Thoroughly understand the value proposition of your customers. Why do they purchase your products? What attributes of your products do they value such as convenience, timely service, or price? Think hard and analytically about your customers and their preferences. El Chapo Guzman, convicted head of the Sinaloa Cartel understood his customers. He knew that when the Oxycontin pill-mills were shut down in the US, he started supplying refined Mexican heroin, called China White.
As part of our series about how to become known as a thought leader in your industry, I had the pleasure of interviewing Jerold L. Zimmerman, Ph.D.
Zimmerman is the author of Relentless: The Forensics of Mobsters’ Business Practices. He is a globally recognized microeconomist and author of seven books and has taught organizational economics, accounting, and finance at the University of Rochester’s Simon Business School for more than forty years. He has consulted with numerous clients, including Fortune 500 companies and management advisory firms, to demonstrate how organizational economics principles can improve a firm’s culture and, eventually, its performance. Zimmerman is also a founding editor of the Journal of Accounting and Economics, one of the most highly referenced peer-reviewed journals in economics, and has served on several public company boards of directors. His fifty published studies and books include textbooks on economics and accounting and a trade book about designing organizations that create value.
Thank you so much for doing this with us! Our readers would love to “get to know you” a bit better. Can you share your “backstory” with us?
I grew up riveted by popular crime shows including The Untouchables, The Godfather, Goodfellas, The Wire, and The Sopranos. I was intrigued by the ability of some organized crime syndicates, like the American Mafia, to survive many decades despite enormous law enforcement efforts directed at their eradication.
Twenty years after I first met Daniel Forrester as an MBA student at the University of Rochester’s Simon School of Business, we reconnected to address the challenge of how organized crime continues to thrive despite enormous law enforcement resources devoted to their demise. Our professional careers sought to assist lawful leaders improve their firms’ corporate governance by better understanding why some legitimate organizations succeed while others fail. What corporate governance practices benefit certain firms or hamper others’ fate? Our collaboration married our professional interests with corporate governance and our fascination with organized crime. The outcome is our book: Relentless: The Forensics of Mobsters’ Business Practices.
Can you briefly share with our readers why you are an authority about the topic of thought leadership?
I am a globally recognized microeconomist and author of seven books and over 50 research articles. I taught organizational economics, accounting, and finance at the University of Rochester’s Simon Business School for more than forty years. I have consulted with numerous clients, including Fortune 500 companies and management advisory firms, to demonstrate how organizational economics principles can improve a firm’s corporate governance and, eventually, its performance. I also am founding editor of the Journal of Accounting and Economics, one of the most highly referenced peer-reviewed journals in economics, and have served on several public company boards of directors.
The impact of my research is well documented:
- My textbooks have sold over 175,000 copies
- My writings have been cited over 32,000 times (Google Scholar)
- My research papers have over 69,000 reads and more than 7,000 scholars follow my research (ResearchGate.net)
- My research and teaching have been recognized with numerous prestigious awards such as the American Accounting Association’s Seminal Contribution to the Accounting Literature Award and the Outstanding Accounting Educator Award
Can you share the most interesting story that happened to you since you started your career?
I was interviewing for a teaching position at the University of Rochester’s business school. This involved presenting my doctoral research at a seminar before the faculty. About 20 minutes into my talk, one of the most highly respected Rochester faculty started barraging me with questions critical of my approach. After trying to defend my research, I calmly walked over to this professor, handed him the chalk (this was in an era before white boards and PowerPoint), and said “If you know how to do this better than me, why don’t you finish the lecture?” He was so flummoxed (not to mention embarrassed) he started offering positive suggestions. The next day, I got an offer as an assistant professor, which I accepted.
Ok, thank you for that. Let’s now jump to the main focus of our interview. In a nutshell, how would you define what a ‘Thought Leader’ is. How is a thought leader different than a typical leader? How is a thought leader different than an influencer?
