Bernard Marr
Best-selling business author and enterprise performance expert

Successful people often paint a picture of the perfect ascent to success. In fact, some of the most successful entrepreneur in the world have failed. Many have failed numerous times but they have never given up.

Let’s look at some examples:

Henry Ford – the pioneer of modern business entrepreneurs and the founder of the Ford Motor Company. Henry Ford failed a number of times on this route to success. His first venture dissolved in a year and a half because the stockholder lost confidence in him. He then was able to gather capital to start again but a year later the financiers forced him out of the company again.

Walt Disney – Before the great success Walt Disney came a number of failures. Walt was fired from an early job at the Kansas City Star Newspaper because he was not creative enough. Then he started his first company called Laugh-O-Gram. It would produce cartoons and short advertising films. One year the company went bankrup and Walt didn’t give up.

Richard Branson – He dropped out of school when he was 16, he then started a student magazine but that didn’t do as well as he hoped. Richard then setup a mail-order record business which did so well that he opened his own record shop called Virgin.

J.K. Rowling – Like so many writers J.K. Rowling received rejections from publishers. At the same time she was a divorced single mum on welfare and that made her story even more inspiring.

Bill Gates – Before Microsoft, Bill Gates, Paul Allen and Paul Gilbert co-founded a business to read data from roadway traffic counters and create automated report on traffic flows. But without a good business that left the company with few customers. The company ran up lossess between 1974 and 1980 before it was closed.

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Ron Baker

Founder of VeraSage Institute

If one were to lay the two theories of value––labor and subjective––side by side, it would look like this:

Cost-Plus Pricing––Labor Theory of Value

Product » Cost » Price » Value » Customers

Pricing On Purpose––Subjective Theory of Value

Customers » Value » Price » Cost » Product

Cost-Plus Pricing, RIP

Cost accountants focus on the inside of an organization, yet all value takes place in theexternal world, beyond the four walls of the organization. By and large, accountants are not well equipped to judge and measure value, despite all the recent blather about activity-based costing.

A Tale of Two Automobiles

When Lee Iacocca developed the Ford Mustang, he reversed the order of the usual car-making pricing up to that point. Rather than giving his engineers carte blanche to develop a sports car and then marking up the resulting costs to arrive at a price—as GM did with the Corvette—he solicited the opinions of potential customers as to what features they would want in a sports car and what price they thought they would be willing to pay.

Knowing people liked the Corvette, but thought it was too expensive at $3,490, Iacocca wanted the price to be low enough to entice the potential sports car enthusiast. He then went to his engineers and asked if they could manufacture a sports car, with the desired features, sell it for no more than $2,500, and still turn an acceptable profit for Ford.

By building the Mustang on the Falcon’s chassis, in the first two years, it generated net profits of $1.1 billion (in 1964 dollars), far in excess of what GM had made on the Corvette. The average customer was spending another $1,000 on options, and while Ford projected that 75,000 units would be sold in the first year, the 418,812th Mustang was sold on April 16, 1965, only 13 months after the first rolled off the assembly line.

By comparison, the Corvette reached 1 million in sales in July 1992, with the release of a white convertible with red interior, mimicking the first one introduced in 1953.