Key Idea #1: Buy A Big Company's Mistakes
John took what was a Super Shuttle franchise that had gone bankrupt and turned it into Cloud 9 Shuttle which today is a vital operation.

Topic For Discussion: What significant marketing change did John make very quickly?

Answer: By asking themselves who their customer is, Cloud 9 figured out they have tourists and residents using the shared-ride service. They also calculated that the residents spend more for a ride because the distance from the airport to most residential areas is farther than the distance from the airport to most hotels. Also, there are more residents than tourists and residents will ride more often than tourists. So, the future of Cloud 9 depends on its ability to attract and keep the hundreds of thousands of San Diego residents who want a shared-ride service to and from the airport

Tourists coming into the San Diego airport often are going to the convention center and the hotels close to the harbor, downtown and Mission Valley. These destinations are close to the airport which means a ride might only earn Cloud 9 $5 to $8 per person. The strategy to go after locals raised the average ride to $30 per person! We call John's insight counter-intuitive marketing.

Topic For Discussion: Why has an entrepreneur been able to do what a franchise organization could not do?

Answer: Plenty of reasons! First, we all know that if there is a viable market for a quality product or service, the key to success is leadership. John Hawkins or another entrepreneur with a burning desire to achieve can out perform 20 middle managers. Second, a small company can throw out all of the rules that bog down a big operation. Third, a new business can build a fresh team made up of people with plenty of energy and new ideas. Fourth, a locally-owned company can act local.

John explained that people who live in San Diego want to buy services from locally-owned business. The Cloud 9 Shuttle has a spunky personality with brightly painted vans that look very different from the Super Shuttle which can be found in many airports today. Also, Cloud 9 is experiencing great success with it's advertising on the back of the vans. Some of this is paid which creates revenue; some is in-kind for radio spots promoting Cloud 9; and some is done as good will for the community. Being locally-owned is part of the entire marketing strategy of Cloud 9. .

You think about it: What mistakes are the big guys making now in your industry? What can you learn from those mistakes? How can those mistakes help you gain marketshare?

Key Idea #2: Leverage Every Asset
When you take over an existing business you get the good, the bad and the ugly. You get the good employees and the not so good ones. In this case, John got the vans but they were painted dark blue like the rest of the Super Shuttle national fleet. In many cases, what is an asset on paper can turn out to be a pain in the neck.

Topic For Discussion: What Super Shuttle asset did John end up using to his great advantage?

Answer: The phone number, 1-800-9Shuttle. Working with the "9" they came up with Cloud 9 because San Diego is seen by residents and visitors as heaven or paradise. This feeling about San Diego is imbedded in the thinking of many and has been for years. Cloud 9 graphics work on the white vans so when a person steps out of the airport and sees the vans, they think "I am in heaven."

The artwork includes palm trees and a sunburst. Tourists choose Cloud 9 out of the other vans because it fits what they expect to see when they arrive in San Diego. A tourist assumes the van will get them from the airport to where they want to go, so using names like Sure Ride and Super Shuttle aren't as attractive as this name that carries with it the promise of a wonderful visit to San Diego.

The name also works locally. The Convention and Visitors Bureau is made up of over 4000 businesses who all believe San Diego is paradise. You will often hear these people say, "Welcome to paradise;" they constantly promote tourism and they believe Cloud 9 Shuttle is promoting a feeling people want when they come to San Diego. It is easier for John to get the other businesses to recommend him because of his approach to the "shuttle business." Cloud 9 isn't just a shuttle, it is part of the tourism experience.

Topic for Discussion: How was the name selected and why did the expert push for Cloud 9?

Answer: A group of employees, friends of the business and a few experts sat in a room for hours to brainstorm possibilities and they emerged with Cloud 9. The expert noted that this name is, "graphically extendable and legally protectable. It's unique. It's sellable. It's cute. It's appealing to young and old, male and female, visitor or residents. It's got long legs in the San Diego community."

Topic for Discussion: What was wrong with the name?

Answer: It seemed silly, especially to John. But since it fit the qualities they had agreed to in advance of the brainstorming session, John gave in and approved it.

