Category Archives: Featured

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For the Love of the Game

By Lloyd Graff.

The late Harry Carray singing “Take Me Out to the Ball Game”

I love sports. Unfortunately, my vision problems caused by retinal detachments over the last 13 years have curtailed my ability to play many of my favorite sports, but I still get to watch them on TV.

This year I have renewed my lifelong passion for baseball. My team, the Chicago Cubs, is playing reasonably well going into August and I am as excited to watch them as I ever have been. I scour the internet for trade rumors and search for places to catch the games on TV when I am traveling. Basically, I live my life around the Cubbies these days.

I know I’m crazy, but this team, my love of the game, a lifetime of studying strategy and watching players come and go, has given me enormous pleasure. I literally stand up and sing “Take Me Out to the Ball Game” in the seventh inning with the Cubs faithful during home games while watching TV in my family room.

When I was about to be wheeled into the operating room seven years ago for open heart surgery my wife and kids sang the song to me for encouragement, and it helped bring the right karma to us all.

I know many people think baseball is boring and slow. It’s popularity probably has ebbed in America, especially with kids with the rise of basketball and soccer, but for me, it will always be number one. In my mind the game has been rejuvenated by the great young players who have recently come into the Major Leagues. Mike Trout, Bryce Harper, Clayton Kershaw, Madison Bumgartner, and Anthony Rizzo of the Cubs are all in their early to mid twenties. Each is a potential Hall of Fame player, without the extra boost of steroids.

The game has finally moved past the spectre of “batter living through chemistry” and is greater for it. Personally, I was never as upset as most fans of the game were about the use of “performance enhancing drugs.” I think players like Barry Bonds were amazing with or without the roids, and Bonds in particular should be in the Hall of Fame by now. But I am hopeful that most of the drugs are now out of the game, and the focus is now on the pennant races and less on the home run totals.

Guys like Trout and Harper are as talented as any players I’ve ever seen play, and they are  23 and 22 years old respectively.

The only thing I wish for in baseball is a little more hitting. Pitching has ascended in the post steroid era, as the 95 mile per hour fastball has become common and young fire ballers have figured out how to change speeds to compliment their power pitches. Also the use of sophisticated statistics has led to radically shifted infields which have certainly cut down on ground ball hits. Scoring is down significantly in the game. The stress on power arms in the bullpen has changed the game, too, which the Kansas City Royals demonstrated brilliantly in last year’s playoffs.

But the game will adjust. It always has. It is an axiom of baseball, that it is a “game of adjustments.” Pitchers find a batter’s weakness, the batter suffers, but if he is smart and talented he learns how to compensate for a particular deficiency. If he doesn’t he soon will be out of the game. The art of business isn’t all that different. Keep changing to adjust to the times, or pay the price. Slumps happen to the best, so the key to success is flexibility and the willingness and ability to change your game.

Go Cubs go.

Question: Is baseball too slow for you?

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Give Me An “N”

By Lloyd Graff.

What is a letter worth?

Specifically, the letter “N” in a company sign, 30 feet above the ground, three feet tall, made of 31-year-old weathered, brittle plastic.

Our letter “N” in “Pinkert” on our business sign “Graff-Pinkert” fell down in a windy rainstorm a few weeks ago leaving an empty space between the I and K of the name Pinkert near the top of our 35’ high warehouse exterior.

This is one of those contingencies you don’t plan for. The sign had held up perfectly for over 30 years. If you think about it, which you probably never do, you figure it will outlast your need of the building. It’s sort of like your nose, you really don’t think about replacing it. Then suddenly, you lose your “N”.

But it’s only a sign. It’s the digital age. Customers don’t come often to our warehouse. They can view machines on video on their computers. And Aaron Pinkert, my father’s partner, retired 30 years ago and has long since passed away. His family has no association with the company. He was a good man, and I worked with his son Dan during summers, but Dan became a lawyer for Amoco and Aaron sold out to the Graff family.

