Shaping Strategy in a World of Constant Disruption: How to Manage Your Business Ecosystem

In this month’s Harvard Business Review, authors John Hagel III, John Seely Brown and Lang Davison provide a road map for the daunting task of shaping strategy as technology-driven infrastructures constantly change.
The article is called: “Shaping Strategy in a World of Constant Disruption” and you can download it here (thanks Deloitte Consulting!) >>
In my view this is a very timely piece of thinking from my heroes JH3 and JSB (and Lang Davison). I’ll dig into it later this month on ecosystemwatch.com
Wait, there’s more. Check out the podcast >>

Online Selling: Procter & Gamble Goes Direct to Fight Private Labels?

Don’t look now, but P&G is trying some direct selling online.
From the Financial Times:

Procter & Gamble is testing its ability to use the internet to sell its toothpaste, household cleaners and nappies directly to US households, in a potential long-term strategic challenge to its retail partners.
…The move brings P&G into direct brand competition with its retailers, underlining the extent to which e-commerce is contributing to changes in the way the two sides have traditionally worked with each other.

OK. The site is called theEssentials.com, but so far it looks like they have very little traffic.
Is this how they intend to fight the private label war? I’ll talk about them later this month on ecosystemwatch.com

Retail Strategy: Tips from Peter Drucker

One of the great things about the late Peter Drucker is that he can be summoned to solve just about any problem.
One of my clients is a web retailer. They’re having serious issues with “customer hesitancy.”
And of course the headlines are now full of bad news in retail.
So we had a long chat about customer hesitancy. What makes the customer hesitant? Is it really the news on TV? Is it the fact that they might be out of a job?
My first piece of advice to them was straight out of Drucker: Stop selling and start buying for the customer.
Are you buying for the customer? Really?
That line of reasoning led to these predictable questions: so exactly who is your customer? Are there segments you aren’t serving that you should? Are there segments you should stop wasting your time with?
We were able to go and look at their historic web-sales data (for the past two years down to the last two weeks) to find out who their customers really were. And surprise, there was no customer hesitancy there!
All they needed was to focus on the right segment. We changed the website to do just that.
Listen to good old (in this case a younger, “1.0 version”) Drucker:

Shoe Circus: Gates and Seinfeld take on Google, Apple – er, Goople

Here’s Crispin Porter & Bogusky’s attempt to “bring back” Microsoft:

It’s the first in a series of ads designed to fight Apple’s “Mac vs. PC” comedy show. Will $300 million do the job?
C’mon Microsoft! You can’t let Apple do this to you:

The scary thing is there’s so much more.
The way I see it this isn’t about Vista at all. It’s about the next wave of competition, about how Microsoft will compete against Goople – Google apps on Apple hardware!

Nurturing Your Business Ecosystem: Lessons Learned from SAP

JH3 and JSB have written an insightful piece for BusinessWeek titled: How SAP Seeds Innovation: SAP’s collaborative Web sites and discussion forums give its customers ways to learn from SAP business partners as well as from each other.
So why does SAP succeed where others fail?
According to Hagel:
1) SAP generated its ecosystem, which consists of customers, business partners, experts and independent parties by addressing the needs of the participants

and
2) it focused on the needs of individuals, not just companies.
There you have it: people first.
Read the entire article >>

Watching Ecosystems: a blog about marketspace analytics

Announcing our new blog at www.ecosystemwatch.com >>
The idea is fairly simple: If you don’t understand the ecosystem you’re competing in, you can’t compete effectively…
The blog will cover the following topics:
– Blogosphere
– Branding Ecosystems
– Business Ecosystems
– Business Models
– Case Studies
– Disruption
– Ecosystem Maps
– Industry Ecosystems
– Influencers
– Innovation Ecosystems
– Political Ecosystems
– Product Ecosystems
– Social Networking
– Strategy
– Value-Networks
This is a natural offshoot of our Ecosystem Intelligence™ service; take a look…