A name means nothing until you build an image in the mind of the marketplace. Once you have done that, the name means everything. Disneyland means fun. IBM means stability. We have feelings and impressions of these names because billions of dollars have been spent to create brand awareness. This is done with traditional advertising, marketing and public relations.

Big businesses take all of these tasks very seriously and it seems they spare no expense when it comes to building their name and protecting it from negative impressions. Remember how Dow Chemical was forced by the media to take responsibility for the accident in India which killed people? This is a public relations nightmare because every impression people absorb about a name is like a permanent record in the mental database.

For a new business, you can do some market research to come up with a name for your business; that's what John did. While Henry Ford named his company after himself, we don't think this is such a good idea. It can be off-putting to employees and you lose the opportunity to find a name that you can exploit. In order to build brand awareness around a name, it should be legally protectable and graphically extendable. And, the more collective conscience a name touches the better.

You think about it: Does your name make it easy to market your product and services? Does your name have deep meaning?

Key Idea #3: Make People Smile
Mrs. Fields launched her cookie business because as a little girl she noticed that people would smile at her when she gave them one of her homemade cookies. What she proved as her business grew is: a smiling customer comes back and they tell their friends about your great product or service.

Topic For Discussion: What about Cloud 9 makes people smile?

Answer: The name, the art and the drivers who are smiling and wearing a bright purple tie with a white cloud design. When people can chose between a van and a cloud, what do you think they chose? The silliness that was irritating to John at first turned out the be the magic part of his formula.

Veteran entrepreneur and cofounder of Nicole Miller, the New York City-based fashion house, Bud Konheim says, "Make somebody happy and you will make a business successful." And he quickly admits, "We're trying to make a product that makes somebody happy. If it doesn't make them happy, they are not buying it and you're out of business."

Topic For Discussion: What is happiness?

Answer: "Life, liberty, and the pursuit of happiness" have become more than symbolic words in our shrinking global village. Not everyone believes these words should be the cornerstones of a society. But, John Adams, Thomas Jefferson and the other framers of the Constitution of the United States of America thought there was something profoundly right about the pursuit of happiness. Yet "making someone happy," is hardly an "American" concept. It so much a part of the legacy of most cultures throughout history, it seems deeply embedded within our eidetic memories; it seems to be an essence of our very being, a primal thrust and energy that pulls us forward.

Topic For Discussion: How important is a smile?

Answer: There are books written about the healing power of smiling because research shows that smiling and laughing change a person's chemistry. Love, Medicine & Miracles: Lessons Learned About Self-Healing from a Surgeon's Experience With Exceptional Patients was written by Bernie Siegel and published in 1986. We read the book back then and recall that the patients who smiled, laughed and looked for the good in their situation got well faster than those who were glum.

In 1987 a group of nurses formed the Association for Applied and Therapeutic Humor because they observed, then later proved with research, that patients who laughed and smiled went home from the hospital sooner than those who did not.

Writing for "O Magazine" in 2001, Valerie Monroe starts by quoting the Bible. In Proverbs 17:22 it says, "A merry heart doeth good like a medicine." Monroe goes on to say, "Research has shown that smiling and laughing cause physiological changes in your body. 'When a person has a true, heartfelt smile, it does more than put her in touch with her own inner joy,' says Doe Lang, PhD, a New York City psychotherapist who specializes in nonverbal communication. 'There's a reduction in cortisol, a chemical that indicates stress in the body, and an increase in mood-elevating endorphins. On a social level, an honest smile defuses hostility and draws people near you.' These short-term effects may have long-term benefits. A recent study at the University of California at Berkeley, published in the Journal of Personality and Social Psychology, found that women who had smiled the most in their college yearbook photos had happier lives, happier marriages, and fewer personal setbacks in the following 30 years."

OK. There is proof. When you make a customer smile you are both drawn to each other.

You think about it: Do you make customers smile? What could you do to instigate more laughter and more smiles?