But my father and I retained the Pinkert name for the company all these years. It’s an artifact, I suppose, but it’s part of our brand.

I like having personal names on the company. Calling ourselves Perfect Machinery or Ideal Machinery or Oily Machine Tools just never felt authentic. It felt generic and bland. So I kept Graff and Pinkert and kept the stationery (although who uses stationery today?).

But after 31 years we suddenly had this pesky N problem, that seemed like it had to be dealt with.

First we had to find an “N” maker. It didn’t make sense to replace the entire sign if only one letter was in pieces. We found a plastic sign maker and sent him a fragment for color matching and photos to match style, but he had to know the exact height of the existing letters to produce a perfectly matching N. Our letter was incomplete so we had to physically measure the existing letters in the sign. This required renting a hydraulic cherry picker, having it delivered to our parking lot, and sending a person up 35 feet to measure the letters. It cost $500 to rent the machinery for a day.

We took our measurements, sent them to the sign company, and waited for our letter N. It arrived in a week and we had to rent the cherry picker a second time to mount the letter. It was shinier than  the 30-year-old letters, but a very close match. From 50 feet away nobody could tell the difference. Yesterday we replaced the N in Pinkert. It cost about $1300 for this enterprise, quite a bit less than my recent knee replacement. I felt a sense of completeness that our name was now correct on the building. Pinkert was back, even though Aaron was long buried.

It was important to me. In a world of sameness with 35,000 McDonald’s franchises, interchangeable TV news anchors and generic aspirin, we had our singular brand, almost 75 years old – intact.

Question: Is a brand valuable for a job shop or is it all about price?

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Power In Not Knowing

By Noah Graff.

Diane Van Deren, One of the world’s best ultra-marathon runners. NPR.org

Are the people with the sharpest minds and the most knowledge the most likely to achieve extraordinary feats? What if knowledge didn’t always mean power? Maybe we humans sometimes know too much for our own good. Perhaps a little naiveté or comfort with not knowing everything is a healthy ingredient to reach success.

The following is a summary of one of my favorite Radio Lab episodes, a fantastic show from National Public Radio. The 2011 episode featured a story about an ultra-marathon runner named Diane Van Deren.

When Diane was 24 years old she started having epileptic seizures. She discovered that when she had the feeling she was about to have a seizure, also known as an aura, she could often stop the seizure by getting up right away and going running. But in the end, the seizures kept getting worse and the running remedy was not enough to control the epilepsy anymore.

To prevent future seizures, Dianne elected to have a kiwi sized section of her brain cut out, the temporal lobe, where her seizures were originating from. The procedure was successful in stopping the seizures, but it also had side effects. It ruined Diane’s sense of direction and left her with poor short-term memory. She also lost the ability to keep track of time.

One year after her brain surgery, on a whim she entered a “short” 50-mile ultra-marathon, which amazingly she won. Ultra-marathons usually range from 50 to 150 miles. They go through crazy places such as Death Valley or the Rocky Mountains. The competitors are not allowed to sleep and may run for 30 hours or more straight. After she won the first race Diane started competing in ultra-marathons frequently and became one of the best in the sport.

Because of her poor short-term memory and inability to read maps, when Diane races she has to leave pink ribbons on the ground to mark the path she has taken when she encounters a fork in the road. Then, if she runs a significant distance and the rout seems wrong she retraces her steps and tries another path—a definite handicap when running 100-mile races in harsh environments.

However, one of Diane’s brain deficiencies gives her an advantage. Because she is not aware of how much time has elapsed she can run extraordinary distances without feeling tired. She can’t tell the difference between running one mile or 10 miles. She won a 300 mile race through the Yukon, where she fought temperatures as low as -48 degrees. She says that for the first 100 miles of the race she didn’t even have a drink. Diane says she focuses only on the rhythm of her footsteps and breath, blocking out all distractions that could slow her down.

