157: Become a “Cool” Business, Provide a Superior Customer Experience and Compete in the Internet Age with D. Anthony Miles

Robert Plank: We're here with Dr. D. Anthony Miles, he's a PHD and entrepreneur and founder and CEO of Miles Development Industries Corporation, a consulting practice and venture capital acquisition firm. Dr. D. Anthony Miles is an award winning professor, a researcher, a leading expert who provides expert testimony, he's a radio talk show host, and executive producer of Game On Business Talk Radio Show. He's nationally known and has a new book out. He's a best selling author of Risk Factors and Business Models: Understanding the Five Forces of Entrepreneurial Risk, I'm super excited to talk about that. How are things today Dr. D?

D. Anthony Miles: Great, thank you for having me today Robert. I really appreciate it.

Robert Plank: Cool. I'm glad you're here. Can we talk about how you're different, just to start us off? Sure, there's lots of PHDs and lots of people who say here's what you should do in business, but what makes you stand out as opposed to everyone else?

D. Anthony Miles: I think what makes me stand out from a lot of academics is I have over 20 years of industry experience to back up my academic work. I would say I'm active in the business world. I'm always doing things, I'm always doing partnerships, I'm working on different ventures. I would say that I have more of a duality to my skills and experiences because of what I do outside of the academic world as well as what I do in the academic world. I'm also a statistician, so I'm always working on statistical things and looking at different things. That's what gives me an edge over, say someone who's just a professor.

Robert Plank: Okay. Yeah. Either someone who's over educated or has the experience but not the education, not the way to express it and make it easy for others.

D. Anthony Miles: Absolutely. I think nowadays colleges and universities are looking for people with an industry experience as well as academic. You probably went to college like I did and you most likely taken a class from a person who's never had a real job, only works out of the TA and then they're trying to tell you about business strategy or they're trying to tell you about industry things.

Robert Plank: Oh yeah.

D. Anthony Miles: Sometimes I think business students need a little bit more from there professors. They need someone who's actually been out in the jungle, who's actually had to learn the school of hard knocks as well as the school of education, all of the above critical.

Robert Plank: That's cool. Yeah, me in college, I was a computer science major and that's an area, that's a field where in the real world things change drastically with computers, with programming languages and Facebook. Computers get faster and all of this and when you're dealing with a professor who's in his ivory tower, still kind of teaching the same thing he taught 30 years ago really doesn't cut it as opposed to someone who had the same duality as you. Those are my favorite kind of teachers because they would know what to say but then they would go off on a little bit of a tangent or use a real example or a case study. I thought, "Okay, great. This is really reinforcing the long term, the ever green academic stuff," but also the nooks and crannies, being in the trenches, being in the jungle as you put it.

D. Anthony Miles: Oh, absolutely. One of the critical factors as why I won an award as an adjunct professor. The reason that I was strategic and how I taught my students is I could always relate something from my experience. I worked in retail, I use to be a loan officer, I actually used to be a collector. You can't be a good loan officer unless you're a good collector. I was out there in the jungle. I re-pod a car, we have to talk at another show about that.

Robert Plank: It sounds like you've done a little bit of everything.

D. Anthony Miles: I would say I'm a little seasoned. What taught my students in a classroom is I would say, "The five forces, it may sound good as a theoretical model but in the actual business practice you really don't do business that way." You really need professors like that, you really do. I brought realism to my classroom teaching, that gave me an edge. It was so bad how students were trying to find out what I was teaching before the semester started. They wanted to know what classes I was teaching, what time.

When students see that you have a passion about what you're teaching and you bring a knowledge there. Again, if you go back to the academic, he has the knowledge yeah. He's a academic but he's not a practitioner. I would say both schools of thought are needed. You need the practitioner side, you also need the academic side. One without the other is one dimensional but you want to have both of those. Absolutely.

Robert Plank: Okay. You have both of those. You mentioned this thing called the five forces, what is that exactly?

D. Anthony Miles: There's a common business theory and every business student, anyone who has a BDA or MBA knows this, the Michael Porter model of the five forces of the industry. That's what's commonly been taught in most MBA programs and business schools. It's the basic framework of how you look at the industry. Do you want me to go through that, I could tell you really quick?