How to Measure Innovation

In some companies, you’ll hear senior executives spout this tired mantra: “Innovation is everyone’s job.” When that happens, head for the exit.
Now, the British are going to tell us how to measure innovation. The National Endowment for Science, Technology & the Arts (NESTA), a nonprofit organization that promotes innovation, wants to create a new index, one that will be industry-specific… blah, blah, blah.
I agree with their premise that traditional methods of measuring innovation, such as the amount of money thrown at R&D, don’t tell the entire story.
But their idea of implementing an industry-based “peer review in which company executives both help to define the innovation indicators and rate each other” is a joke.
Let’s see. Let’s ask the CEOs of Exxon, Chevron, Shell ,and BP to rate their industry on innovative approaches to solving the energy problem. Not funny, is it?
Clayton Christensen says the same thing in this article about creating new value networks.
So what should we measure? How about looking at results?
Can we identify disruptive entrants in an existing industry ecosystem? (Shameless plug: yes, we can – with Ecosystem IQ)
Hey, at least the British are trying. Better than our lame Department of Commerce.
BTW, BusinessWeek does have a Global Innovation Index worth looking at, but again, they’re looking at the establishment, the industry giants that are investing in innovation.
What I want to see is the game-changers. Where’s the next successful car company coming from? Is it Tata or Tesla?

Lessons Learned: Branding and Online Communities

Back in 2000 I was the leading an interesting experiment at one of the world’s largest software companies. The idea was simply this: if we build “communities of interest” around a specific topic (e.g. “database management,” or “innovation,” or “quality of experience”) we’ll be able to attract a significant number of our “target” audience and convert them to paying customers over time.
In a year and a half, we built seven distinct communities each supported by an ecosystem of vendors and partners. For four years we tried to make these communities work, and we did, with various levels of success. Along the way we learned several key lessons and I mention them here because while they seem basic, few companies ever seem to get them right:
Communities build Brand Equity
Unaided brand recognition for our company went from 12% to 84% within two years. Our “agency” did the survey and couldn’t believe the findings. Like most agencies, this one was focused on producing “creative” work rather than figuring out how to be useful to the consumer. Of all the sites we built, this was the only one which received “full funding” and was strongly supported ($) by the sponsoring business unit. It became a major hub in the ecosystem we were competing in, and we literally had about 50% of the “target audience” “opted-in” to our email newsletter. Furthermore, in terms of online referrals, this community accounted for as much as 40% (yes, forty percent) of referrals to the online store.
Communities are Self Segmenting
We learned we didn’t have to target or segment anyone. The content did the work for us. Because each community was “vertical” and concentrated on a specific subject, the only visitors we got were people interested in the topics we wrote about. In fact, the some of our more successful sites became the hub in the marketspace we were targeting.
Stop Selling, Start Learning
We didn’t push products on the sites. In fact, we tried hard not to sell. Instead, we focused on educational content from the world’s leading experts. The result, we had “stickiness” numbers even I couldn’t believe. On our best site, the average user spent over an hour per visit. And this number held up every month, for three years in a row. While we tried our best to teach, we also spent a considerable amount of time learning. I’d spend afternoons poring over site statistics – trying to figure out what was going on.
The 90/10 Rule applies
As we studied visitor behavior, we looked at content and author popularity, the clickthroughs and conversion rates, and resilience – which articles or discussions stood the test of time. Surprisingly, we noted that 5% of our authors drove 95% of our traffic. And 5% of our readers drove 95% of our sales. This was the pareto-principle on steroids (Richard Koch was right)!
Communities Drive Demand Generation
10X better than traditional online techniques like SEO and PPC. Our cost per lead was so low, our EVP of Sales couldn’t believe it. He became one of our biggest supporters.
Corporate Marketing is the Enemy
Don’t ever sell “communities” to a marketing department that thinks in terms of quarters and campaigns. As our communities took off, we experienced all sorts of difficulties, not from the outside, but rather from the corporate marketing staff. My boss believed that companies must drive traffic to their branded company URL, and not to a myriad of niche sites with funky names like linuxvalue.com (the site no longer exists, but it did work). Luckily my boss got zapped before I did, and I was able to keep the experiment going over four years and three different corporate marketing regimes. To this day, they don’t get it.
Forget the Wisdom of the Crowd, Focus on Thought Leadership
Communities are not necessarily social networks. We learned early on to allow the leading experts in the field to write about their pet peeves and passions. Sometimes they would come to “virtual blows” – one expert against the other – each presenting their views with wit and learning (and the occasional threat).
Manage the Ecosystem
After a year of slogging, we suddenly noticed that we didn’t have to worry about keywords or search engines ever again. We had become Google favorites. Almost anything we wrote about on any of the sites rose to #1 in Google and stayed there for years. Why? Because we had built a strong enough ecosystem- not a business ecosystem, mind you, but a consumer ecosystem. Our readers loved us. The experts loved us. Google loved us. What a game! All we had to do was focus on quality content. Our ecosystem became impenetrable. We had built a firewall against all competition. One example is particularly striking. Even after we stopped updating the site in question, we remained at #1 in Google for a highly competitive key phrase – not for a month or two, but for straight three years, after we had stopped touching the site at all!
There were a few more lessons we learned as well, but I think I’ve done enough jabbering for today. The end game for me was Double Loop Marketing™ and Ecosystem Intelligence™ – both direct offshoots of my time spent figuring out how to make communities succeed.