Side note—I have extremely mild epilepsy, also originating in the temporal lobe, which is associated with hearing and speech. Fortunately, thanks to medication I haven’t had a grand mal seizure since I was 18. It is the only one I’ve ever had, thankfully. Seizures can manifest themselves in many forms, but the grand mal is the one everybody pictures when they think of seizures—when a person can go into convulsions, turn blue and lose consciousness. I still have auras, also known as simple partial seizures, every so often, although they occur pretty infrequently because of my daily medication. During the auras my hearing gets very loud. I can hear my footsteps and my breath, and the world sounds kind of eerie for a few minutes. I can still function decently, but it’s a little harder to think quickly. Interestingly, in high school, when I had to run the mile in gym class I would sometimes have an aura, and it made me somewhat numb to fatigue. I seemed to enter a zone where distractions were blocked out, and I felt I had a kind of super strength. One of my minor claims to fame is running a mile in 5:59 to beat a challenge from my gym teacher, a feat I believe was made possible by an aura. I’m extra proud to say that I did it after eating huge Italian beef sandwich only 30 minutes before.

But I digress.

Diane is a champion ultra-marathoner despite her having a poor short-term memory, no ability to read maps, and no ability to keep track of time. One could argue that the lack of time awareness is an advantage, but it’s a profound brain deficiency nonetheless.

I wonder what great things I could accomplish and could have accomplished in the past if I was not overwhelmed by fear of failure, fear of the time the task would take, and fear of the pain I might have to endure to reach a goal. So many times I hear successful entrepreneurs say that if they knew how hard starting a business was going to be they probably wouldn’t have even tried. Thank God they did try. Thank God for the gift of naiveté.

Question: Is distance running good for you?

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Thanks For Your Patience

By Lloyd Graff.

Courtesy of www.mashable.com

“Your wait will be four minutes. Thank you for your patience.”

All I wanted was to buy a pair of pants from the Territory Ahead catalog, which I had recently received at my home. I am “old school.” I prefer to talk to a person when I order goods.

I do not give a credit card number in an online transaction, less out of fear of it being compromised than dealing with my vision, which is always compromised.

It was 9:45 last Friday night. I expected the call to take 10 minutes, 15 tops. After four minutes, the automatic response came back and promised I would be waited on in four minutes. No progress, but I put the phone on speaker and looked at the Wall Street Journal that I had not read. Five minutes later the phone voice announced the wait would be four minutes! Ok, I was invested in the process so I continued to wait. The next announcement was hopeful, 2 minutes until liftoff, when a real person would take my order. I had considered buying some t-shirts, which were on sale, but by now I had rejected that whimsical purchase.

The voice interrupted my reverie, “15 seconds” it said. Nirvana was imminent. Except it wasn’t. Three minutes later the voice repeated that a person would appear in 15 seconds. And so it continued for another 20 minutes.

My anger was growing by the second. I decided there was no way I was buying a thing from this disgusting, frustrating incompetent firm, but I was going to hold on until a real person answered so I could deliver my welling fury.

Finally, an answer from a person. But the person failed to even acknowledge the ridiculous wait. He was from some call center in India or the Philippines reading from a script.

I exploded into my rant and hung up. Then I called up a competing apparel catalog and ordered some khakis from a lady who talked to me with a pleasant southern drawl.

It was a lesson from customer service 101. Don’t promise what you cannot deliver. If you drop the ball, immediately own up to your shortcomings. A client will accept a deficiency if corrected. Everybody hates to be lied to, especially by a machine.

In customer service every detail is important, but above all the customer must have faith in the honesty and commitment of the seller of goods and services.

We all mess up in our work. This blog may have a typo or a grammatical error, but we work very conscientiously to catch every mistake. You have inspection machines and quality control departments. But your client will occasionally catch a mistake. How you handle the error may determine the future of your business, because it is your ultimate signature.

To live is to screw up. To own up and quickly correct is the mark of integrity and allows for the possibility of success.

Question: What are your best and worst experiences with retailers?

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Where Did My Day Go?

By Noah Graff.

Noah Graff’s iPhone 6 Plus that follows him everywhere.

