The season has changed to that magic word Spring, for those of who like plants, gardening is one of the things on our minds. However just because the season  changed, in the my part of the country, it does not mean you can start digging in the dirt and plant for the ground is still frozen. In the meantime, various magazines and catalogs can be read; flower shows attended. In all the readings, one of the lessons to learn is to grow anything, the correct conditions must be available. If the small piece of backyard is shady, then plants needing lots of sunlight are not going to grow well, however lovely the pictures are. Adapting to the conditions of the space makes a happy gardener. In all the books some of the first questions to be asked is when is the sunlight in your space and how good is the ground to grow things? The sunlight is a given but the garden can be enhanced, most will need composting material, because the land is not rich, in my case it is clay based.

Linking to dividend paying stocks, similar to gardening, not every stock is going to do well without the basics. If the company is not profitable, it will not pay a dividend, but if you love growth stocks that is where it fits in. If you love profitable companies, then narrowing the field is the first step. The second step is consistency of the business and whether the company has paid a dividend for a number of years. Each time you narrow the field you eliminate some companies and are left with very good choices where there tends not to be a wrong answer. If you have the option of two very good companies in different fields, that is where you personal preferences comes into place.

There are more questions than answers, till the next time – to raising questions.

Warren Buffet has made and continues to make a lot of money, which is a really good reason to pay attention to what he does. Recently his company Berkshire Hathaway Inc. had their annual meeting and many people went to hear Mr. Buffet’s comments. There are were 3 take aways which are easy to say and harder to implement.

Lesson One – do not chase beating the index.

Lesson Two – be patient with your investments

Lesson Three – do not lose your money.

Lesson One  – the stock index will rise and fall, if your investments are providing steady dividend payments, some years you will outperform, some years you will be around the index.

Lesson two – this is the hardest lesson which is wait for when you feel is the best opportunity. Mr. Buffet has a great many ideas being given to him and his team on a daily basis. The trick is to not do anything with most of them, let time help you or patience be your guide. Mr. Buffet has often waited years before making a big decision. Also you may have noticed when companies have gone to Mr. Buffett for help, his rates are higher than the banks and ensure a constant dividend flow.

Lesson Three – the most important aspect of investing is not to lose your money. If you start with companies that have paid dividends for 5 to 10 years, your total return will be in the positive. By narrowing down the field for the bulk of your investments, and then meeting the other criteria you have is the safest method not to lose money.

By using the three lessons for investing in stocks – pick solid companies earning a profit and paying dividends, use patience and because you picked good companies their value will tend not to go down. In the long run you will be better off.

There are more questions than answers, till the next time – to raising questions

Carnival is the world’s largest operator of cruise ships and has been in in the news as another one of its ships had equipment difficulty and stopped working. The headline which the reader saw was a reminder of the song “Another One Bites the Dust” As the operator of more ships than anyone else, the odds are if there is a ship with equipment difficulty, the chances of the ship being a Carnival one is high. It just seems that after years of very few mechincal difficulties, there has been more this year. It may just be a bad stream of luck,  although it seems the company is doing the proper thing – the company announced a comprehensive review of all ships in the fleet as well as offering compensation to passengers.

Linking to dividend paying stocks, all companies make mistakes or have things that go wrong. The issue is always  how does the company react? If the company seemingly does the right things from the public’s point of view, the public will continue to support the company. If the company tries to put its head in the sand or blame someone else, then a different reaction from the public and investors is expected. From the point of investments, when a company faces a number of mishaps, the shares will go down as Carnival’s correctly has. The next question is this a buying opportunity? holding opportunity? or waiting opportunity. As this is Carnival’s busiest season, perhaps it is a later opportunity.

There are more questions than answers, till the next time – to raising questions

The writer was fortunate to spend time on a flight path from the south to the north of the migrating water fowl primarily ducks.  Many people follow the birds as they go south, however at this time of the year, they are going towards their nesting places further north. At the park where I visited some of the people had all the latest gear to see the birds up close; my interest was if the birds are coming, the warmer weather is coming to the area where I live. We all have all our signs of spring, perhaps the first day to sit on a patio is yours.

