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“Magic” Johnson was prepared for business due to basketball – and thorough research

From a young age, NBA hall of famer Earvin “Magic” Johnson was drawn to basketball. You could say it ran in his genes, with his parents and brothers equally as passionate about the game. But even back then, business was his ultimate ambition.
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Not only was Johnson blessed to have a family genuinely love the sport he played, he stressed that his parents often told him he could amount to anything – he just needed to believe it himself and finish his education.

It turns out that while Johnson aspired to be a basketball player, he always dreamed of becoming a businessperson later in life. And while he did end up in the corporate landscape, Johnson maintained that his work ethic and discipline were courtesy of what he learned on the court.

Talking at the Las Vegas SuiteWorld event, Johnson said that arguably his biggest lessons came from failure. By the time he entered high school, he had already made a name for himself by never losing a match. At the age of 15, he led a team expected to finish last in the league to conquer the championship favourite. It was here that Johnson recorded a triple-double of 36 points, 18 rebounds and 16 assists, earning the nickname “magic”.

Things changed, however, in 1984 when he met rival Larry Bird. “He was just amazing,” Johnson explained, “and for the first time in my life I had failed. Not only that, I was the reason why we lost that championship. I made the wrong decisions in key moments of the game. Later, while Bird was pouring champagne over his head I was in the locker room crying.

“That summer I took a SWOT of myself [analysing strengths, weaknesses, opportunities and threats]. I realised that I wasn’t as good as I thought I was. All summer I worked on my game to get better.

“Bird made me a better man. I knew he was shooting 2,000 shots a day so I did the same. He made me stay on top of my game.”

Having some competition, Johnson opined, is never a bad thing. In fact, your competitor can help you strive for improvement. As fate would have it, Johnson’s team beat Bird’s team when they played each other again in 1985.

“My second lesson came after I was drafted to the Lakers,” Johnson said, talking about his first business deal. “My rival, Bird, had gone to the Boston Celtics. I realised that we were number one and two when it came to t-shirt sales, but neither of us had received checks. It turns out that our rights were owned by the players association.

“They said I should open my own store and that they’d help me stock it. I went and bought what I thought everybody would like. Nothing sold for around four to five months as I had been buying the things I liked instead. That was my biggest lesson – always make the business about the customer.”

Upon retirement, Johnson finally took the corporate dive, but if anything basketball had taught him, it was that preparation was key. “Basketball gave me discipline,” he said. “I’ve never been late, and never will be. It’s given me the ability to stay focussed and learn before taking the plunge.”

He’d been saving up money to begin a venture, but thought he still lacked the knowledge to set something up. At the back of his mind, he was mired by thoughts of why athletes so often failed in business. Taking matters into his own hands, he found out who held season tickets at the Lakers’ games and ended up cold-calling 20 CEOs. He asked each one for advice.

Research on where to invest his money made him realise that much was still lacking in urban communities. He set up Magic Johnson Enterprises to bring job development, entertainment and better housing and retail to those areas. He became the first person to open a Starbucks franchise, acquired a Disney Land contract and boosted attendance at Dodgers games. Each achivement came hand-in-hand with a valuable lesson.

When it came to Starbucks, Johnson explained: “In urban areas they’ll pay $3 for coffee, but don’t quite know what scones are. I had to take them out of my Starbucks as it wouldn’t resonate with my customer base. Sweet potato pie, peach cobbler and Earth, Wind and Fire playing in the background, that’s what they wanted. The music is just as important as the food because you’ve lured someone into making that one purchase. Now you want them to stay longer and make another one.

“You need to over-deliver on the experience factor. Just delivering isn’t enough anymore. You’ve got to get their attention first.”

When it came to increasing the attendance at Dodgers games, it wasn’t only about understanding customers.

“The one thing you’ve got to realise is that the customer now is a different customer to before,” Johnson explained. “What I wanted and expected as a child is completely different to those of my own children. They want it now, they want it fast and if they don’t get what they want they’re going to somebody else. Well, we found out that the millennials that come to the games don’t actually come for the game.

“They want the experience of meeting their friends and hanging out. The game is secondary. So we built a pavilion so they can just stand and socialise. And guess what? They buy an incredible amount of drinks while they’re at it. We’ve got that revenue coming in like crazy from these young people.

“That’s also why I keep a lot of young people around me, because my old way of thinking sometimes gets in the way of success. I had to be open to listen to the young people who work for me.”

Disney Land, you can tell, was of great importance to Johnson – “you haven’t made it big if you don’t have a Disney contract.” It says a lot then that he declined the opportunity when it came around. He placed much emphasis on understanding a company and its capabilities.

You can’t just move forward with something because you want it. So he worked on preparing for it for three years, and now not only works with Disney Land, but Disney World as well. “Minnie and Mickey eat my food,” he grinned, “it’s really cool.”

Johnson holds much wisdom in the regard of customer expectations, with his every business thought preoccupied with knowing what his audience wants and how to add what’s been missing from their lives. This degree of focus, he explained, would never have come about without his years playing basketball.

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Shané Schutte

Shané Schutte is a senior reporter at Real Business, with a particular specialism in employment and business law, human resources, information technology and sales/marketing.

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