Thought leaders and economists share common traits. Thought leaders offer informed guidance, innovative ideas and insight in their field of expertise that others trust. Economists pursue knowledge about how individuals, businesses, governments, and nations allocate scarce resources. They too generate innovative ideas and insight in their field. So, thought leaders offering advice about leadership, entrepreneurship, and commerce must apply economics when forming their guidance and generating their insights.
One of the most important traits of economists and thought leaders is curiosity. They must be curious about the way their world works, what really motivates their work force, what do their customers really value, and how current forces are reshaping industries. Nobel prize winning economists first ask interesting, fundamental questions, and then apply rigorous thinking to answer the question. Thought leaders do the same. Typical leaders (and maybe influencers) accept the status quo. They don’t ask fundamental questions. They don’t think outside the box.
Can you talk to our readers a bit about the benefits of becoming a thought leader. Why do you think it is worthwhile to invest resources and energy into this?
Among scientists, thought leaders persist while influencers end up at less-known institutions. A particular piece of published research is judged by the number of times the article is cited by other researchers. Google Scholar tracks citations to published research. Researchers are judged, promoted, and compensated (indirectly) based on the cumulative citations to their studies. Research funding is highly correlated with reputation, which is built by citations. Promotion committees at universities often review both the quality of the journals where the papers are published and the citation frequencies. In academic settings, thought leaders, those researchers with large citation counts, get promoted and those with few citations don’t get promoted. It is not just “publish or perish,” but also “get cited or pack your bags.”
All surviving organizations require people who can help chart the course through uncertain and challenging times. The COVID pandemic is creating enormous problems for many firms and industries. These organizations must assemble groups of employees who can create innovative solutions to the pandemic. Stressed companies must encourage everyone in the firm to become a thought leader to generate ideas about how to better protect everyone while providing goods and services valued by their customers.
Let’s talk about business opportunities specifically. Can you share a few examples of how thought leadership can help a business grow or create lucrative opportunities?
In my book with Daniel Forrester, Relentless: The Forensics of Mobsters’ Business Practices, we offer numerous examples of how criminal thought leaders created lucrative illegal rackets. The Mafia in New York City had small crews of 5 or 6 wise guys who sat around during the day thinking of new rackets. These groups contained thought leaders. One scheme involved smuggling cigarettes from southern states that had low taxes and selling them in NYC that had very high cigarette taxes. In another, they infiltrated labor unions and eventually became union officers where they stole pension funds and extorted local businesses. Mobsters turn out to contain thought leaders who “offer informed guidance, innovative ideas and insight in their field of expertise.”
Ok. Now that we have that behind us, we’d love to hear your thoughts about how to eventually become a thought leader. Can you share 5 strategies that a person should implement to become known as a thought leader in their industry. Please tell us a story or example (ideally from your own experience) for each.
In Relentless, Daniel and I present a process that lawful thought leaders can follow to improve their organizations. The five-step process is illustrated using criminal syndicates.
- Thoroughly understand the value proposition of your customers. Why do they purchase your products? What attributes of your products do they value such as convenience, timely service, or price? Think hard and analytically about your customers and their preferences. El Chapo Guzman, convicted head of the Sinaloa Cartel understood his customers. He knew that when the Oxycontin pill-mills were shut down in the US, he started supplying refined Mexican heroin, called China White.
- How do we increase customer value? Once you really understand your customers and their preferences, how do we change our product or processes to enhance our customers’ experience? Jeff Bezo’s understands that people do not like to wait to get their purchases. Amazon is relentless at reducing delivery times.
- What external trends are affecting the markets for your products? Are new technologies threatening your products such as online shopping, digital imaging, or autonomous vehicles. If you own parking lots, what are you going to do as your customers shift to ride sharing? If you operate long-term care facilities, how will you navigate the reduced demand for nursing home beds as seniors now prefer staying in their homes after the COVID pandemic? Or, if you provide home health care services, how do you pivot to capture more seniors wanting your services? Thought leaders are needed to help you navigate an ever changing world.