Robert Plank: Yeah, real quick's good.

D. Anthony Miles: Threat of substitutes, threat of new people coming into the marketplace, the threat of the customer, power of the customer and industry, power of supplier, I believe of something like that. Basically what I would tell my students was that that model came out in the 80s when I was a student. You have to understand something, that model came out before the internet, before globalization. The model is, I wouldn't say it's strictly outdated, but it needs to be updated because the industry is never that firmly or that neatly aligned. Here's a new emerging thing in industry right now, have you heard of a term called showcasing?

Robert Plank: No. No I haven't.

D. Anthony Miles: Marketing, that's an emerging term, showcasing, what that means is, I know I've done this and everybody has done this. You ever go out to a store and you whip out your smart phone and you go to a store, you see what they're charging for a particular item, let's say a bookstore. You go out to, let's say a common retailer. You go in there and you see what the book costs, you whip out your smart phone, you go onto the Amazon.com app and you go price that book to see what the basic pricing of the book is. Then you may also find that the book may be, you may find it cheaper used, it may be you look at the condition of it, say, just like new or like new. It may be a fourth of the cost that's in the retailer, what they're selling the book for. Now you have new smart customers.

The smart customers are not like the customers that your parents were. Now customers are smarter, customers have more information at their access. Your smartphone is like a mini computer. Anytime you go out into a retail establishment, like a bookstore, and you price the item and what you're interested in, you can price shop and price compare. Then you say, "Why don't I just buy it on Amazon right now? I was going to spend 30 bucks on a book, I can get the book for 10 bucks." I seen people do that. When Porter built his model, Michael Porter the Harvard professor, that was unheard of when he built the five forces of the industry. Those are the kinds of things I'm talking about.

Customers are showcasing now because now, remember that model was built before smart phones, built before the internet. Not only customers are smarter now, customers have power. A customer doesn't have to rely on you to tell them that the price is, they can price shop you. That could be for cars, that could be for any other item, that could be for appliances. Now we're living in the age of the smart customers are in power or consumers rather or in power. They don't have to accept your pricing. Not only are you competing with your main competitors, you're competing with people on best selling items on Amazon.com. That model does not have that in the five forces. You with me?

Robert Plank: Yeah. Just to make sure that we're on the same page here, there's this one example. There's the five forces which are from the 80s and things but then now there's all these new changes in technology and things like that. The example that you used is for example, one of the new forces I guess, is showcasing where someone can take their smartphone to a book store, find a book they want, scan it, order on Amazon for half the price and get it shipped home to them in a day or two. Things have changed but are there new rules or are there a new set of five factors? Is there some kind of response that us, as business owners, can now move in a new direction as the rest of everything else has changed?

D. Anthony Miles: Yeah. You have new frameworks and new models. I don't want to get all academic on you, I'll just say this to answer your question, competition is maybe four tier now when it used to be three tier. Not only are you competing locally or regionally or by a state or whatever, now you're competing globally and global also means the internet. You're competing with people all over the world. People not necessarily compete on price. That used to be the other thing, "I'll match their price." It's not about price now. Warren Buffet had said this, "Price is what you pay, value is what you get." The same people that want value aren't the same people that are concerned about price. We have a totally whole new ball game.

I'll give you a great example of this. I'll use Wal Mart as an example. What if you went and bought a laptop at Wal Mart? Wal Mart is considered a low price retailer, correct?

Robert Plank: Right.

D. Anthony Miles: Okay. The people that buy laptops from Wal Mart are concerned about price. What do you get when you buy a laptop from Wal Mart? You get no technical support, you get no help in terms of selecting item that you're interested in buying. Let's flip that around. That's a person that shops on price. The person that shops on value will go to a retailer who specializes in computers and they want value for their money. They don't care about the price. The guy that goes to say, let me give you an example, Best Buy or a place like that. You get more technical support from Best Buy when you buy a laptop than you would, say Wal Mart. People will say, "I spend extra money because I'm getting value, I get technical support. I get a 1-800 number. I can go back to the store and if the computer doesn't work, they'll do a charge back and I can just go get another one off the shelf." Can't do that with Wal Mart. You probably could but I'm just showing you the differences between the two. Most people shop on value and most people shop on price but you never see people shop on value and price. That's why some people go to Wal Mart and some people go to Best Buy. That make sense to you Robert?