Why did Tata buy Range Rover and Jaguar?


Interesting analyses. We are going to see many more such mergers.
India and China are buying up brands.
We are going to see many more such mergers. These are “learning-acquisitions.”
Let’s see what Tata can teach Jaguar, and vice-versa. Value-engineering? Haven’t heard that terms since the 1980s…

Online Brand Monitoring: A survey of marketspace analytics vendors and why they fall short

From GE to Target, from IBM to Best Buy, companies of all stripes and sizes are struggling to quantify the effects of Web 2.0 on their companies. What are the blogs saying? Are they positive or negative? What’s happening on Second Life? Where are our customers congregating? Who are the influencers in the marketspace?
The result of this anxiety is a new booming business in “marketspace analytics”—companies that profess to track your brand over time and alert you to news (bad or good) in real time.
Given some of the new findings about buzz in the blogosphere (positive online buzz for cars and trucks doesn’t necessarily translate to volume sales) you have to ask, are they wasting their time?
My take on this is somewhat biased. I view all of these brand monitoring products as the online equivalent of the traditional press-clipping tracking function the PR companies used to cling to as a way to justify their existence.
That said, online brand building is a critical competence for today’s marketer. What matters is not online buzz which is a temporary spike in attention, but what that buzz does to your position in your online ecosystem.
Your competitive position in your ecosystem determines your destiny:
• How do you and your competitors compare in terms of return on marketing investments and relative share of the ecosystem?
• How are the leaders making money, and what is their approach in the ecosystem?
• What is the full potential of your business position in the ecosystem?
• How big is your marketspace—the size of the ecosystem you want to compete in?
• Which parts of the ecosystem are growing fastest?
• Where are you gaining or losing share in the ecosystem or sub-ecosystems you compete in?
• What capabilities are creating a competitive advantage for you in the ecosystem?
• Which capabilities need to be strengthened or acquired to help you compete in the ecosystem?
Because we couldn’t find anything to help us with these questions, we decided to build it ourselves. That’s how our Ecosystem Intelligence™ service came into existence:
(i) to help measure a company’s position in the ecosystem(s) it competes in, and
(ii) to help improve that position in the marketspace over time
Now let’s check out some of the competing brand monitoring vendors:
Biz360: provides customer opinion measurement from thousands of expert and consumer product review websites, shopping sites, blogs and message boards
Cymfony: rated highly by the tech analysts, they claim to “quantify your amount of coverage as well as get expert qualitative interpretation of how effectively your message is being picked up in traditional and social media.”
Skygrid: a search tool that sifts through hundreds of web and mainstream media to show you just one thing: whether the balance of the news on a public company is good or bad, and how the “mood” is changing.
BrandIntel: collects, processes and analyzes online consumer content and applies human analysis to the results in context.
Factiva: monitors your competitors, customers, and industry, with in-depth research and company financial data reports.
MotiveQuest: “sees” the “peaks of passion” in online conversations to understand customer motivations. Again, a combination of proprietary software and human analysts to explore what drives customer behavior.
Nielsen Buzzmetrics: measures consumer-generated media to help companies understand consumer needs, reactions and issues. They use a data-warehouse approach to index customer sentiment.
Scout Labs: allows users to track brands and reactions to those brands. In essence, the company helps companies make sense of positive and negative brand sentiment in blogs, user generated videos, and images.
Umbria: analyzes social media—including blogs, message boards, Usenet, and product review sites. Umbria also adds human insights to their data reports.
And there you have it, all variations on the press-clipping theme.
And unfortunately most companies (including the ones above) don’t get it.
It’s not about tracking buzz, it’s about starting a conversation.
Seth Godin gets it.