- After completing the first 3 steps above, thought leaders must then change their extant business models and devise a revised business strategy. This requires a consensus building process to get input and buy in from all the key players, and other thought leaders, throughout the organization. One criminal thought leader gave pagers to middle class drug abusers in US cities who could signal a driver to deliver small quantities of drugs. Only carring small amounts of drugs, arresting police officers would not want to do the paper work for such a small cache.
- Major shifts in strategy usually require modifications in the company’s corporate governance mechanisms that attract, retain, and motivate your workforce of self-interested people to work to achieve the new strategy. When Netflix moved from distributing content on DVDs mailed to customers to a streaming service, they had to attract, retain, and motivate software engineers to build server farms to deliver the content.
In your opinion, who is an example of someone who has that has done a fantastic job as a thought leader? Which specific things have impressed you about that person? What lessons can we learn from this person’s approach.
Milton Friedman. He is best known for his strong belief in free-market capitalism. His prolific writings advocated for a volunteer army, freely floating exchange rates, abolition of professional licensing of doctors, a negative income tax, and education vouchers.
I have seen some discussion that the term “thought leader” is trite, overused, and should be avoided. What is your feeling about this?
Probably true. But buzz words “sell.” Aren’t all leaders thought leaders? Steve Jobs was an entrepreneur and very successful leader of Apple. His innovative ideas and insights produced digital devices people didn’t even know they wanted. Steve Jobs, Jeff Bezos, and Bill Gates would certainly meet the definition of thought leaders today. But they were labeled “entrepreneurs.” Is the term “thought leader” just “old wine in new bottles?”
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
How do we win the war on drugs? Estimates vary, but many put the cost of drug abuse in the US at nearly a trillion dollars annually, including lost productivity, criminal justice costs, and health care costs. Inestimable are the costs to families destroyed by drug abuse. What is the cost of a child caught in a cycle of poverty and ends up in a menial minimum-wage job for life? Drug abuse fuels much of America’s homeless problem. Mexico is in free fall from cartel wars killing over 275,000 people since 2006. Corrupt Mexican officials are destroying the fabric of their society. Drug wars in Mexico, and central and South America are driving much of the illegal immigration into the US. The 1920 18th Amendment to the Constitution created National Prohibition and banned the manufacture and sale of alcoholic beverages. We know how that turned out. The 18th Amendment was repealed in 1933, but not after it powered an explosive growth of criminal syndicates throughout the US, many of which still survive today providing gambling, prostitution, loan sharking, and other rackets. Thought leaders are needed to debate and find new solutions. Border interdiction, mass incarceration, massive public relation campaigns, education, and drug abuse clinics have failed to solve the problem. Some states are moving to decriminalize small amounts of drugs for personal consumption. But this does not solve the problems created by drug cartels selling impure products. Should all drugs be legalized and regulated like marijuana and alcohol? Can the taxes collected be used to finance substance abuse clinics?
In 1971, President Nixon declared drug abuse “public enemy number one” and launched the war on drugs. The Drug Enforcement Agency, formed in 1973 spends about 2 billion dollars annually fighting the war. It is losing. Better ideas are needed.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Professors Jensen and Meckling at the University of Rochester business school taught me that in general individuals are resourceful, self-interested, and seek to maximize their well-being. They are self-interested and care about more than just money. They value safety, friendship, travel, respect, leisure, philanthropic giving, a rewarding work experience, …. And, they make tradeoffs among the things they value. This life lesson teaches us that cooperation among people whether in professional or personal settings requires you to understand what that person really values and to provide a mutually beneficial experience. When motivating people in your organization, don’t just use money.
We are blessed that very prominent leaders in business and entertainment read this column. Is there a person in the world with whom you would like to have a lunch or breakfast with? He or she might just see this, especially if we tag them. 🙂
Former Attorney General, William Barr. Criticized by both the right and left, he must be doing something right.
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