Robert Plank: Yeah. Some people shop based on value, some people shop based on price. Is what you're saying that the people who are shopping based on price, there's no keeping most of them in general because of these new technologies, because of the price wars and things like that?

D. Anthony Miles: Absolutely.

Robert Plank: We're going to lose a big chunk of those people. To make up for that we give the people who are looking for value more of what they want?

D. Anthony Miles: Absolutely. Let's say you know someone and this where, I guess, Porter's theory comes in with switching costs. Say, let's say cell phones in particular. Why do people buy Apple's products? Apple's products are good, I have to give that to them. You have something called composition loyalty, which means you make people buy your products so they don't switch. They don't care about the price or the value, they're going to be loyal. It's almost like blind loyalty.

A lot of people, it would take, if you have all your platforms, all your devices set up with Apple, you got the Apple laptop or you got the Apple iPhone, all the other devices. What if you want a regular PC, you don't want a Mac? That's going to cost you money to switch. Those are called switching costs. For you to go switch from a Apple laptop or whatever, all your things on there, all your items, and all of your files on there, for you to go switch to a regular PC that uses a Microsoft platform you're going to have a lot of switching costs. That's one of the things that Porter does talk about is switching costs. People, if it's going to cost you more money to switch products then people are going to say, "I can't afford that switching cost so I'm just going to stay with Apple and that's what I been using. I'm just going to stay with them." Switching costs can be a factor.

As a person is doing business out in the business world or having customers, you want to make sure that your customers are loyal to you in a way that maybe it's not about price, maybe it's about value. You call them every month. You have someone on your staff, like think of a car lot when you buy a new car. That salesman sell you that car, he tries to keep up with you at least once a month or once every 6 months, ask how you're doing because he knows 5 years from now you're going to be looking for another car or if you have children. You may have to buy your daughter a car who's getting ready to go off to college. Salesmen try to keep in contact with you so it's about the relationship. You're not a good salesman or a good business person if you sell something to somebody once. If you can sell them something more than once, you're an excellent business man or excellent business person rather.

Just because you sell somebody something once, that does not end the relationship. It's what you do before the sale and what you do after the sale. That's why they call it relationship. That's what you want to do if you're a business owner. You want to build a relationship. Yeah, your prices might be higher but what do you give them for their money? You give them value. Something breaks down, they bring it to your shop, you fix it, give it back to them. People don't forget that. That's what makes people stay with their particular retailer, their particular person they do business with because you provide a sense of security. When they buy something from you, they don't have to worry about it. It's part of your brand, does that make sense?

Robert Plank: Yeah. It makes tons of sense. It makes me think of a few different experiences I've had with different establishments who did that very well. One example that comes to mind when I bought a car a few years ago, the dealership offered something like free oil change. I think it might of been forever even, for your oil change. You take the car in and as you're waiting for you car to get done, you walk around the lot, you might want to pay for a car wash and things like that. I remember kind of pretty, I don't know what the word is even, but it made the gears in my brain start turning as I was realizing that they had this one little schtick of, "You can bring your car in as much as you want however many miles to get your oil changed."

Even things like my dentist is really good at the follow up, the email follow up and stuff like that. I go to a dentist, it cost the same and it's more or less the same service as any dentist in town but this dentist is pretty good about letting me know when appointments are coming up and things like that. What really impressed me recently in the past week is I recently had a birthday and my dentist sent an email. I'm sure it was on an automatic sequence but still, it was cool that my dentist had somehow, somewhere figured out my birthday. I don't even remember when they discovered my birthday but they put it in some kind of a system, some kind of a database so that on my birthday that would send out an email saying, "Happy birthday." There might of been some other businesses that might have sent me some kind of a message like that but if there were, it was only 1 or 2.