Americans on average spend 7.4 hours staring at a screen of some kind every day, according to Kleiner Perkins analyst Mary Meeker. That breaks down to 147 minutes watching TV, 103 minutes in front of a computer, 151 minutes in front of a smart phone and 43 minutes in front of a tablet. The U.S. is ranked 6th in world in screen time consumption—Indonesia and the Philippines are at the top of the list.

I’m sure I spend at least an average of 7.4 hours of screen time daily, and I don’t even own a TV. Working a salaried office job, I have a computer screen in front of me most of my day. Fortunately as a machinery dealer, I get to spend time in my day in the shop amongst folks doing physical labor.

When I’m not in the office, I’m often on my iPhone 6 Plus, surfing the Web, perusing Facebook, and incessantly checking my three email addresses (two for work, one personal). I have refused to download any mobile game apps, as I am already way too distractible. Following work, I spend the next few hours commuting, then working out in some form, and then eating. After dinner I often get back on the Web with my laptop or phone, sparingly streaming a sporting event, a Netflix show or The Daily Show. I also may write the occasional blog for Today’s Machining World or edit a movie—more screen time and more screen time. Not having a TV helps me cut down a little on the screen time, but as you can tell, I still can’t escape the screens.

I’m bothered by all the screen time. I don’t think it’s healthy. It’s not natural. I think it’s really sad when you’re at dinner and people can’t stop looking at their phones, even during a conversation. Remember the days when people could debate a subject at dinner and not instantly settle their dispute by googling the answer? Remember when you had to consult an expert or even go to the library the next day to resolve your question?

The constant email checking is definitely one of the most significant effects of smart phones on me. It means that for me and millions of folks around the world our jobs follow us EVERYWHERE all the time. I accept this as an essential reality of my job as a machinery dealer. Often the most important emails or calls come from Europe or who knows where at 6:00 a.m., interrupting my normal slumber before my usual 7:45 a.m. alarm time—I know, that’s late for most people in the manufacturing biz. I hate to say it, but often when my iPhone alarm goes off in the morning I get myself going by checking my work email as I still lie under the covers.

Also, I often find myself texting or talking about business with my dad/boss on the phone several nights during the week, and he texts me in the morning before my alarm goes off as well. I don’t mind it—usually. If we are talking about something business related in after hours it often means something interesting is happening, generally something more positive than negative. If it’s negative I usually will tell him we should deal with it the next day.

I’m on salary, so this is the routine I signed up for. But for people who get paid by the hour smart phones complicate things. When does writing emails on your phone after work constitute overtime? When does it just mean being a responsible employee?

If we are all working from everywhere, all the time, does the traditional vacation format of a set number of days become obsolete? Netflix began giving employees as many vacation days as they wanted back in 2002. Today 1% of American companies offer unlimited vacation. Believe it or not, many employees don’t like “unlimited vacation time” or they end up taking less vacation because of the privilege. People become overwhelmed by the choice of how much time to take off, causing them to feel indecisive and take less vacation. Also, some employees may feel guilty or self-conscious if they take more vacation than their peers.

People have been working “overtime” from home for decades, centuries probably. But today we have those damn smart phones. Those damn beautiful, powerful, multipurpose devices that fit in our pockets. Are they enslaving us? Are we really better off with them?

Questions: Do you prefer living in a world in which we all have smart phones?

Do you wish you could choose how much vacation time you receive in your job?

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Entrepreneurial Philanthropy

By Lloyd Graff.

Kalydeco, approved by the FDA in 2012, can treat cystic fibrosis. In the U.S. a year’s supply costs more than $300,000. Courtesy of Bloomberg.com

We all get the phone calls from the brain dead solicitors advocating for good charities like the American Cancer Society and the American Heart Association.

I pledge my pittance but I really don’t want to listen to the pitch, even though I know it’s worthwhile.

