Lessons from the Lemonade Stand

The dependable lemonade stand is not only an enduring summer icon but also a slice piece of trade rich with business lessons. This past summer I made a point of stopping at those I spotted. I learned that the exchange of flavored water for a few coins may appear simple but represents aspects critical to business. If you look closely the humble stand provides a mini-MBA covering funding, strategy, production, marketing, customer service and reinvestment. It all starts with thinking about the lemonade stand “industry” which is:

Fiercely competitive with low barriers to entry

Both seasonal and weather dependent

Reliant on a commodity, easily substituted product

Seemingly undifferentiated overall

Unattractive from a revenue and profit perspective

For each of these conditions, one has to tailor the business to succeed. As daunting an industry as it is this has not stopped thousands of young people from starting them up each and every summer. Here are five lessons for your children and your own enterprises.

Delight with a Superior Product

Of course, we will all part with our loose change to help out a tiny entrepreneur. But if the lemonade is tart, weak, overly sweet or thimble size we will force a smile, wish them luck and complain about the product back in our car or as lemonade-stand_5we cycle away. This reaction is no different from any other disappointing purchase. I have gone back to a stand twice if the lemonade is legitimately pleasing in taste.

A superior product differentiates, communicates care and quality, provides value in the exchange, engenders loyalty and prompts word-of-mouth.

Pick a Smart Spot

Location has always been critical to business. As a child, I ran a stand at my home in Winnipeg, Canada situated on a quiet street and later that day while dumping the warm, unsold liquid treat down the drain vowed to learn from the experience. The next time I loaded up my wagon, trundled half a mile, and set up outside the gates of The Tuxedo Golf Club. With that experience I learned another lesson – have adequate stock. My location was so good that the would-be Tiger Woods cleaned me out fast.

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Ad Agencies Make Their Own Products

I recall the 1999 attention-getting idea by Vancouver agency Rethink. The three leaders of the agency had just left Palmer Jarvis DDB to go out on their own. In order to create buzz for their startup they branded and distributed Rethink Beer. The product helped put Rethink on the map and remained on shelves until 2003.

This is one example in a longstanding series of agency experiments with product development. A new book by Leif Abraham, with an amazingly long title, suggests how Madison Avenue needs to change. His effort is called, Madison Valley: Building Digital Products. Getting the Most out of Talent. And How Madison Avenue Can Be More like Silicon Valley, which is a fine preview of the book’s content. The overriding premise is creative businesses should not restrict themselves to communications but should leverage their talents for real product innovation.

Having worked at, and for, a number of agencies, I know these businesses would love to reap the profits of an iPod or Nike FuelBand as additional revenue or to stave off the long anticipated lower margins resulting from an old business model. Yet, Abraham points out the reality, “Every agency wants to build a lab and make products. Every award show adds product innovation categories. But we haven’t yet seen a successful product coming out of an ad agency. My book gives an analysis on how product innovation is treated in agencies today, what needs to change and why it’s about more than just the product.”

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Looking Back on Mad Men

Our paper originally appeared in The Agency Post, Marketing, and Sparksheet. It was also featured on Flipboard in Advertising.

As the last season winds down, Mad Men is being examined for its impact on television and its reflection of society both in the period it is set and our current day. We invite you to enjoy this work which is rife with observations, insights and images that will delight fans of the show, pop culturists, history buffs, along with all those who enjoy marketing and advertising.

Get it here … SC_LookingBackonMadMen

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