Just the way that you described that with things like... Just have some kind of afterwards support. Then, like you said, even before the sale, have just those little touches in there to build up that momentum so at least people will know who you are. Would you say, is that the attack plan more or less against the big retailers? Retailer could even be Amazon but, I guess, the advantage to an Amazon or a Wal Mart is that they're competing on price but they don't have the, I don't know what you'd call it. They don't have the time to give that extra care.

D. Anthony Miles: Support.

Robert Plank: Yeah.

D. Anthony Miles: The customer support. There you go, right, the customer support.

Robert Plank: They can't support all of those customers. They're all doing it on volume so their weakness is they can't support those customers. Now the plan of attack is to play your own game and support that smaller pool of customers that a Wal Mart or an Amazon wouldn't be able to support. Is that right?

D. Anthony Miles: That's an excellent point, Robert. Excellent point. You also have to remember this, and because of customers being in power with smartphones, I know I heard Bill Parcells say this, or I heard someone else say this, the coach that used to be with the Jets. He said, "Customers don't marry products, they date them." What does that mean? That means that if you don't give the customer the proper support, they're going to jump ship. It maybe involve switching costs and it may not involve switching costs. The guy who can maintain a higher customer support level is the guy who wins.

You made another excellent point we talked about Amazon. Yeah Amazon is a huge retailer. If I was competing against Amazon I would say, "Okay, what would make people come to me as opposed to them?" You raised an excellent point. I would say my customer support is stronger. My customer called my 1-800 number, I get somebody on the phone. If he called Amazon, and I've seen this, you may get some guy in India who doesn't know nothing about your product but he's just doing caller support. Just the things like that that makes people want to go do business with you because you have a stronger customer support mechanism. It's like I go back to this all the time, customers don't marry products, they date them. When you are no longer, and I don't want to get too technical on marketing and all that, but when you don't put the customer first everything else goes to hell.

Yeah, they'll buy from Amazon but Amazon might be second choice. What if they go on to your establishment or you store and look for it first and they say, "You don't have what I'm looking for," stop them before they leave out of the store. You go, "Hey, I can order and have it FedExed here tomorrow. I'll let you know. Let's do business. I want to take care of you, I can have it here tomorrow." How could Amazon compete against that? Amazon is trying. I don't know if you've seen this Robert, Amazon has some type of relationship with some of the retailers. I've seen this done with bookstores, where you order the book and then the retailer might have the book, say a Barnes and Noble, and you go over to order the book, you pay for it and everything and they'll say, "Okay, it's located at the Barnes and Noble on Main Street. Barnes and Noble will hold the book, you go pick it up." Amazon is concerned about that, they're trying to make an adjustment to their customer service model. That's a little bit scary but you can still compete against it.

The thing you compete against is what is your customer support mechanism or infrastructure look like? That's what people look for. I'm not going say, you don't have to pamper people, you just have to take care of them. If you take care of your customer, you don't have to worry about your competition. I think Mark Cuban said that. That make sense?

Robert Plank: Yeah. Compete in the area where Amazon can't, at least not yet, at least until they figure out the artificial intelligence. Then when they do, there will be some other open area where we can adapt and kind of play our own chess move against them.

D. Anthony Miles: Absolutely. Think about this, I don't know if you ever been into the Apple store or you been into the Microsoft store, have you seen those establishments in your area?

Robert Plank: I've been in an Apple store maybe four or five times but never a Microsoft store.

D. Anthony Miles: We have them here. I been in both of them and I'm going to tell you there's a difference. What's the difference? The Apple store is cool. You see cool little products. You remember that store, The Sharper Image, in the mall that used to have those neat gadgets?

Robert Plank: Oh yeah.

D. Anthony Miles: You remember that store?

Robert Plank: Yeah.

D. Anthony Miles: That's what Apple is. Apple is the cool store where all the kids want to hang out, but you go into the Microsoft store it's just a different ambiance there. It's like, they got the surface, they got the laptop but it's just not the same ambiance. You see more people in the Apple store than you do the Microsoft store. The ambiance is just different. It's not the same. Microsoft products, I guess maybe they're still working on it, they just don't move people to go to their store. It's like, yeah everybody has laptops. You go to Circuit City, go to what's the other retailer? Best Buy, but okay, you got laptops, do you have the cool stuff? Microsoft, they're not there yet with it. They just not there yet. Like I said, there's a total difference between the two.