Linking to dividend producing stocks, all companies follow patterns and make more money in particular months. The classic example is the gas company, they sell more gas in the winter than in the summer as people try to keep warm. If they did it, then you know your dividend is secure. Whatever season or months are best for the companies you own shares in, spring is a great time to see how they did or what plans they have.

There are more questions than answers, till the next time – to raising questions

All around the world, people drive Toyota cars, they have built up a reputation as good cars to own. The architect of the Toyota Production System was Taiicho Ohno and a new book was recently published Taiicho Ohno’s Workplace Management, Special 100th Birthday Edition by McGraw Hill, 2013. The book gives insights into how Mr. Ohno approached his job and has lessons for everyone, whether you work in manufacturing or not.

1. Management by walking around – “When you enter the factory you should walk in a way that takes you hours to go 100 meters. If it takes no time at all to walk 100 meters that means no is rely on you.” Walking around means interacting with people. Asking, offering advice, teaching, etc. by walking around without asking has limited value. It involves the boss respecting the workers and the workers respecting the boss.

2. Discipline goes between youth and elders, but those giving the scolding and correction must practice what they preach or they will lose credibility.

3. People have to learn how to use the equipment properly. If an inexperienced person borrows a pair of sheet metal shears, they cannot cut sheet metal with them. A person who is skilled at using metal shears can also cut thin paper with them. Value talent and experience or you are wasting the resources.

4. Standards have to be set, but when someone says there might be a better way, it is an opportunity to try. That way the decisions are not made by some higher group but by the workers themselves. The process allows for trying, failing and trying again and again as improvements are to expected on an ongoing basis.

5. If you going to set times, do not do the average time, set the shortest time frame. The next stage is the more important one – find out why people can not do the work in this time frame and teach them. If you set an average time, you will receive average work, raise the bar.

6. The Toyota Production System came about by asking the question why 5 times. The first couple of answers are easy, the next ones will make you think.

Linking to dividend paying stocks, continuous improvement only works when people have a vested interest. It is hard to do but is necesarry, when it happens things change for the better. Asking questions gets the process started and most of the time you will find people in the company with solutions, if they are allowed to try and try again.

There are more questions than answers, till the next time – to raising questions

All around the world, people drive Toyota cars, they have built up a reputation as good cars to own. The architect of the Toyota Production System was Taiicho Ohno and a new book was recently published Taiicho Ohno’s Workplace Management, Special 100th Birthday Edition by McGraw Hill, 2013. The book gives insights into how Mr. Ohno approached his job and has lessons for everyone, whether you work in manufacturing or not.

1. The misconception that mass production is cheaper. Is it really or can many examples be found where it is not the case. The reality is many times  an increase in  production results in higher costs, rather than lower costs. When the volume is beyond the capacity of the machines, factory costs rise. If the volume is high a new machine is needed which adds to costs, but most important is matching sales to new volumes. If items are not sold, there is inventory storage costs.

2. Wasted motion is not work. The most important job of production control is to limit overproduction.When people do tasks that are not directly related to their jobs, is it work or can the work be improved. The example given was a cutter doing some work, then spending time to sharpen the tools. Is sharpen tools the work or is there a better way? different process? centralized processes? Usually the answer is yes, there can be a different and better way.

3. the Better Question to ask – an example is a motorized loom, when a thread broke, the machine would stop and a worker would have to reconnect the thread. This happened often and the thinking at the time was to connect the thread as soon as possible in order not to lose production. The better question is how do we produce a thread that would not break?

4. The simpler it is the harder it is to do. Rationalization means doing what is rational, so there should be nothing that makes you think “Wow!” we did  it.

5. Why Shutoff buttons – the reason for the many shutoff buttons on a production line or the ability to shut down the line is to minimize defects and to ensure workers focus on quality. The point is not for workers to abuse the shutoff buttons, but to ask the question why is the line being shut down?  Finding  solutions will keep the line running longer and costs are reduced when there are fewer defects.

6. One of the main fundamentals is to make ‘what you need, in the amount you need, by the time you need it’, with the next phrase not written down at the lower cost. For example if you can make 120 units but only need 100, then make 100 for it is the lower cost. What happens to the other 20 and the costs for running the machines an d plant are not incurred or saved.

Linking to dividend producing stocks, Mr. Ohno’s philosophy focuses on learning, improving and focus on reducing costs. In Japan at the time of Mr. Ohno’s writing there was a full employment policy, this meant reducing bodies was the last step. It seems in North America, it tends to be considered the first step, perhaps it should be the last step.

