so.  There was no indication that these invitations would be different from those I frequently receive from others.  Those invitations appear only once, and I can either accept or reject them. End of story.

Shortly after the upload, however, I received an email from a long-time professional friend who told me that he had received not one—not two—but three separate invites from me to “connect.”   I was appalled and immediately contacted LinkedIn to stop that process.

Now, I have sent an email note of apology to those who may have received the multiple messages.

If I were the CEO of LinkedIn, I would understand that business relationships must be guarded carefully and take steps to ensure that LinkedIn’s processes would be clearly defined so that my customers could proceed without worry that they might damage their valuable professional relationships.  Evidently the real CEO, Jeff Weiner, does not share my concern.

You may be interested in what I had to say about Harry and David in these articles from the Portland Business Journal and the Medford, Oregon-based Mail Tribune over the last two days.

I’ll have more to say on this topic later….but from feedback I’ve been getting, it appears that the problems I saw were only the tip of the iceberg.

Many people believe that the CEO should have the “vision thing.”  I believe that our presidents (plural!) and other elected officials  should have the the “vision thing,” that it is their responsibility to set the priorities and anticipate problems before they occur.

It appears to me that these officials too often don’t even think about anticipating problems before they occur, let alone initiate preventive actions.

For example:  On February 2nd,  the Washington Post ran a story, Why does Fresno have thousands of job openings- and high unemployment? The answer, of course is that there is a mismatch between job openings and the skill sets of job applicants.  Duh!

We seem to be discovering this nation-wide mismatch only recently, when it has, in fact, been on its way for at least 25 years.

For example, when I was in my MBA program (1984-5), I wrote a paper, “What to do about the coming structural unemployment.”  In the paper  (lost to posterity because I created it on a floppy disk using my Apple IIe), I addressed the unemployment/change in employment opportunities that would result from the two obvious trends:  globalization and greater use of robotics.

If the trends and their impacts were obvious to me, surely they were obvious to countless others.

So here is the question:  Why didn’t we, as a country, pay more attention to this problem earlier?

My answer is two-fold:

1. Elected officials are really fire-fighters who are so busy putting out the the current fires, they don’t have time to attend to the likely future ones.

2. We get the government we deserve.

On the business (as opposed to the political) front:  Is the phenomenon described above any different from the leadership of  Blockbuster and Borders being late to the technological revolution?

Why do some people “see” while others do not?

What I learned at the TMA conference is not what you expected.

I met with a private equity partner who told me he had actually visited my blog and read some of my posts.  Not long ago, someone on the east coast contacted me to tell me he agreed with my comments about turnarounds.  Then, I received an email from a long-time friend who had just learned about and visited my blog.  Today,  someone else  left a comment about one of my posts……

This has serious implications:  All this time, I’ve been having a grand time blissfully writing about whatever happens to enter my mind–what better forum for a person who has strong convictions and loves to talk about them?

Now, however, I’ll have to write my posts  as if someone might actually READ them!