Key Idea #4: Explain Change
Everyone at the old Super Shuttle knew that big changes would be made with the new ownership but going from a nationally-known and respected franchise name to Cloud 9 was shocking.

Topic For Discussion: How did employees react to the name change?

Answer: At an all-company meeting John explained how the name had been selected and what it would mean for the future. Some people quit. Yes, it was that dramatic. John was happy to see people who could not buy in to the new way of thinking leave the organization. Everybody had to get over the initial confusion, "What do clouds have to do with San Diego and shuttles and vans?"

It's been said that the only person who likes change is a baby with a wet diaper. As the owner of a business you have the power to do anything. You can change anything and everything and do it without asking anyone else's opinion. This freedom can get you in trouble so you have to think ahead and prepare employees to jump on your bandwagon. This is critical if you want them to help you make all of the changes so customers and suppliers don't suffer.

We say the best communicators make the best leaders and often a small business owner doesn't make the transition from owner-operator to leader because of poor communication skills. We say you have to explain change in this key point but we would add that you have to explain everything to everyone. You have to talk when you might not feel like talking because your employees want to hear about the thinking behind your decisions. They want to feel included in the thinking process. They even want you to solicit their opinion on matters that affect them directly.

Many parents who are in a hurry say to their kids, "just do it because I said so." This not the way to lead an organization through change or toward any exciting goals.

You think about it: Could you do a better job of explaining decisions to your employees? could you engage them in the decision process more effectively?

Key Idea #5: Be The Town's Top Citizen
In the first key point here we said that John used math, not intuition or tradition, to discover that Cloud 9 should become the shared-ride choice for local citizens rather than focus on tourists. This led him to the efficient and cheap marketing idea that he would join every important organization in San Diego and get involved. Today many people in San Diego would say that John Hawkins is Mr. San Diego.

Topic For Discussion: How did he create his image and endear Cloud 9 to the citizens of San Diego?

Answer: If you read his bio on his own web site you would learn that in addition to being responsible for finance and strategy at Cloud 9, John' s big job is community relations. He is Immediate Past Chairman of the Board of the San Diego Convention & Visitors Bureau, Vice Chairman of the Board of the San Diego Regional Chamber of Commerce, and on the Board of Directors of the Better Business Bureau, the Holiday Bowl, the San Diego International Sports Council, the Port Tenants Association and the USS MIDWAY Aircraft Carrier Museum... He has served as Chairman of the Corporate Finance Council, and Fleet Week San Diego and is a member of the Downtown Rotary Club.

Topic for Discussion: Does joining organizations, volunteering and giving away advertising space guarantee ones branding?

Answer: No. You have to put your heart into it. You have to believe in these people and their organizations. You really have to love them all. And, most of the time, a phoney can be easily picked out of a crowd. John Hawkins is just a good guy. The fact is that he's been a good guy all his life. He is that national merit scholar all grown up. He loves people. Yet, he also loves success. But, if there is a choice, he will put the integrity of the people first. He'll put somebody else's cause in front of his own.

You think about it: What organizations can you put your heart into? What organizations could benefit most from your donation of time, money, products or services? Do you have employees who are interested in certain causes? Could you give them time off to volunteer for those causes? Who in your company is in charge of community relations? If not you, who could do this job well?

Key Idea #6: Hire The Smile Then Teach
We taped a speech by Herb Kellerer once and then had a chance to interview him. We asked him if he hired funny people or if Southwest Airlines took time to teach people to be funny. He said they hired fun and funny people as there is no way to teach a person how to be funny. He told us that the first thing they say to a person coming to interview for a job at Southwest is, "Welcome to Southwest and the first thing we need you to do is take off all of your clothes." Herb laughed and said that if people panic and turn pale the interview is over right then and there. If the person laughs, they are taken into a dressing room full of Southwest Airlines uniforms and told to choose the uniform they like best and to come out to the conference room in their new attire. The person has total privacy but they do have to take off all the clothes they arrived in and change into clothing provided by the company.

Topic for Discussion: What is unusual about the hiring process at Cloud 9?