I was actually going to get staff together and research the both of the retailers and do a article about it but I put that one later. It's just a different, different kind of feel to both of the stores. It's just totally different. Microsoft products don't seem cool to the consumers. It's something they're missing that they're not there yet. They just don't have... It's just not the same as when you go into the Apple store. Those are the kinds of things that people look at. Are you the guy with the cool store? Are you the guy that has the products that people like and want to play with them? Apple was very strategic in doing that. The Apple store is a really really massive stroke in a retail environment added to their platform.

Robert Plank: Would you say that with the companies that you work with, online and offline ones, would you say that the number one mistake, if there was a number one mistake, is it that people don't have a cool store or is it something even bigger? Is there a real low hanging fruit that all these entrepreneurs and stores should be pursuing?

D. Anthony Miles: It took years for Apple to build up their brand and come up with the cool store. However, what you could do in terms of what you're selling to the public is, and it goes back to this Robert, what's your customer service mechanism? How are you perceived to the customer? You know you heard of the five P's of marketing, right? You have a fifth P called presence, how you look to the customer. What does your presence look like to that customer? Does that customer say, "Hey, this guy has this, this guy has that, he has all the ancillary products that help with the sale?" What you want to do is you want to always measure yourself to whoever your competitors are and you either want to outperform them or you want to take characteristics like Sam Walton used to do. He would shop his competitors and he would borrow ideas that worked for them and he would incorporate those into his Wal Mart store.

You can do the same thing, you just have to find out what works and see if you can incorporate it into your store or your business and try to maximize it. You should always benchmark other retailers that are either a direct competitor to you or some that are not a competitor of yours. You have ideas all over the place, you just have to manage those ideas. Some work, some don't. You want to make sure that you take ideas from other stores or other people and incorporate them into yours and then definitely will build up your customer support mechanism. That's the goal is to build up your customer support infrastructure mechanism.

Robert Plank: That's interesting. That seems like that's what Microsoft is trying to do with the Apple store but as you said, they're falling short and maybe not copying just the right parts, which is weird. For example, Microsoft has a whole gaming system and Apple doesn't, talk about having a cool store, put some more video games in there. That makes a lot of sense there because instead of trying to reinvent everything from scratch, you just look at what seems to be working and what's not and incorporate those ideas in and see where they go.

D. Anthony Miles: Absolutely. A lot of the things that happen between those two companies are based on their corporate philosophy and their corporate culture. Microsoft tends to be an adapter. What that means in terms of innovation, there's two types of innovations, you have adaptation and you have creation. When you are a adapter, you take things that are already there and you just improve on them. Apple is more of a innovator or more of a creative company than Microsoft. Microsoft is an adapter and you say Apple is more of a creative or creator type of store or creative innovation. They always doing radical things like case in point, who invented the iPad? Who invented the iPod? Who invented the iPhone? Those all innovations made by Apple.

Let me give you a great example of this, you have the iPod, so what does Microsoft do? Microsoft went and started, what, Zune tunes? Remember that device?

Robert Plank: Yeah, I remember the Zune, yeah.

D. Anthony Miles: Yeah, Zune tunes just didn't catch on with people. That's a core difference between the two companies. Microsoft tends to be an adapter, Apple tends to be a creative innovative type of company. Apple tends to create things, Microsoft tends to take things and try to improve on them, sometimes it works for them, sometimes it doesn't. Sometimes when you create something it just doesn't work. Remember Newton? Sometimes he could be too ahead of the market. Not one strategy works all the time, it depends on the situation.

If you want to look at Apple or you want to look at Microsoft, go, "Okay. Do I need to take a creative innovation strategy or do I need to take an adapter strategy? Like take something that has some weaknesses and improve it and put it up on the umbrella of my business." You got to keep your ears to the ground and take a strategy that may work in different contexts in a way you need to work in terms of building your business or making your business more successful.

