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As explained in the Cost Discipline Concept, Chapter IV, a Neo-Tech manager digs into nitty-gritty details with a supplier. Each cost component of a job is broken out and examined. For example, Neo-Tech Publishing would have an envelope maker quote not just the final envelope cost, but each cost component, such as the paper cost, printing cost, manufacturing cost, delivery cost. This breakdown of costs opens up new avenues for price-cutting techniques, such as using less-expensive paper, using a less-expensive printing process, combining similar orders from other companies into a single run, and so on. By digging into nitty-gritty details, Neo-Tech usually finds ways to significantly reduce costs. And that is what pushes new test programs from red to black. That, in turn, means steady and increasing business for a supplier. Everyone benefits from nitty-gritty cost discipline.
Continual cost discipline allowed Neo-Tech Publishing to survive and prosper in the very competitive and expensive direct-marketing business. Through sheer cost discipline, little Neo-Tech Publishing Company negotiated some of the best prices from suppliers in the industry. Neo-Tech's prices were lower than major corporations that ordered much larger volumes of supplies.
The cost discipline exercised at Neo-Tech Publishing was crucial to its founding and growth. Likewise, exercising cost discipline is crucial to the success of any new business. Diligent cost discipline can make the difference between a new business being stuck in the red and folding or that business pushing into the black and prospering.
If a new business has a product that is of value, a product that people are willing to buy -- which most new businesses have -- survival comes down to whether or not that new business is in red-to-black dynamics. If it is not, that new business will fail. But, if that new business is in red-to-black dynamics, it will survive and prosper.
Most entrepreneurs, when starting a business, focus on their product's potential and hope that they will be one of the few new businesses that succeed. Yet, essentially every new business has a product that can sell. The reason over 50 percent of all new businesses fail is because expenses exceed income. Nitty-gritty cost discipline can reverse that. Yet, few businessmen really understand and effectively employ cost discipline. If the founders of all new businesses that are started each year explicitly understood the Cost Discipline Concept, if they really dug into nitty-gritty detail and exerted creative cost discipline, almost all of those entrepreneurs would push their new businesses into red-to-black dynamics.
Employing cost discipline, even in mature, established companies is crucial for forward-essence movement because it allows new products to be tested and moved into successful, red-to-black dynamics. If cost discipline is not continuously exerted, new avenues of business will sink into black-to-red dynamics. Forward growth will be cut off. Without continual, nitty-gritty cost discipline, even an established business will eventually slip into black-to-red dynamics and fail.
Yet, as mentioned, Eric constantly met experienced business people who would reveal a complete lack of cost discipline. They would simply approach a supplier and get that supplier's standard price quotes without really negotiating, without digging into nitty-gritty details to learn where and how to reduce costs. This spooked Eric because he realized how limited the opportunities were for those businessmen. This also explains why so many businessmen fail when they venture out to start their own companies.
On the other hand, the constant drilling about cost discipline Eric received at Neo-Tech Publishing proved invaluable, especially as Eric branched out with his own integrated thinking and forward-essence movement. The cost discipline that Eric learned at Neo-Tech Publishing Company evolved into a tremendously powerful Neothink concept: The Dictate Your Own Terms and Set Your Own Conditions Concept.
Because Eric had integrated the Cost Discipline Concept, he dug into nitty-gritty details with printers, lettershops, envelope makers, computer bureaus, and other suppliers with which Neo-Tech Publishing dealt. Eric developed a firm grasp of costs and competitive pricing in those industries.
Now, consider the following example. Early in Eric's career he had met the Postmaster of Ireland at a marketing conference in Europe. Ireland was hungry to attract foreign business. Eric, along with his associate Mark Hamilton, explained Neo-Tech Publishing's international direct-mail program to that Irish Postmaster. Eric explained how Neo-Tech Publishing was mailing by cheap international bulk mail from England and Holland. The Irish Postmaster then said that he would beat England's and Holland's postal rates if Neo-Tech Publishing brought its international mailing business to Ireland. Eric, of course, immediately pursued that opportunity.