There are more questions than answers, till the next time – to raising questions

All around the world, people drive Toyota cars, they built up a reputation as good cars to own. The other car companies, thankfully, have made remarkable improvements and are competitive. The architect of the Toyota Production System was Taiicho Ohno and a book was recently published Taiicho Ohno’s Workplace Management, Special 100th Birthday Edition by McGraw Hill, 2013. The book gives insights into how Mr. Ohno approached his job and has lessons for everyone, whether you work in manufacturing or not.

1. Need a strong sense of humility – if the normal person is right 50% of the time, he is wrong 50% of the time. The trick is therefore to change gracefully. Try something, measure the results and if it does not work, correct and try again.

2. Why Mr. Ohno believes we are wrong 50% of the time – look at the letter T. It looks like the vertical line is longer than the horizontal line, in fact they are the same length. It is called an optical illusion or misconception. There are many things in this world that we cannot know until we try something. Very often the results will not be what is expected. If you try and it is not correct, admit a mistake and try again.

3. Misconceptions Hidden within Common Sense – often times things are set down in particular way because they have always been that way based on the premise doing it that way has no big advantages, as well as no big disadvantages. However the better approach is if you eliminate the disadvantages, you will be left with the big advantages.

4. We produce only what we sell. Costs do not exist to be calculated, costs exist to be reduced. The important issue is to try various methods to see which ones reduce cost and which do not reduce cost.

5. If you get the forecasts about sales wrong, the opportunity lost to make a profit causes no actual harm, while an actual loss causes financial harm. It may feel like a loss, but it is not a loss on the company’s books. An example if you made 10,000 units but could have sold 15,000 you have an opportunity loss of 5,000 but it is not a real loss.

6.There is misconception about production  people believe “it cost less to make 15,000 units than to make 10,000 units. However if you only sell 10,000 units, what happens to the other 5,000? Are they put in storage, to gather dust? Is the storage not a cost? Inventory control is a key in thinking of how to produce the 10,000 at the lowest cost possible.

Linking to dividend producing stocks, how does the companies whose shares you own function? The philosophy of Mr. Ohno is to look at failure and costs, two things after producing profits that companies prefer not to focus on. Mr. Ohno believed we fail 50% of the time and how we look at costs in order to reduce them is key. Given the previous statement, do your companies you invested in look at failure as learning opportunities and do they focus on true costs rather than accounting costs.

There are more questions than answers, till the next time – to raising questions

I reread the book Broken Windows, Broken Business by Michael Levine, Warner Business Books, 2005. The theory behind the book is if the Broken Windows Theory works for crime and it does, could it work for business? The theory is if a window is broken and is quickly fixed, there will be less crime. If a window is broken and no one fixes it, there will be more crime. The reason is simple if the window is fixed as soon as possible, it shows someone cares and is looking after the property. If the window is not fixed, then the crime of opportunity will happen. If no one is fixing the property, what else are they not fixing or not worried about? What else can someone get away with? The theory works with property crime; it works in the classroom where students test teachers boundaries; and Mr. Levine’s book says it works in business.

you will mystery shop your business to see how a customer interacts. All employees are service/sales employees. Everyone in the organization does something to affect the customer experience and translate the experience into a sale. It is important to know how does a customer relate when coming into contact with your business? Whether it is Undercover Boss, mystery shoppers, you need to know how your business reacts to your customers on all the different methods the customer relates to you – phone, Internet, sending in a form and reaction times, etc. d- does expectations meet reality? Work on continuous improvements.

you will ensure each customer is met with courtesy, efficiency and a smile. The greetings must be sincere and genuine, before possibilities can happen.

you will exceed customer’s expectations. Every customer has expectations with their interaction to your company. Making it safe and easy to find solutions helps surpass expectations.

you will always make a positive first impression and assume every impression is a first impression. Everyone brings knowledge about customers to their job, some are more difficult than others, some you naturally like better than others, the important thing is to do the good impression each time. People will use the resources they have to tell others of a negative experience and once in while they will also tell of a positive experience. If they have a positive experience, customers are more likely to be repeat customers.

you will ensure everyone does their job to solve the customer’s problem the first time. The reason the customer contacted you was to solve their problem. It does not have to be the reinvention of the wheel, but you should be able to solve their concern or be able to tell them the things that will be followed up to find a solution for them.