But not all charities pitch for pennies. The Cystic Fibrosis Foundation just hit the jackpot by playing the fundraising game much differently than its peers. The Foundation, based in a modest office building in Bethesda, Maryland, just landed a $3.3 billion check to pursue drugs and therapies to ease the suffering of the 30,000 people afflicted with the illness in the U.S.

I found it a fascinating and instructive story as recounted in a piece in Bloomberg Business Week. The Cystic Fibrosis Foundation has been collecting data for 50 years on the people who deal with the disease that thickens mucus, which makes it hard to breathe and leaves a person prone to infection. Lifespans were in the early twenties 30 years ago, but today forties are a reasonable expectation.

In the late 1990s when the human genome was identified and drug companies were sprouting up like crocuses, the Cystic Fibrosis Foundation realized it had data in its possession which could be helpful to drug developers.

The problem was that the big drug firms were not very interested in a small disease like CF. But a little drug company called Aurora Biosciences was interested in researching the area. The Foundation did not have much money for the early discovery work, but it had precious data and tissue samples collected over decades.

The CF Foundation had an idea – it could trade information and some seed money for royalties if a viable drug (based on modifying a genetic flaw) emerged from the pioneering work of Aurora Biosciences, which was acquired by the larger Vertex in 2001. This was a 100 to 1 shot at best, as so few drugs work at all, and the drug would have to overcome the bureaucratic hurdles of the incredibly slow FDA process for okaying new drugs.

Despite the odds, Vertex did something heroic. It developed the drug Kalydeco, which was approved in 2012, and Orkambi, approved last week. Both drugs treat the most common genetic mutation behind Cystic Fibrosis.

At the end of 2014, the the CF Foundation sold its royalty rights to an investment firm for $3.3 billion. Now the little Foundation is rich, and two promising therapies are on the market, but a new problem has arisen – the cost of the drugs. Kalydeco costs about $300,000 per year and Orkami will cost $259,000. Health plans are hesitating to pay for the drugs.

The CF Foundation has no control over the pricing of the treatment, though patients are imploring it to subsidize the drug regimen for them.

We see a similar problem with the new Hepatitis C drug Sovaldi, priced around $90,000 for a 12-week course, which for most patients cures the awful illness.

I understand the argument for high prices of the drug makers who say they are looking for needles in a haystack and then face long regulatory and legal slogs. When they finally hit a winner they want it to be a home run.

Now the Cystic Fibrosis Foundation has an enormous bankroll and it wants to leverage the money for more drugs and better outcomes. Researchers and universities are lining up at their Bethesda door to propose new ideas. But perhaps the most useful thing the Foundation can offer is its innovative approach to jumpstarting research into places where nobody else has ventured. Robert Beall, the head of the CF Foundation since 1994, spearheaded what he calls “venture philanthropy,” funding small visionary companies rather than spreading money around to university labs. He started the process by cold-calling firms in 1998. The only one to return his call was Aurora Biosciences of San Diego, which happened to have a scientist on staff who had studied CF.

The CF foundation has since spread money around to drug companies, big and small, but the tiny investment in the first company made the gigantic payoff.

There can be unimaginable payoffs from the lucky cold-call and the shrewdness to bet on the smart horse.

Question: Should the Cystic Fibrosis Foundation use its windfall to subsidize patients whose insurance balks at paying for the new drugs?

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Trigger Happy

By Lloyd Graff.

Jeopardy Champion Arthur Chu, Notorious for Unorthodox Game Strategies. Courtesy of tvweek.com

A favorite blogger of mine, Seth Godin, wrote a piece Sunday in which he recounted not making his high school quiz team because he was too slow with his buzzer. He would wait to push his buzzer until he “knew” the answer, which usually resulted in one of his competitors answering before him.

Eventually Godin learned that the secret to winning a quiz game is hitting the buzzer as soon as you feel the answer coming. You often have enough time between striking the buzzer and time running out to retrieve the answer. If you can’t pull up the correct answer the penalty is usually not so onerous that you can’t make it up later.

