Have you ever wondered how Santa Claus can manufacture millions of toys for children all over the globe and then delivers them in a single night? I mean, the efficiency of his operation must be the gold standard that we all strive for, right? From quality control to employee relations and research and development to shipping, nobody does it better than ole St. Nick. That’s why I thought it would be fun to take a close look at the North Pole operations to present 7 things business owners can learn from Santa!
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As I began researching this subject, I found that there are roughly 2 billion people that Santa Claus can visit each Christmas. This takes into account the different cultures that don’t celebrate the Christmas holiday and families without children. To think that one man could visit 2 billion people in a single night is mind-blowing. Even more so when you consider that the modern flying version of Kris Kringle didn’t come into existence until around 1929. But more than the magical, the marvelous, and even miraculous aspects of Christmas, I want to key in on what we can learn from Santa’s business operations.
As you know, I look at businesses from the 8 key areas that impact their value the most. These areas, of course, are planning, finance, legal, operations, marketing, leadership, sales, and people. When we look at these key areas, it enables us to kind of dissect the business in order to uncover its weakest areas. So, when we examine these key areas in Santa’s business it becomes very intriguing.
For instance, each Christmas Eve, Santa visits roughly 108 MM homes. That means that he has to visit 1,250 households per second. In order to accomplish this feat, Papa Noel travels around 75 MM miles. This means his sleigh is flying through the air at a rate of 650 mps (that’s miles per second for the layperson). Talk about a tight schedule, folks. Even FedEx isn’t that good. So, I’ve come up with 7 things business owners can learn from Santa and his North Pole operations.
In order to pull off such a spectacular service, Mr. Klaus must plan so far ahead that everything is mapped out to the smallest detail. Think about it. If he is to drop the exact number of gifts for the exact little boy or girl at such an exact time, he must have plotted out his path from start to finish. It takes masterful and precise planning in order for Santa to deliver his goods and services to all those people. Perhaps this is where UPS came up with their “left turn” policy. They have worked out all of the numbers and found that by never going against the grain of the traffic, they cut down on the risk of accidents, fuel costs, and delivery times.
Santa Claus is the CEO of his company, Santa Inc. As you would expect of any major corporation, he also has Presidents, Vice Presidents, senior managers, and department heads that oversee different aspects of the day-to-day operations. Additionally, he has many different job classifications within his organization. These range from toy makers and designers to mechanics and air traffic controllers. So, as you can see, Santa has a full-fledged organization and everyone within the organization knows what they are responsible for and who they report to.
Before you say, “Okay, Justin. Santa has expert planning and great leadership practices, but he doesn’t do any marketing,” I want you to think about something. Santa’s marketing is so good that you can easily identify the keys to his marketing efforts. First, he is reliable. We know that every year, no matter what, Santa will make his deliveries and he will make them on time. Second, he is hyper-niched. Santa knows who his target demographic is and he centers his model around them. Because of this and a lot of branding through numerous mall appearances, promotional TV cartoons, the signature “red and white” color scheme, the entire world knows of Santa Claus.
Not only this, but he encourages feedback. He actually wants you to write him letters. And let’s not forget the ultimate customer rewards program. Every year, the people who make it on the “Nice” list receive a ton of gifts. In fact, he has a rockstar team that is dedicated specifically to this rewards program, which leads me to my next point.
It has been estimated that there are around 110K elves that are going to be working this Christmas. That’s just the elves, folks. I mean, this is a huge organization with a lot of mouths to feed. Now, the compensation package is a little more non-traditional, but his employees seem to be very happy and cared for. You see, Santa Inc. doesn’t pay the elves. Instead, they are given room and board. Each elf has a specific job and each one is integral to the success of the entire operation. And if we really get right down to it, nobody does operations like the guy in the red suit.
The sheer magnitude of Santa’s operations is mind-boggling. I mean, he has so many different types of products, from electronics to edibles, that have to go out. There’s manufacturing, logistics, quality control, order accuracy, and so much more. And yet, it all just hums like a well-oiled machine. His team pulls all of this off to perfection, in a 364-day timeframe.