Answer: Anyone who wants to be a driver for Cloud 9 has to make a speech to a group of 50 people about why they want to drive for Cloud 9. They see the drivers as entertainers on stage. If an individual can convince a group of strangers that they should be hired, they probably have some good communication skills which include showmanship. Also, you can't be a shy person and meet hundreds of strangers every week. The Cloud 9 driver is supposed to be friendly, warm and full of fun facts about San Diego. If they are having a bad day, they still have to "step on stage" when they go to work and act as if the rider has not only purchased a ticket for a ride, but for a performance.

If you have studied our episode about Boston Duck Tours you learned that the customer experience is both educational and entertaining. It's entertaining because the vehicles themselves are fun and funny to look at. They are the opposite of high tech. They are a novelty and make us feel as though we are stepping back in time. They are painted bright colors and cleverly named. They make people smile. However, the key to the entertainment aspect is the tour guides themselves. They develop their own World War II character and "stay in character" the entire time they are working. They are excellent story tellers; and, even though they are given a script, they are encouraged to make it their own. Audience participation is key. Our tour guide got us all to say "quack, quack" on his signal. We had fun doing it and the people on the street laughed as we drove by.

To hire the right people who can create an entertaining experience, Boston Duck uses a drama coach. The coach then basically conducts an audition rather than an interview. The people who want to be a tour guide have to demonstrate creativity, enthusiasm and story-telling skills. Boston Duck and Cloud 9 are copying Disney in that Disney sees all of its theme parks as a stage and all of the employees as actors and all of the customers as the audience.

Topic for Discussion: How does Cloud 9 prepare a driver for the first day of work?

Answer: Every driver spends 40 hours in training before they begin to carry passengers. The company has a trainer whose job is to not only teach the mechanics of the job, but also to pass on the Cloud 9 corporate culture. Anyone who wants to be a driver for Cloud 9 has to make a speech to a group of 50 people about why they want to drive for Cloud 9.

Topic for discussion: Why does John believe that the tie is a management tool?

Answer: The tie is fun and whimsical, not serious. Every driver at Cloud 9 wears a white shirt and the company tie -- this is a uniform. John says, "When a person puts on this tie, they are reminded they work in a fun place." When you wear that tie, it gives you permission to be the best San Diego booster, the warmest welcoming committee of one, and the foremost historian about everything-good San Diego, the branding is working. People have to be willing to wear the tire with affection just like when people come to interview for a job at Southwest Airlines, they have to take their clothes off.

You think about it: Do you have hiring criteria? Do you stick to it?

Key Idea #7: Hire Seniors.
There's a reason that 60 is being called the new 40. With improved healthcare, labor saving machinery and better nutrition, 60 simply is not old. There are 78 million Americans who are called baby boomers. They were born between 1946 and 1964 and this huge pool of workers can be the place you look for the people you need to grow your business.

Topic For Discussion: Why does John like hiring people who are over 50 or 60 years old?

Answer: Most of these people don't have to work -- they want to work. They work because they enjoy being active, like the structure work brings to their lives, and they find Cloud 9 fun place to be and good work to do. Plus, the "seniors" can do the work. The job of driving at Cloud 9 is not physically demanding and the most important qualities looked for in a driver is willingness to serve and entertain. With unemployment being so low now, and with many employers looking for people with computer skills, Cloud 9 has jobs it can fill with people who are not as desirable to others. This is a win-win situation. Labor is the most expensive part of any business and if you can find a way to hire, train, and retain your employees it puts you ahead of the competition.

You think about it: Is there a place for young seniors in your company?

Key Idea #8: Integrate Technology
When we created this episode, Cloud 9's marketing efforts had been so successful, it could barely handle the business. Its next step was to select and implement technologies which will help them better serve the customer. With 100 vans driving all over the city, they needed a global positioning system to help the central dispatch office and they needed credit card processing to be integrated into the central office reservation system. With these new features, riders don't have to wait as long for a pickup and will spend less time in the van. Such efficiencies reduce operating costs by increasing the productivity of each van. Customers both in the van and waiting to be picked up are more satisfied. And, billing information is more accurate . There is less room for error and loss when the credit card information goes straight into the system as opposed to being carried around by the drivers for hours.