Online Buzz Bubble-Popper: Positive reviews don’t necessarily mean more sales

Positive online buzz for cars and trucks doesn’t necessarily translate to volume sales, period.
Here’s the story in AdAge: “What Web Buzz Does for Car Sales: Not Much”
Turns out that BrandIntel has been monitoring 450,000 comments over the past year. Comments made by “enthusiasts” in consumer discussion forums on auto-information sites such as Edmunds.com, newspaper and magazine sites, and blogs.
Let’s look at the print/paper analogy. This is the equivalent counting the number of press-clippings in the trade mags. As a measure of PR efficacy of getting stories published, it worked great. As an indicator of sales, it didn’t.
What matters in print and online is the credibility of the messenger and the size of the audience. A story in Rupert Murdoch’s WSJ or the NY Times may have a dramatic impact compared to the same story in your local rag.
Online, credibility and audience-size still matter, but so does findability. How easy is the story to find? Does it come up high in Google and to a lesser extent Yahoo? If there is buzz, is the buzz on a hub or a backwater site? Is it getting attention or play through links from other noteworthy sites?
How does one measure that? There is a way – ecosystem relevance – which measures the position and rank of a site within its industry/category ecosystem.

Jeffrey Immelt: India versus China – Trust is a Global Issue for GE

I was talking to Bill Dunk this morning, and we got to the topic of trust as an issue in global business.
I told him I’d seen a video in which Jeff Immelt said something to the effect that in China the concept of win-win is an issue, whereas India is much better at partnerships.
Immediately, Bill dug up this article for me – an interview with Nani Beccalli-Falco, GE International’s chief executive.
From the article:
This is a difficult challenge and it is one that Beccalli-Falco speaks of with surprising candour. He talks of the problems of striking deals in China, where, he says, the values of equity and fairness implied in the West’s ‘win/win’ approach to business are replaced by a more naked self-interest. “In China, they have a tendency to think ‘win for China, OK for you’,” he says. “It makes forming partnerships difficult.”
If you want to get a global perspective on business, you must subscribe (for free) to Bill Dunk’s Global Province >>
And yes, I finally dug up the video:

Watch Immelt’s interview with Rajat Gupta, and listen carefully as Immelt talks about India versus China – right at the very end of the video:
“China has a hard time with win-win. That’s a problem over the long term.India’s much better. There’s a much better sense that India can be a real ally…”
Wow.
China’s got the Olympics this summer… wonder if they’ll let anyone else win a medal…