But consider this, let’s assume that the average gift weighs 2lbs. That means that Santa is carrying roughly 321,000 tons of gifts on his sleigh. Now, 321,000 tons traveling at 650 miles per second creates enormous air resistance, and this will heat the reindeer up in the same fashion as a spacecraft re-entering the earth’s atmosphere. This means that the two lead reindeer will each absorb somewhere around 14.3 quintillion joules per second.
Without a NASA-designed heat shield, this will cause them to burst into flames spontaneously, exposing the pair behind them. As a result, there will be a rapid series of deafening sonic booms, as the entire reindeer team is vaporized within 4.26 thousandths of a second. Meanwhile, Santa himself will be subjected to a centrifugal force that is 17,500 times greater than gravity. That should do wonders for his waistline. A 250-pound Santa (which seems ludicrously slim) would be pinned to the back of his sleigh by 4,315,015 pounds of force.
Why do I bring this up? Santa knows what’s at stake. He knows what he’s up against and he has created unbelievable operational efficiencies. Everything is delegated to the various leaders in their departments and entrusted to them. Santa has trained them. He has clearly defined what their objectives are and what is considered a “win.” The big guy has some of the most impressive operational standards the world has ever known.
At this point, it has to be clear that this is an expensive enterprise. The estimated cost of all the toys that Santa delivers each year is around $24.3 billion. That works out to about $683 MM in shipping costs. Then there’s the cost of his staff. Housing the elves carries an annual price tag of $31.5 MM, while feeding the whole crew adds an additional $78 MM per year. On top of it all, Santa has to protect his assets.
Elf insurance alone is an astronomical expense at $468 MM. Santa’s standard business insurances like Workman’s Compensation and business liability coverage run him another $35 MM annually. All in, Santa’s business costs him about $25.6 billion every year. That’s not chump change, folks. But with all of that in mind, he has to have one of the world’s best finance departments to keep track of all of the accounts receivable and payable. As you can see, the 8 key areas matter. We aren’t done just yet, but how does your business stack up against Santa Inc., so far?
When you own a business, you have a target on your back. That’s just the way it is. Now, imagine owning a business as large as Santa Inc. You’d have to have one of the greatest legal teams that money could buy to protect your interests. To prove my point, I found a guide that was created by a group of law students at Suffolk University Law School, outlining exactly how to sue good old St. Nick.
Reasons for bringing a suit against Santa Claus include intentional emotional distress (ever wake up on Christmas morning and find that you didn’t get the gift you wanted?). Similarly, when you have a labor pool made entirely of “elves,” many of whom don’t have the best documentation to verify their age, child labor law violations could come into play.
Likewise, the use of non-domesticated animals could create legal trouble for Santa Claus. Black’s Law Dictionary defines non-domesticated as “those animals considered to be naturally wild and not naturally trained or domesticated or which are considered to be inherently dangerous to the health, safety, and welfare of people.” In 2010, there were thirty-seven reports of reindeer attacks on humans in the North Pole region, including a brawl between Donner and an area bike-messenger.
In addition, Santa could easily face trespassing, fraud/tax evasion, speed, parking, and airspace violations. With so many legal risks involved in his daily operation, Santa has to have a top-notch legal team. Want proof? His legal team has prevented him from being taken down by lawsuits for centuries.
Friends, these are just 7 things business owners can learn from Santa. The reality is, there are probably many other business lessons that could be learned from his North Pole operations. My hope is that, with a little levity, I’ve been able to shine a light on some of the areas in which your business may be lacking. Each of the 8 key areas that I mentioned earlier has a major impact on the value of your business. If there are areas that are suffering (be honest, there are) then it isn’t too late to do something about it.
If you’re unsure of how to turn the weak points in your business into best-in-class points of pride, then reach out to us. I do this every single day, both in my own businesses and in those of my clients. Take stock of where your business is today and begin making preparations to transform your organization in 2021.
Look, I know life is hard. I get it. But life is so good. It’s Christmas time and the spirit of love and joy is thick in the air around us. Comparing your business to Santa’s gold standard can be frustrating. But it doesn’t have to be. With a little help from a professional and an entrepreneurial spirit, we can make measuring up to Santa’s operations at least financially simple.
From the entire Financially Simple team, Merry Christmas! If you have further questions about how to improve the 8 key areas of your business, or if you just need help, contact us. We are here to help!
*Cartoon courtesy of Ellis Rosen. Check out his creative work on Instagram.