Creating Something Out Of Nothing

November 9th, 2010

Pedro and I before the race

At 5:45 last Sunday morning, I walked into the lobby of the Hilton Hotel on 53^rd Street in Manhattan and joined the crowd getting ready to run the New York Marathon. I was amazed by the energy of groups of nylon-clad athletes waiting to head to Staten Island and the race’s start.

There were runners from every country – big groups of Argentines, Brazilians, Dutch, and Australians (the Kenyans and Ethiopians had already been transported to the elite runner starting line, of course) and lots and lots of New Yorkers. Everyone was chatting excitedly, checking their running watches for the umpteenth time, re-knotting their shoes and scarfing down piles of New York bagels.

Finally I got onto the bus and sat next to my friend Pedro Madeira, the general manager of Joma USA, a Spanish soccer and running outfitter. As the bus whooshed into the midtown tunnel and out of Manhattan, Pedro told me about his time as general manager of Nike in Brazil and the business they built around the Brazilian national soccer team.

Under the watchful eye of Trevor Edwards, VP of Global Brands for Nike, Pedro found ways to capitalize on the Brazilian soccer team’s influence around the world. Before the team was scheduled to play in a great world city (Paris, Seoul, etc.), Pedro’s group would coordinate with the Nike representative in that city to make sure there was plenty of special edition apparel on hand for sale. Fans excited about the world champion Brazilian team coming to their town would snatch up shoes, clothes, and accessories; anything that had both the Nike logo and the Brazilian team’s colors.

The best part was that none of this merchandise was really new. It required no new R&D and very little new design work. Instead, what the fans cared about was the uniqueness of the products and how they related to their favorite team’s image. So a shirt with a different sleeve design, or a soccer boot with a different color pattern was all it took to produce additional sales.

What was required, though, was logistics – making sure the newly colored merchandise was created, distributed and shipped in time to catch the fans’ fever. But, as Pedro pointed out, none of this required new offices, stores, people or distribution networks. Instead, it was a matter of the various Nike people around the world coordinating their efforts in order to make the sale.

When Pedro left Nike to join Joma, he took this same ability to find the opportunities hidden in plain sight with him. Even though Joma didn’t have the enormous marketing budgets or sponsorship connections of Nike, there were still opportunities to be mined.

Pedro and his team analyzed Joma’s abilities and uniquenesses and looked for ways to create real breaks. The Spanish brand had been selling competitive quality goods at ±20% less than the bigger brands such as Nike and Adidas. And thanks to tough economic times, the pricing strategy was scoring some successes. So Pedro looked deeper into Joma’s distribution system and found a new opportunity for profits.

Because Joma operated from a single distribution point in Madrid and had developed a very powerful logistics system with FedEx and UPS, the Spanish company was able to ship products around the world within two days. Discovering that fact was when Pedro heard opportunity knocking.

Pedro’s sales force began reaching out to high school team sport managers and coaches around the country to let them know that Joma could outfit their entire teams in only two or three days.

Imagine the competitive advantage! While the big boys needed three weeks to three months to deliver a team’s uniforms, Joma could deliver in just a couple of days, making the coaches’ jobs easier. And because the parents of the players paid for the uniforms, the coaches had a much easier time collecting when the parents were saving 20%.

Most importantly, as with Nike, Joma was able to create this new business channel without adding any new expenses; the entire program worked within the company’s existing infrastructure – it required no new people, plants or processes.

The opportunity was hidden in plain sight; it just took creativity and an open mind to identify and exploit it. Which are the same skills you need to find the hidden profit centers in your business and the hidden pleasure centers in your life. Before you start thinking it’s impossible, think of what Pedro accomplished for his companies without spending a dime. And then, as Nike says, “Just Do It.”