From my experience in business, this buzzer analogy is right on. I’ve discussed this with clients in the turned parts business and some of the smartest ones have confirmed this assessment. The key to getting the big juicy long running jobs is to know you can get the answer in time to make the parts successfully in the long run through innovation and refinement of the tooling, even if you don’t know the path at the time of bid submission.

Graff-Pinkert, my used machinery business, was just involved in an auction deal that I initially felt was too risky. But we took a shot in the end because we thought there were enough things that would go right in the deal to overcome our fear about the negatives.

Taking a new job or starting fresh in a venture also often requires a preemptive buzzer hit.

A doctor treating a cancer patient or a heart surgeon performing a procedure can’t know how things will wind up for a patient in the end, but they have to make a decision and hit the buzzer anyway. They have to trust their knowledge and creativity to adjust course in midstream.

Successful buzzer pressing is not just about guts. It takes knowledge and preparation to win on Jeopardy or be successful in business. But waiting until you are sure you know the right answer will rarely win the prize.

Questions: Will you take on a job if you know you can at least break even?

If you could be on any game show which one would you choose?

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A Brave New Romance

By Noah Graff.

Courtesy of Huffington Post

My search for a romantic life partner is a dramatically different process with different goals than those of my parents and grandparents. Today’s dating world revolves around online dating sites, text messaging and partner experimentation. It yields opportunities to go out with tons of diverse people but produces a lot of confusion as well.

I recently listened to the book, Modern Romance, written by the hilarious young comedian Aziz Ansari. The book analyzes the dating world of today’s current singles (like me), particularly those around my age of 35 and younger. Ansari, age 32, relates to my current search for a soulmate, giving some perspective that hopefully will help me eventually figure things out, and JUST SETTLE DOWN ALREADY! The following blog gives you a taste of the book’s insight and a little window into my own search to find THE ONE.

One distinction for my generation of daters is that we marry at a much older average age than our predecessors. In the United States, women today marry at an average age of 27, men age 29. For his research Ansari interviewed residents at a retirement home who had married at an average age of 20 for women and 23 for men. Most of the “older folks” he interviewed shared that they had married people with whom they lived in close proximity. They often had lived across the hall in the same building, were next door neighbors or went to same school growing up. Fifty years ago, it was harder to meet a lot of people, long distance travel and communication were more difficult as well. Also, people felt that it was important to find a spouse in their early 20s because marriage was the major step to adulthood. After high school or college it was assumed that a person got married and left the house. Hopefully he or she would settle down with someone compatible, and a companionable love would grow over time.

Society’s attitudes about marriage have changed over the decades. Women have more career choices, views about abstinence before marriage have changed—thank God, and our expectations are simply different. Now people of my generation have the opportunity to experience adulthood into their 20s and 30s without having to marry. We have the opportunity to focus on college, exploring various careers and pursuing side passions (such as making films and salsa dancing, in my case). We also have the opportunity date a lot of different people, hopefully learning from past relationships to better understand what we want when we finally settle down. Because we have such extensive time and opportunities, the majority of people today aren’t looking for just a decent life partner, they are searching for a soulmate.

Today people have more time and and a myriad of tools to meet new people, such as online dating sites, which can create overwhelming quantities of options for potential partners. Of Americans today who describe themselves as “single and looking,” 38 percent have used online dating. When a user signs up for an online dating site, usually the person is asked to select what type of relationship he or she is looking for. Often the choices include selections such as marriage, long-term relationship, short-term relationship, friendship, and sometimes even casual sex. The user then gets to sift through thousands of profiles, reading (often ignoring) self descriptions and pouring over endless photos. Users can systematically filter which types of people they want to look at, requesting specific body types, religions, drinking habits, smoking habits, sexual preferences, you name it. The dating sites also attempt to use algorithms to match people they believe will like one another.

According to  Ansari’s research, at the time Modern Romance was written, OkCupid, one of the largest Internet dating sites (which I recently signed up for), creates around 40,000 dates everyday. A study from a University of Chicago researcher found that between 2005 and 2012 more than 1/3 of couples who got married in the United States met through an online dating site. In that period, online dating led to more marriages than work, friends and school combined!