Robert Plank: All that makes a lot of sense that, yeah, sometimes you're in adapter mode and sometimes that you're in creator mode. It sounds like today we covered a lot of little things and a lot of ways of thinking about stuff and for businesses to problem solve their way out of wherever they're stuck and things like that. I understand that you have a book and a website where someone can get all this stuff in one place and take the book and use it for their business and turn it around or make it better and adjust the time. Is that right? You have this book for people?

D. Anthony Miles: Yes. I have a book out called, Risk Factors and Business Models: The Five Forces of Entrepreneurial Risk. In my book I looked at business failure and I looked at some of the things that cause business failure. My book is one of the few on the market that's strategically focused on risk and what causes businesses to fail. I did research in over 500 small businesses and ventures. I conducted statistical or empirical research on it. I think that my will be helpful to your listeners because you don't want to make the mistakes that people do when they start a business. Case in point, start a commodity type of business, a business that can't compete in the market place because the level of competition is so high, your business would not make a dent in the marketplace. Those are some of the things that I talk about in my book.

I'm also working on a new book called, How To Get Away With Murder In Marketing but I'll save that for the next time we get on the show or do another interview. I'd love to come back.

Robert Plank: Oh man, I'm excited for that one. That's the future book and the current book is Risk Factors and Business Models and where can people pick up a copy of that?

D. Anthony Miles: Sure. You can pick up my book on Amazon.com. It's funny, right? Amazon.com, Barnes and Noble, and pretty much established online retailers, you can probably find it there. I do have a clip of my book on my website www.MDICorpVentures.com. I also have some things that I published on my Research Gate page. I have a lot of people that, you can download some of my articles and presentations for free. If you type in my name D. Anthony Miles and go to Research Gate, I have some neat things up there. I've actually done research on Hispanic owned businesses, female owned businesses, I did a national marketing study on businesses that were doing some work with the SPI. Like I said, I have some presentation and workshops that I've done. All that's free for your listeners if they're interested. My treat.

Robert Plank: Awesome. They can get all that free stuff at DAnthonyMiles.com? Is that the place for those?

D. Anthony Miles: I don't know, I've had my website redone. If they want to get the free stuff, they can go to Research Gate. Just type in my name D. Anthony Miles at Research Gate. If you Google my name and see Research Gate, that's where you want to go. ResearchGate.com. I have about 40 items on there, whatever you're interested in. I actually got some research I did with another professor, on workplace bullying, that type of stuff. I got some neat stuff and it's all free. All free.

Robert Plank: Awesome. Free is good and what's also good is as you're talking about emprically done and peer reviewed and stuff like that but it's also on these practical subjects.

D. Anthony Miles: Absolutely.

Robert Plank: MDICorpVentures.com and DAnthonyMiles.com. Then Google search D. Anthony Miles and find the entry with you and your Research Gate content. Before we go Dr. D, what is this D stand for in D. Anthony Miles?

D. Anthony Miles: Oh, it's my first name Derek. Only my mother and my ex-wife call me by my first name.

Robert Plank: Oh, okay. You're saying, I'm a big time business owner and professor, I'm not going to be Derek, right? Got to be Anthony, got to have a strong name, right?

D. Anthony Miles: If you notice something Robert, most CEOs have the initial then their middle name and their last name like H.R. Ross Perot. I did that because I want to reinvent my identity in the business world so I use my first initial, my middle name and my last name.

Robert Plank: Nice. That way your initials spell DAM anyway.

D. Anthony Miles: Yeah. That's the down side.

Robert Plank: When you're passionate you can say, man I'll build you a great DAM business, right?

D. Anthony Miles: Yeah, there you go. I got to use that as some of the marketing.

Robert Plank: Yeah. You work with what you have, right? Cool. Lots of great stuff today Dr. D. Once again, DAnthonyMiles.com, MDICorpVentures.com. I appreciate you so much and I appreciate you hopping on and sharing all these knowledge bombs with us today.

D. Anthony Miles: Thank you so much for having me Robert. I really appreciate it. I love sharing my knowledge with your listeners. I think they'll pick some things from me and I think I can help them out a lot. I really enjoyed it, thank you so much.