The Irish post office was willing to arrange a super-low-cost surface mail rate. So, Eric and Mark dug into the numbers and found that such a low-cost surface mail program would only be worthwhile if Neo-Tech Publishing's entire direct-mail package could be printed and assembled for very low cost as well. Such a complete low-cost marketing program would then allow Neo-Tech to expand its marketing to very large-numbered mailing lists.
Eric Savage and Mark Hamilton travelled to Ireland to meet with printers and lettershops. A low-cost brochure printed on newspaper stock was designed. This low-cost mail piece combined with low-cost postage opened up whole new avenues of business for Neo-Tech Publishing.
About a year after initiating those Irish mailings, Eric learned that the Singapore post office was initiating a similar low-cost, bulk-mail program to attract foreign direct-mail business. But, once again, in order for such a program to work, rock-bottom prices for printing and preparing Neo-Tech Publishing's entire direct-mail piece had to be obtained. So, Eric contacted one of the few lettershop in Singapore at that time. Eric explained to that lettershop what Neo-Tech Publishing had done in Ireland. Eric then explained that to bring Neo-Tech Publishing's business to Singapore that lettershop had to match the rock-bottom prices that Neo-Tech Publishing received in Ireland. If that Singapore lettershop could match the Irish prices for printing, assembling, and mailing brochures, then they would get consistent, large-volume business. Thus, that Singapore lettershop owner contacted printers and envelope makers in Singapore and presented Eric's proposal to them. The lettershop owner then came back to Eric and announced, "It's really tough, but we'll do it."
Because Eric had dug into the numbers, he knew what prices Neo-Tech Publishing needed to make a low-cost, large-volume, worldwide mailing program work. Eric had a pretty good idea as to the lowest costs printers and lettershops would be able to bring their prices down to by using inexpensive newsprint paper. So, Eric dictated his terms to the Singapore suppliers. In turn, he received the incredibly low prices he needed -- prices much lower than any other company in the industry was getting. In contrast, if Eric had approached suppliers without really digging into nitty-gritty details, with no accounting scenarios on paper, and instead just asked them to give Neo-Tech Publishing their best quotes, Neo-Tech Publishing would have never achieved the low-cost mailing dynamics it did. Profitable, growing business would have been lost by both Neo-Tech Publishing and its suppliers.
By digging into the nitty-gritty details of his business, Eric was able to dictate terms to suppliers. He had the accounting figures to back up his terms. He also had knowledge of cost-cutting alternatives, such as printing on low-cost newsprint in large volumes. As a result, Eric was able to get the low prices Neo-Tech Publishing needed to open up huge, new avenues of red-to-black business that no one else was tapping.
The experience of dictating terms really opened Eric's eyes. For example, when Eric first visited Argentina and Chile, he found that South America had essentially no direct-mail industry. But, a well-developed magazine market did exist in those countries. So, Eric met with the advertising managers of several Argentina and Chile magazines in an attempt to rent their mailing lists. But, few of those magazines had mailing lists because their sales were usually via newsstands, not subscriptions.
Eric then explained the concept of inserting Neo-Tech brochures as loose inserts into their magazines. None of those South American magazines had done that before. But they agreed to try it. Eric proposed paying them the same price he would for list rentals--$100 per thousand inserts. Initially, Eric arranged a small test of 2000 inserts in a Chile computer magazine. That test did not work. After several months, only three orders were received out of the 2000 brochures inserted in that magazine. The numbers were in the red.
However, when the third and final order from that test had trickled in, Eric pulled out his calculator to more closely examine the numbers. He began doing some "what if" calculations. "What if the inserts were printed on low-cost newsprint like in Singapore? What if those inserts were printed in large numbers to bring the printing cost from $70 a thousand to $20 a thousand?" Eric knew he could find a printer who would agree to that price as long as Eric dictated his terms to that printer. Eric would have to explain that this would be the only way Neo-Tech Publishing's insert program could work. If it did work, this would mean consistent, large-volume business for that printer. Thus, a printer would either agree to Neo-Tech Publishing's low-cost terms and get consistent, large-volume printing business, or that printer would get no business at all from Neo-Tech Publishing.