Linking to dividend producing stocks, two of the reasons companies are producing dividends are they do customer service well or have a strong monopoly with few choices. The second option is diminishing rapidly, thus the emphasis has to be on customer service. Meeting expectations is a daily task and most business are on the Internet which means 24/7. It is not easy to surpass expectations all the time, or the work continues. As a shareholder, your task is when interact with the companies you own shares in it, how was it? If it is not good, you can ask is it just you or do you think there are others? you can vote with your feet and sell your shares. If it is good, then there are other questions.

There are more questions than answers, till the next time – to raising questions.

I reread the book Broken Windows, Broken Business by Michael Levine, Warner Business Books, 2005. The theory behind the book is if the Broken Windows Theory works for crime and it does, could it work for business? The theory is if a window is broken and is quickly fixed, there will be less crime. If a window is broken and no one fixes it, there will be more crime. The reason is simple if the window is fixed as soon as possible, it shows someone cares and is looking after the property. If the window is not fixed, then the crime of opportunity will happen. If no one is fixing the property, what else are they not fixing or not worried about? What else can someone get away with? The theory works with property crime; it works in the classroom where students test teachers boundaries; and Mr. Levine’s book says it works in business.

To replace an existing customer, the cost will be 9 times as much as keeping an existing customer. The first rule to save money is to focus on your existing customers. The problem is you may not know why they leave, but one thing you do know is middle income people vote with their feet. If the customer has a bad experience or not a good service, they will go somewhere else and given the Internet, there is great opportunity to try something else. The Broken Windows Theory says do not give a bad service but ensure you do it right the first time. The rules are:

you have to pay attention to every detail of your business.  Mr. Levine is writing to the business owners as they have to live and breath the business. Paying attention to the details, means all the little things a customer sees that allows for the customer to have a continuing good experience. When the business opened, it made a promise to its customers, if you do not deliver your promise, the business will not last long. If something is wrong, people will notice and customers make the correct choices.

you will correct any broken windows – both physical and broken opportunities. Broken windows is not just the physical layout, although that is what people will see first. It is important if the building needs slight repairs, the repairs are done. People will wonder why are the repairs they see are not done. Sometimes it is the opportunity that is lost – is there a logical and good add on to your business that makes common sense and shows you understand your customer. A classical example is IKEA and the ballroom for children – it shows they understand their customers have kids, to help the parents shop the ballroom was added on.

you will screen, hire and train employees to notice broken windows and to correct them. In an ideal world, your employees bring the same values to the business as the owner, however we often do not live in an ideal world. Your business gives expectations to customers, is the reality meeting the expectations? Do you hire the people and ensure they have the ability to match reality to expectations? If you hire people and give them 30 seconds to solve problems after a customer has been on hold for 15 minutes, reality and expectations will not meet. Each partner has to find the balance to ensure employees can shine and training/support is taken advantage of.

you will treat customers as they are the only customer you have. If everyone is treated well, then they are less likely to leave. Within the context of profitability of the customer, everyday you should do as much as you can to ensure they have a good experience with your company. The writer once went to a local barber to cut his hair, the barber would always say if you came half a hour earlier or yesterday, no wait. You come now and you wait. Since he offered no reservations, it was irritating. I went to someone else that appreciated the business. You likely have a similar story.

Linking to dividend producing companies, even if a company has a dominant market share it has to follow the broken windows theory in one way or another. My sister-in-law has one of those signs in the hallway which in theory is connected to my brother, and the sign says If is dirty, clean it; If it needs to be fixed, fix it; etc. I think the sign is there so she does not have to remind my brother to do the chores that need to be done without her continuing to say to do them. Similarly the broken windows theory says if you are in a business everyone needs to do all the things, not a piece of them. If people only do a piece, customers have choices, when there is choice people will exercise a choice. If a company does not live and breathe customer service, expectation and reality do not meet so profits and dividends will suffer.It is worth asking the companies you invest in how much does a new customer cost them? How do they ensure the expectations meet reality? How does your company live customer service?

More in part two.

There are more questions than answers, till the next time – to raising questions.