Match.com launched in 1995, which was the first online dating site that allowed users to select one another in real time, rather than solely using algorithms to automatically match users. When the site launched, Gary Kremen, the company’s founder and first CEO, proclaimed to the world that Match.com would “bring more love to the planet than anything since Jesus Christ.” No doubt it has created a lot of loving relationships—along with friendships, frustration and broken hearts, things which of course often go hand in hand.

So am I better off as a single in the age of a “Dating Super Highway,” in which I can meet thousands of singles from all over the world on my iPhone? Or would I be better off if I had three choices for a wife, say…choosing between my next door neighbor, my best friend’s sister and the Rabbi’s daughter? Studies show that when people are offered a huge selection of options on a menu, they are less likely to be satisfied than if they are presented with a small menu with just a few really good choices. I often feel like this when I go to restaurants like the Cheesecake Factory where the menu is actually a spiral notebook. I get overwhelmed by the vast number of choices. I obsess over which dish to select as though it’s my last meal. I suspect this could annoy impatient fellow diners at my table as I send the waitress away two or three times before I can decide.

Modern Romance brings up the theory that the same food menu phenomenon exists in today’s dating world. Daters wonder to themselves, “Is this guy or girl really the one, or can I find someone better?” “‘Does settling down actually mean ‘I’m settling’?” Is my menu indecision to blame for me being 35 years old and single? I hope not. Perhaps other people I was interested in chose a different option than me, thinking (wrongly of course) they could do better.

Maybe it’s a foolish quest to look for a soulmate? Personally, I think there are many good matches for a person out there, but there aren’t any PERFECT matches, so choosing one person to stay until death do you part can be stressful. A person can always go back to the Cheesecake factory for another meal—unless it’s truly a last meal.

So is choosing a wife, like choosing a last meal? Oye! What am I saying? I better choose carefully.

Questions: Is looking for a soulmate unrealistic?

Do you wish you had married later in life?

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It’s Rarely in the Bag

By Lloyd Graff.

Courtesy of www.benzinga.com

One of the things that has always fascinated me about the used machinery business is the daily assessment of risk and reward in the deals we go into.

Every deal for my company Graff-Pinkert is inherently a gamble on the future value of a discarded machine tool. It also is a judgment call on the risk assessment of our competitors who may or may not know about a machine we have interest in.

My son Noah calls it a daily treasure hunt. It sounds better than “going to the gambling tables.”

I think I understand the risks after being around the game for my entire business career. But I often wonder about my customers who make big bets on automotive or military contracts, knowing that some of the risks may not be apparent when they bid. I have heard of so many projects which demanded hundreds of thousands or millions of dollars of capital investment, only to be canceled out after a month or a year of operation.

In the high production turned parts arena there is a fascinating opportunity popping up with the enormous recall of Takata airbags taking place by Honda, Toyota and a host of other auto companies.

The car companies, at the behest of the U.S. government, are recalling 34 million airbags because about 100 of them have prematurely fired over the last 13 years. The occurrences are associated with heat and humidity causing a degradation of the propellant mechanism, which potentially results in shooting metal shards at a driver and passengers.

For the companies that have the money, expertise and guts to bid on the Takata work the rewards could be enormous. This kind of volume is rare today, even for automotive vendors. But with airbag work, the players know that there have been many washouts of audacious turned parts firms who dared to venture into the Takata briar patch, along with some big winners.

For those companies who want to capture airbag contracts this time around there are additional roadblocks. Lenders who normally might have jumped at juicy capital equipment loans for solid machining firms are scared of airbag replacement work because of the sheer magnitude of the recall. This is a “Tylenol sized” event. Takata of Japan, along with Autoliv, and TRW produce most of the airbags, Takata with its closest ties to Honda and Toyota. Takata invented the airbag 25 years ago and has ridden it to riches, but this colossal recall could devastate the company.