Eric then approached magazines throughout South America with a similar proposal. He would explain that if they let Neo-Tech Publishing do loose inserts for $30 a thousand, rather than $100 a thousand, then Neo-Tech Publishing could place inserts in their entire circulations. That would mean thousands of extra dollars in revenue a magazine would earn from Neo-Tech Publishing, versus earning no revenue at all from Neo-Tech Publishing. Suddenly, by dictating such terms, the three orders received from that Chile magazine insert would be in the black. And that meant that the huge media market that existed throughout South America was suddenly open to Neo-Tech Publishing. This was a huge market that simply did not exist for Neo-Tech Publishing until Eric dug into the nitty-gritty numbers to figure out the terms needed to push into red-to-black dynamics. This is a profound concept. For, by testing, closely examining results, and then dictating terms, huge new markets can suddenly open up for a business.
The Dictate Your Own Terms Concept is like a business genie. If only everyone understood this concept. So many entrepreneurs fail when they attempt to start a new business. They have a valid product or service, they are willing to work very hard, but they simply concentrate on the wrong factors. They do not know what they should be concentrating on in order to make their businesses go from red to black. The key to success is to dig into numbers. Do various "what if" calculations. A person will then discover the terms that his business needs to go from red to black. That entrepreneur can then aggressively seek out suppliers who will meet those terms.
The Dictate Your Own Terms Concept is not only a turnkey for starting a new business, it is a turnkey for expanding an established business into a worldwide empire. For, that very concept is what the great foundation builders of American business employed to construct their empires. In fact, they went a step further -- they actually Set Their Own Conditions.
The foundation-building greats of American business would envision mighty goals. They would then establish the conditions necessary to achieve those goals. Andrew Carnegie, for example, envisioned producing enormous quantities of quality steel at a cost low enough to cause a steel revolution in American industry. Thus, Carnegie had to figure out and then establish the conditions necessary to accomplish that goal. He had to not only build and run his own steel mills, Carnegie had to buy and run his own iron ore mines, build and run the railroads that delivered ore to his steel mills, and even buy and run the coal mines that supplied coal to his steel plants. That was the only way Carnegie could bring down costs low enough to accomplish his visionary goals. Carnegie had to go beyond dictating terms to suppliers; he had to establish the conditions necessary to achieve his goals.
Consider Henry Ford. Ford dreamed of making the automobile affordable to every working American. To accomplish that, Ford had to go beyond building his own auto plant. Ford had to keep working backwards until all the conditions necessary to achieve his goal were met. Ford conceived and implemented the mass-production assembly line. In addition, Ford had to go all the way down the supply line to the point where he was establishing rubber plantations in Brazil in order to provide rubber for his tires at the cheapest price possible.
Consider Jay Gould. Gould kept his railroad empire alive and expanding while the rest of the railroad industry was going bankrupt from over-capacity and recession during the late 1800s. Gould accomplished this by transporting passengers and cargo on his railroads at prices unmatched by other railroads. Gould set the conditions necessary to drastically reduce costs -- including bringing in low-cost foreign laborers to mine the coal that powered his trains.
Consider John D. Rockefeller. In order to get costs low enough to make American industry switch from coal to oil, Rockefeller built a huge, integrated oil industry. To accomplish that, Rockefeller had to set the necessary conditions. Rockefeller even bought the company that manufactured the railroad cars that transported his oil to markets in order to bring down costs.
Ironically, all of those great industrial foundation builders preached very strongly against speculation in business.[ 10 ] They were against entering areas of business that did not relate to one's core business. Especially Andrew Carnegie. Yet, Carnegie once made the remark that he was into more areas of business than anyone could imagine. This was true of all of the great foundation builders. Each one owned all kinds of businesses -- railroads, steamships, rubber plantations, iron and coal mines. But, those business greats warned against speculation in outside businesses. Was this a contradiction? No, because the many businesses that those greats became involved with supplied their main businesses. They were merely establishing the conditions necessary to build their enormous industrial empires.
