• This is the first company in the world to make toys the color of all children
• Jake does not manufacture his products.
• Who you know is sometimes as important as what you know.
• A small business owner must be mission driven, not dollar driven.

Key Idea #1: This is the first company in the world to make toys the color of all children.

You can see as this show unfolds that these toys teach children that they do any kind of work -- be whoever they want to be. You don't have to be a certain color to be a airline pilot, for example.

Topic for discussion: Why is this the first company in the world to make toys to teach that there are no ethnic or color barriers to a particular career path?

Possible answer: Products ideas come up out of the experience of the inventor. Jake was told by a high school counselor that he couldn't become an engineer because "there are no Negro engineers." He was guided by a drafting teacher, went to college, completed his engineering degree then worked as an engineer for 20 years before starting his own business. Had it not been for the drafting teacher, where would Jake be today? No one knows. But, Jake knows how important that drafting teacher was in his life. Jake wants to "be the drafting teacher" to hundreds of children by making the right kind of toys.

Big companies have product development departments. Why hasn't someone in one of these departments come up with this idea before? Someone probably has. However, that person didn't believe in the idea at the level Jake believes in it. And, as you'll hear Bill Tobin say, the idea is 2% of the success. You have to put muscle behind the idea to bring it to the marketplace.

Jake did just that. As an engineer in big toy companies, he learned the ins and outs of the toy industry. Most of all, he felt that the research used by those companies to make product decisions was faulty. When the large dolls of color sold out quickly, he still couldn't get the company to expand his idea to an entire line of products.

Key Idea #2: Jake does not manufacture his products.

As a new company, he simply didn't have the money to set up a manufacturing operation. As do many small business owners, Jake subcontracts this part of his business.

Topic for discussion: If subcontracting is a startup strategy, why do big companies do it too?

Possible answer: To stay focused on what it does best. Detroit is full of manufacturing businesses making products which become part of an automobile. IBM personal computers contain chips made by Intel. In Jake's case, you heard him say they know how to market to the ethnic consumer. This is what Jake does best. In fact, Hallmark has hired Cultural Toys to develop a line of products that will only be sold in Hallmark stores. Jake does not want to focus his energy on the detail of the manufacturing process. He wants to create products that will teach children how to live productive lives.

Managing a manufacturing process is completely different from managing a marketing organization. With manufacturing comes a specific type of real estate, a certain type of employee, use of machinery, and even unique insurance issues. It is extremely rewarding to actually produce a product everyday, however, many companies opt to depend upon outside experts to deliver the finished goods.

Key Idea #3: Who you know is sometimes as important as what you know.

Jake's wife did her MBA at Northwestern. When it was time to raise money to expand the business, the two looked at her classmate list to find contacts who could help Jake raise expansion capital. Even though a former classmate is now at Solomon Brothers, he was not interested in Cultural Toys because Jake only wanted to raise $2 million. However, the contact led Jake to another firm which took the deal only on contingency. The second smaller firm achieved success and raised over $2 million for Cultural Toys.

Topic for discussion: How does a person develop relationships with people who may be able to help in the future?

Possible answers: Choosing who you "hang around with" is the most life impacting decision you can make. Jake listened to his drafting teacher, not the counselor who told him he couldn't be an engineer. Jake married a person interested in education. While in college, it could be helpful to do an internship in a number of different business settings. If you want to own your own business, try to meet business owners. Volunteer to work in a business if you think the owner would be a good mentor for you. Take a leadership position in your college club or organization. Get involved in campus politics. Sports can also expose you to coaches and students who are interested in achievement. The people you meet while working to achieve a goal will have a positive influence on your life.

Networking is a term that has become very popular in the last 10 years. Networking is the ability to meet a person in any setting and take time to get to know them. Get their name, address, phone number and even correspond with them. You should be thinking how you can help that person. Think of this as match making in a business setting. Who do you know who would be of interest or help to the new person you have just met. For example, you meet John who tells you he is trying to hire a computer programmer. You have a friend who is a programmer but want to change jobs. You put the two together--that's networking.

Key Idea #4: A small business owner must be mission driven, not dollar driven.

Cultural Toys is trying to do something that has never been done before. The going is tough and without the underlying purpose, which is to build the self-esteem of children, it would be easy to quit.

Topic for discussion: Why is Jake Miles so convinced that a big company can not be driven by a mission?

Possible answer: As a business grows, leaders can no longer track success simply by the total number of sales, or total number of distribution channels. Detailed analysis of every aspect of the business must be done monthly and quarterly. This analysis is what the leaders use to make decisions, and, the reports are full of numbers. These numbers include return on investment, the speed at which inventory turns, cost of materials, labor, insurance, real estate, and comparative ratios. When people spend all of their time with numbers, it's only natural for them to become "numbers driven." This does not mean the mission or purpose has been lost, however, it feels that way. Employees only hear how the company is doing in terms of numbers. They don't hear how many customers have been served, or how many lives have been made better because a customer used a particular product. Jake talked about hearing from teachers and mothers who see children playing with his toys. These comments are part of how he measures his success. He doesn't need to focus on numbers, he can focus on the comments from concerned adults.

More exercises! If you list three key words to describe your business, you can use one of the search engines to drill down into the topic to see how others are adding to our knowledge and capabilities. Where is your uniqueness? What are you adding to the knowledge base?