Kevin Coyne’s 21 Questions for Developing New Products

The December 2007 HBR had an interesting article by Kevin Coyne called Breakthrough Thinking from Inside the Box. There’s far more to this article than just the 21 questions, so I urge you to go grab it here!
The approach Coyne and friends describe supposedly works better than brainstorming or strict quantitative analysis >>
“De-average” buyers and users
Which customers use or purchase our product in the most unusual way?
Do any customers need vastly more or less sales and service attention than most?
For which customers are the support costs (order entry, tracking, customer-specific design) either unusually high or unusually low?
Could we still meet the needs of a significant subset of customers if we stripped 25% of the hard or soft costs out of our product?
Who spends at least 50% of what our product costs to adapt it to their specific needs?
Explore unexpected successes
Who uses our product in ways we never expected or intended?
Who uses our product in surprisingly large quantities?
Look beyond the boundaries of our business
Who else is dealing with the same generic problem as we are but for an entirely different reason? How have they addressed it?
What major breakthroughs in efficiency or effectiveness have we made in our business that could be applied in another industry?
What information about customers and product use is created as a by-product of our business that could be the key to radically improving the economics of another business?
Examine binding constraints
What is the biggest hassle of purchasing or using our product?
What are some examples of ad hoc modifications that customers have made to our product?
For which current customers is our product least suited?
For what particular usage occasions is our product least suited?
Which customers does the industry prefer not to serve, and why?
Which customers could be major users, if only we could remove one specific barrier we’ve never previously considered?
Imagine perfection
How would we do things differently if we had perfect information about our buyers, usage, distribution channels, and so on?
How would our product change if it were tailored for every customer?
Revisit the premises underlying our processes and products
Which technologies embedded in our product have changed the most since the product was last redesigned?
Which technologies underlying our production processes have changed the most since we last rebuilt our manufacturing and distribution systems?
Which customers’ needs are shifting most rapidly? What will they be in five years?
Finally, if you want to hire Kevin Coyne, he’s available here >>

Advertising in a Recession: Bye-Bye Magazines and TV?

The Economist tells us that Hyundai almost yanked its Super Bowl advertising due to economic concerns. At the last minute, they decided to stay put.
Yank it, I say. And spend the money advertising on the Internet!
The article goes on to tell us that: “Marketing spending is one of the first things companies decide to cut when faced with slowing sales.”

This is true, but only when companies don’t understand marketing. Which means despite what Maurice Lévy at Publicis Groupe and Sir Martin Sorrell at WPP are saying, look for a crash in marketing spend.
The NY Times tells us “Forecasters Say Madison Avenue Will Escape a Recession, Just Barely.”
I say they’re wrong.
We know that the research tells us that recessions clearly reward aggressive advertisers and destroy timid ones.
In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies covering 16 different SIC industries from 1980 through 1985. Results showed [hat tip to MacTech] that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.

Sales for the companies studied were relatively even before the recession, but varied sharply during and after. Companies that cut advertising during both of the recessionary years maintained flat sales during the period and only modest sales growth in the following two years. In contrast, the companies that maintained their advertising experienced significant sales growth throughout the four-year period.

According to the study and contrary to popular belief, cuts in advertising during a recession decrease net income over the long haul. Companies that maintained advertising during the recession enjoyed measurably higher net income gains not only during the recession, but even more so, two years after the recession. This in stark contrast to those companies those companies that cut advertising both years and significantly reduced their profits during the recession, and for years following.
On top of that, my friend Sundar Bharadwaj insists that “the impact of branding on firm performance outweighs both the impact of the competitive environment and resource allocation.”
But that, ladies and gents, was before the Internets.
Now, we’re going to see something we’ve never seen before. The end of advertising as we know it. If the Olympics go south, as they just might especially given the lame coverage we’ve seen in the past, I expect that TV will be hit hardest, followed by print – magazines and periodicals.
Radio will stay flat, and the biggest (and only) gainer will be online advertising.
I’m convinced we’re going to see a boom in marketspace analytics.
Smart money will focus on ecosystems. They’ll know exactly where to advertise to get the best response to drive quarterly results.
Ask yourself:
– Are we in the right ecosystem to begin with?
– Who are we competing against really? (versus who we believe we are competing against)
– Where do we stand vis-à-vis our competitors?
– Who else is in our ecosystem? Are they neutral, friends, or enemies?
– What are the microtrends? Are we gaining or losing on the competition?
– What are the keywords being used to dominate our ecosystem?
– Are there any potential partners in the ecosystem we want to compete in?
– Is our target demographic well represented in our actual ecosystem?
– Do we need an offensive or defensive strategy to challenge the competition? Can we do both?
– Where does the traffic for our ecosystem come from? Is it global?
– What must we do in the short-term to compete? What about the long-term?
– Where should we be advertising?
– Can we dominate our industry ecosystem?
Welcome to ecosystem marketing.