What comes to mind when you hear the word "technology"? For most of us, it's computers first, followed closely by the Internet. But technology's role in the small business is just as important as marketing and finance. Technology is the ultimate enabler. You can do more in your business and you can do it faster with less error if you incorporate technology in your everyday business operations.

Topic For Discussion: How does a small business use technology in the business?

Answer: There's lots of ways and many of them were only available to big businesses up until a short time ago. But new products and plummeting costs have positioned all of us to be more competitive in our respective market places with a minimum investment. We can analyze our inventory and learn what sells and what doesn't, in what quantities, to whom, with what seasonality, at what margin, and just about anything else we might want to know.

We can codify the intellectual capital of our organization, protect it, keep it organized and up-to-date, and easily search and retrieve what we need. It's all about the learning continuum, turning data into information and information into knowledge, then using that knowledge as the basis of the decisions we make in operating our businesses. Hence the term: knowledge management.

Our challenge as business owners is to figure out what data to store, in what vehicle (data warehousing) and how to access it in such a way that it provides meaningful information that is of real value to us in our business (data mining). We've used a lot of buzz words here; let's look at knowledge management, how it actually works, within a small business. There are a number of things that even the smallest business can do to capture, organize, and make available the intellectual capital of the organization. We'll focus on three here.

Establishing a Common Operating Environment (COE). Before you had computers at your office you kept documents in folders in file cabinets. Different people had access to those documents because they needed them to do their work. Sometimes people forgot to return the documents when they were through, and you would scout around the office until you found them. Sometimes two people needed the document at the same time and they would work something out, or make another copy of the document. The point is that every business generates important information, has processes that includes forms and templates, and shares these among a number of employees.

Now that you have computers, you still generate documents, you still keep them in folders, folders are kept within folders, and various people have access to them. Electronic filing systems can be vastly superior to paper filing systems if we remember to follow the business practices we used in a paper environment. Do you have documents on your computer or network server that are not in folders? How many? How does that compare to the number of documents you would have tossed into a file cabinet without filing?

The good news is that at least (a) the documents are listed alphabetically wherever they are stored and (b) we can always "search" for them if we remember the name, or the software application, or when they were last modified. Hmmm. There must be a better way. You're right! And it's called a common operating environment or COE. In a business with a network environment, where a number of employees have access to a central data depository, you:

1) Establish document naming conventions. As new documents are created, they are named in accordance with organizational policy. People looking for a document would have a good idea of the document name, even if someone else created it.

2) Determine the file structure. Folders within folders within folders. Organizing your information so that documents are easily located.

3) Grant access as appropriate. Security levels and edit rights, determining who can have access to what or not, when to permit "read-only" access, and who is authorized to make changes.

4) Safeguard information. Back-up systems, on and offsite, disaster recovery plans. If you do all of the above, provide training on the implementation, you will have established a COE. The benefits are enormous and immediate.

Using Databases to Work and Mine Data Most of us couldn't imagine functioning without word processing software and spreadsheet software in our businesses. We all use e-mail and a lot of us can use presentation software, some more rudimentary than others. Yet, for some reason, the database software frequently goes unused in the small business.

Digitize, Digitize, Digitize Maintaining our information in electronic form is critical to both the establishment of a COE and mining our data on an ongoing basis. Virtually all software applications allow for exporting data and importing data. So as long as you maintain your data electronically, you can take advantage of new software development in your industry without having to re-enter the information. Electronic files are easier to navigate and cheaper to maintain. Additional computers and memory are just less expensive than rent, file cabinets, and storage facilities.

You think about it: How far has your business moved along the learning continuum? Are you taking advantage of the latest technologies to codify the intellectual capital of your business? If you arrived at your office, and all your information OR all your money was gone, what would be more devastating to you? Now, compare how you safeguard your money with the way you safeguard your information. As you digitize your workflow, be sure you have adequate backup systems with offsite storage for all important information.