May 02, 2010

Dear Catalog CEOs: Crazy

Dear Catalog CEOs:

Last week, I presented an idea to an Executive. I gave the Executive three options.
  • Option #1 = Run a $100,000,000 catalog business, and generate $3,000,000 of pre-tax profit in 2010.
  • Option #2 = Cut catalog circulation in half, run a $90,000,000 business, and generate $5,500,000.
  • Option #3 = Drop the catalog, run a $60,000,000 online business, and generate $5,000,000 pre-tax profit in 2010.
The Executive chose Option #1.

I asked why the Executive chose the less profitable option. Here is his response:
  • Shrinking the business would require the loss of numerous jobs.
  • Shrinking the business would require a significant restructuring process.
  • Shrinking the business would cause a loss of market share, and you never want to lose market share.
  • The catalog has an intangible brand value that cannot be measured via profit dollars.
This Executive looked at me, and said, "if you endorse option #2 or option #3, you are crazy".

What do you think? If an individual offers an unpopular idea, is the individual crazy? Is it worth it to pay a $2,000,000 profit tax, per year, in order to prevent the loss of jobs, maintain market share, and perpetuate intangible brand value that cannot easily be measured? Discuss your thoughts in the comments, please!

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