Chindogu anyone?


Being stalked? Just go ahead and camouflage yourself as a Coke machine.
Martin Fackler’s NYTimes article Fearing Crime, Japanese Wear the Hiding Place gives us a look at the peculiar world of Japanese innovation.
Writes Fackler:
[Japan is] home to a prolific subculture of individual inventors, whose ideas range from practical to bizarre. Inventors say a tradition of tinkering and building has made Japan welcoming to experimental ideas, no matter how eccentric.
“Japanese society won’t just laugh, so inventors are not afraid to try new things,” said Takumi Hirai, chairman of Japan’s largest association of individual inventors, the 10,000-member Hatsumeigakkai.
In fact, Japan produces so many unusual inventions that it even has a word for them: chindogu, or “queer tools.”

A chindogu manifesto is available online for all you budding inventors. The ten tenets are:
1. A Chindogu cannot be for real use.
2. A Chindogu must exist.
3. Inherent in every Chindogu is the spirit of anarchy.
4. Chindogu are tools for everyday life.
5. Chindogu are not for sale.
6. Humor must not be the sole reason for creating Chindogu.
7. Chindogu are not propaganda.
8. Chindogu are never taboo.
9. Chindogu cannot be patented.
10. Chindogu are without prejudice.
And here are a few examples of chindogu from the King of Chindogu – Kenji Kawakami.
Finally, here’s more from the International Chindogu Society. Check out the “portable zebra crossing” >>

Pankaj Ghemawat on Globaloney!

Why do so many global strategies fail—despite companies’ powerful brands and other border-crossing advantages?
Seduced by market size, the illusion of a borderless, “flat” world, and the allure of similarities, firms launch one-size-fits-all strategies.
But cross-border differences are larger than we often assume, explains Pankaj Ghemawat in his new book: Redefining Global Strategy. Most economic activity—including direct investment, tourism, and communication—happens locally, not internationally.
Here’s Ghemawat’s take on globaloney >>
Here’s his globaloney quiz:
Do you basically agree or disagree with the following statements:
1. Competing the same way everywhere is the purest form of global strategy (Uniformity)
2. The truly global company has no home base (Statelessness)
3. Globalization tends to make industries become more concentrated (Consolidation)
4. Globalization offers virtually limitless growth opportunities (Endless Growth)
5. Global expansion is an imperative rather than an option to be evaluated (Act of Faith)
Give yourself—or your colleagues—1 point for each yes answer, and add them up to get to the total score. Zero implies an absence of globaloney. A score of 1 or 2, while indicating some globaloney, is still better than average. A score of 3 puts you at the average for several hundred managers who responded to an online survey—see below—but note that the average is pretty unhealthy given the number of problems it can lead to (think Coke). And a score of 4 or 5 rises beyond globaloney to the level of globalmania.
One wonders whether Tom Friedman will read this book…

Cool Company: Norway’s TH!NK


Another product innovation company, TH!NK is just a fantastic Norwegian company whose time has come. The green cousin of the SMART car… that’s how I think of it.
CEO Jan-Olaf Willums says that this car is coming WIFI enabled, with insurance, and most importantly, with no carbon emissions.
Sounds great! This is destined to be the iPod of cars – everyone will want one, just to be cool, if nothing else. Heck, this is what China and India need as well, not more pollution causing tin-can cars.