Some people think the recall could put Takata into bankruptcy, but the people who are gambling on making the parts believe the company is too important to the car companies to allow it to fold. It is the Toyota, Honda, GM, BMW, etc. name on the recall, not Takata, which means it is highly unlikely the airbags will not be provided. Who pays for them is a question mark, but the smart money is on somebody paying for the hardware and installation. The buyers of parts might be slow in paying as they work out who is financially responsible.

Another unknown is how much business will end up with Autoliv and TRW, the other big airbag players. But Takata desperately needs parts now and they are inclined to place work with experienced suppliers. For them it should be a bonanza. Unless the unforeseen happens—which as Takata certainly knows—can occur.

Question: Is the safety rating the first thing you consider when you buy a car?

Lloyd Graff is a Writer and the Owner of Today’s Machining World, and also runs Graff-Pinkert, a used machinery firm in Oak Forest, IL.

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Is Your Best, Your Best?

By Lloyd Graff.

Joe Maddon, Manager of the Chicago Cubs

How do you change a loser into a winner? This is a question that has intrigued me for decades as a sports fan and a business owner. I think the question can be refined today to, “how do you change a non-winner into a winner?” or, “how do you transform mediocrity into superior performance?” Winning doesn’t mean a championship, and success in business can be defined as longevity and happiness with performance, even if the owners do not get mega rich.

But there is a mindset in sports or business or academia that consistently moves the needle toward success vis a vis one’s peers. This attitude was exemplified and articulated quite brilliantly by Joe Maddon, considered by many to be the best manager in Major League Baseball by his stewardship of the Tampa Bay Rays and now the Chicago Cubs.

A few days ago, a Cubs pitcher named Tsuyoshi Wada was starting a game and the team took a 6-0 lead in the first inning. Maddon watched each pitch intently as he always does and noticed Wada was not sharp. Wada gave up a home run and his pitch count for three innings elevated significantly. With the Cubs leading 6-3 Maddon told Wada in the dugout that he was finished after just three innings, thus he could not get credit for the win because he did not pitch the necessary five innings.

The Cubs bullpen pitched the final six innings and the team won the game, but not Wada in the score books.

Joe Maddon was asked about his decision to lift the starter the next day and relished the opportunity to state his reasoning.

He stated forcefully that he wanted to illustrate clearly to a young team that had been the epitome of failure and non-success for 100 years that mediocrity was no longer the norm. Wada was not on his game and his previous record did not indicate that he would be able to reverse course. He was not trying to get Wada a win, he was determined to get the Cubs a win, and he would do everything possible to insure that. One more win could be the difference between making the playoffs or not.

Maddon’s actions were a message to all of the players that the team was no longer in rebuilding mode. They were supposed to go all out every day, every play, if they wanted to be winners.

As an owner and manager of two businesses I find this attitude inspiring and scary, because I know Maddon is right on and I know that I often take a different approach. I do not always challenge myself or my people to go all out, all the time. Honestly, at 70, I don’t feel like I can be “all in” every day. Therefore, I tend to give my employees a pass at times to clock watch and sometimes go through the motions without always calling them on it. I personally am satisfied to make a good living and pay my taxes at the end of the year, even if I do not always top myself.

I suppose if I was a ballplayer for Joe Maddon, he would be looking to trade me for a more aggressive, type A winner.

Business is not Major League Baseball. I get that, but Maddon makes $5 million a year because he can turn non-winners into winners. The best manager, according to baseball analytics, is worth five to seven games a year. Doesn’t sound like a lot in a 162 game season, but it’s the difference between making the playoffs or finishing fourth for a lot of teams.

For me, the attention to detail, the periodic reminder to do something, the compliment or the thoughtful reprimand, the to-do list that actually gets done, are things that really do move the needle in a small business. Sometimes you have to fire somebody who is adequate at what they do for the firm, but they are a bad fit.

I am slow doing the hard things in my business, so I admire a manager like Joe Maddon who seems to relish doing the “right thing” even when it’s hard.

Question: Do you do your best every day?

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