Management Lessons From Santa

December 25, 2011

12:00 pm

Imagine if Amazon did more than just sell you stuff.  Imagine that they manufactured and delivered stuff – and competed with other ecommerce sites like Overstock, manufacturers like Sony and Cannon, and shipping companies like FedEx and UPS.  It would be a miracle if they excelled at any of those functions.  No one outfit could compete separately in those 3 areas right?

Absolutely wrong! That humbug on the spirit of entrepreneurship ignores the miracle of Santa Claus Enterprises in the North Pole.  Yes, the CEO of the frozen north breaks all the rules and shatters all business stereotypes.

So let’s look at some of his achievements.

  1. Branding – The guy is a genius.  He’s the top holiday icon, besting the Easter Bunny.  With no known marketing budget or PR operation, Santa is one of the most identifiable brands in the world.
  2. Longevity– Somehow this guy has stayed on top longer and more consistently than other comparable business leader – longer than Steve Jobs, Bill Gates and Mark Zuckerberg combined.  Santa has been the number 1 performer in his space consistently since he started operating in the late 16th century.
  3. Control – Santa has been able to build his empire with no apparent outside funding and apparently been able to maintain control of the operation. The fact that his operation is independent and privately run allows him to keep his revenue, business model, and trade secrets absolutely secret.

I can’t tell you how many times I’ve heard young entrepreneurs say that they are going to create the Next Google or the Next Facebook or that they are going to be the Next Steve Jobs.  Now before I hear the next young entrepreneur declare that they will be the Next Santa Claus, I believe that it is my duty to point out some of the magic elements of Santa’s enterprise, the “secret sauce” as it were, that makes his business model nearly impossible to replicate.

  1. Jurisdictional Friction– Santa operates in the North Pole, which is not under the jurisdiction of any government. It’s kind of like operating in a libertarian Ron Paul world – there are no government regulations, no child labor laws, no taxes, no EPA, no OSHA…no nothing.  This affords Old Saint Nick with some very difficult-to-duplicate competitive advantages in cost structure.
  2. Monopolistic Non-Unionized Workforce– Santa Clause Enterprises is the only employer within 1000 miles of his operation.  He operates in an environment that is non-unionized and hires little people who require less living space, exist on fewer calories, require less to money to live and have very little leverage in labor negotiations.
  3. Longevity – In the late 1600s there were few, if any, specialized businesses that focused on delivering only one link in the value chain. It was common for an enterprise to own their entire value chain, including procuring raw materials, manufacturing, sales and delivery.  By perfecting this horizontally integrated organization prior to the development of less integrated and more focused corporations, Santa was able to develop an integrated value chain and maintain control of the costs and pricing of the entire chain.  Today, it would be madness to attempt to compete against just UPS, much less to tackle multiple Gorillas in multiple levels of the value chain.

So yes, you’ve got to hand it to Santa, he’s built an unassailable entity. While B-schools across the country study Apple or Google, perhaps they should add Santa Claus Enterprises as an organization that has created a very difficult organization to duplicate.

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Glen Hellman (@glehel), is an angel investor, serial entrepreneur, and works for venture capitalists as a turn-around specialist. He is the Chief Entrepreneureator at Driven Forward LLC, frequently muses on his blog, Forward Thinking, and works with entrepreneurs to help them figure out what to do and get them to do it.

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