What those foundation-building businessmen had in common was tremendous, history-changing vision. They dramatically altered society. To achieve their goals they had to use Neothink. They had to project into the future. They had to figure out and then establish the conditions necessary to achieve their goals. Often, those business greats had to create entire industries from scratch. They could not just go to a traditional supplier and say, "I need a price so low that every working person in America will be able to afford my car." No. It would have been impossible for a supplier to meet such terms. Instead, those business greats had to establish such conditions themselves. Thus, in addition to running their core businesses, they had to set up and run their own supply businesses -- such as steel mills, railroads, coal mines, iron-ore mines, rubber plantations, and so on. That was the only way they could bring down prices low enough to accomplish their goals.
Setting your own conditions is the key to building a world-changing empire. That is why Andrew Carnegie would stay up very late, night after night, working with accounting numbers. At first one might think, "How can a man be so motivated to do accounting all night long?" Well, the accounting numbers that Andrew Carnegie was working with were revealing the conditions necessary to make his visions a reality. That is why all of the business greats, regardless of how they got their start or what business they were in, invariably ended up digging into accounting. The reason they were so captivated by accounting was because the accounting numbers were revealing to them the conditions necessary to build their empires.
The beauty of the Dictate Your Own Terms/Set Your Own Conditions Concept is that it is a simple process. A person does not have to be a genius to employ it. By dictating one's terms and setting one's conditions, a person can successfully start a red-to-black business and then build that business into an empire.
Dictating your own terms and setting your own conditions is Neothink in business. Business greats such as Andrew Carnegie, Jay Gould, John D. Rockefeller, Henry Ford, and others would use Neothink to project out world-changing goals and then dictate the terms and establish the conditions necessary to achieve those goals. The achievement of their world-changing goals would be revealed by down-to-earth accounting numbers. Those business greats were dealing with hard-nosed reality, not wishful thinking. They could and did achieve the terms and conditions necessary to build their empires.
Once the Dictate Your Own Terms Concept had been explicitly identified by Eric Savage, his thinking began expanding out vigorously in all directions. He began developing plans for new areas of business all over the world -- like he had done with the low-cost, mass mailings from Ireland and Singapore and the low-cost media inserts in South America. The Dictate Your Own Terms Concept was a key to making new ventures go from red to black and then expanding those ventures worldwide. Eric Savage and Mark Hamilton then began to set their own conditions. For example, Neo-Tech Publishing defined a major Neothink goal. That goal is to cure the disease of mysticism and collapse institutionalized irrationality. Accomplishing that goal will establish the conditions for pursuing and eventually achieving biological immortality. By using Neothink to project out Neo-Tech's ultimate goal, curing the disease of mysticism and achieving biological immortality, the conditions necessary to achieve such an ambitious goal begin revealing themselves. For starters, how can Neo-Tech Publishing get maximum dissemination of the anti-mystical Neo-Tech concepts? One condition could be to deliver a Neo-Tech brochure to every household in America. But, that is not feasible within current direct-marketing dynamics. However, by projecting out Neo-Tech Publishing's ultimate goal, one can then employ Neothink to identify the conditions necessary to achieve that goal. One begins examining ways to achieve the necessary conditions. For example, how can brochures be printed and delivered cheaply enough to make distributing a Neo-Tech brochure to every American household feasible? Accounting figures can lead to Neo-Tech Publishing buying its own printing presses in order to print millions of low-cost brochures, to Neo-Tech Publishing establishing low-cost imitation paper farms in Brazil to bring down the price of paper, to Neo-Tech Publishing hiring migrant laborers to deliver brochures door to door, and so on. Those are conditions that can allow a Neo-Tech brochure to feasibly be delivered to every household in America. That is just one simplified example of projecting a wide-scope goal and then working to establish the conditions necessary to achieve that goal.
The power of the Dictate Your Own Terms/Set Your Own Conditions Concept is tremendous. Any man or woman can employ those two techniques. A person does not have to be a highly educated hot shot to build a world-changing empire. Andrew Carnegie was not. Jay Gould was not. John D. Rockefeller was not. Henry Ford was not. All of those business giants came from blue-collar, under-educated backgrounds. None attended college. By dictating your own terms and setting your own conditions you can build a business empire.
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[ 10 ] Jay Gould was an exception. This was because Jay Gould's business essence was financial investment.
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