Cool Companies: Germany’s Q-Cells AG

John Hagel reminds us that most businesses are in fact a combination of three very different kinds of models:
Infrastructure management businesses (IMB) – high volume, routine processing businesses – think of contract manufacturers, logistics providers and call center operators as relatively pure play examples of these businesses
Customer relationship businesses (CRB) – businesses that get to know individual customers extremely well and, based on that understanding, help to access relevant resources for these customers – relatively pure play examples of these businesses include large advisory firms that help large enterprise customers decide what form of IT outsourcing to pursue and help these large enterprises to evaluate and negotiate with the right mix of outsourcing service providers.
Product innovation and commercialization businesses (PIC) – businesses that focus on developing innovative new products and services, getting them into market quickly and accelerating adoption of the products – think of semiconductor firms operating without their own fab facilities as relatively pure play examples of these businesses.

I love product innovation businesses – in some ways they are the best hope for the creative individual because they are by very nature more entrepreneurial and performance-based.
Which brings me to one of these companies…
Take a look at Germany’s Q-Cells AG.
Their focus is simple: develop, produce and sell high-performance solar cells. The goal? To drive the photo-voltaic industry to competitiveness.
Don’t forget to check out the Solar Taxi!

Intelligent Aggregation: TheIssue.com

The previous post on this blog just got picked up by theissue.com – which describes itself as a “blog newspaper.”
The site describes itself as follows:
The Issue is a non-partisan blog newspaper that provides a window to an emerging world of diverse and informed opinions. We cull the blogosphere for its wise insights, probing analyses, and diverse perspectives, drawing together a borderless newspaper. By combining the democratization and diversity of new media with the format and editorial standards of traditional news, we hope to offer a hybrid news source that provides the best of both worlds.
Now I don’t usually believe anyone who says they’re non-partisan (all the Republican attack sites do this), but I do understand the concept. In essence, this is a very valuable function, one that delivers real value to the busy reader.
I think we’re about to see a flood of these blog aggregators in the marketspace – many of them tightly focused on niche topics.
The news media is actually fairly weak at blog aggregation, even though it’s a technique which could help them drive traffic and revenue. Especially if they’d embed videos.

Beyond Chatter: Monitoring Online Ecosystems

There’s a flutter of activity in the ad-agency world around the subject of tracking online conversations.
WAPO reports on a tool call Buzz Manager, “a Web-based research tool that trolls sports blogs, message boards, podcasts, YouTube and similar sources, capturing relevant chatter on behalf of a client” — whether a racecar driver, corporate sponsor or sports league. That information is analyzed for content and impact and then translated into a Buzz Rating — a single number on a scale of 1 to 10.
In my view, this is just an online version of the old “press-clipping” service that PR companies would go use in the old days of Web.0!
What they’re missing is a map of the entire ecosystem. How does traffic (and attention) flow through the ecosystem? How many people are in the ecosystem? Which sites are positioned as hubs in the ecosystem? Are they friends or foes?
Wait a minute. That’s why we developed our Ecosystem Intelligence™ Services.

Snorkeling in a Red Ocean: Yahoo’s ‘Peanut Butter Manifesto’

Read John Hagel’s post “Internet Strategy – Red Ocean or Blue Ocean?” then take a look at this >>
[From the WSJ]
An internal document by Brad Garlinghouse, a Yahoo senior vice president, says Yahoo is spreading its resources too thinly, like peanut butter on a slice of bread. Full text of the document is below.
Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!
It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!
I proudly bleed purple and yellow everyday! And like so many people here, I love this company
But all is not well. Last Thursday’s NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake up call. But also a call to action. A clear statement with which I, and far too many Yahoo’s, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down – but rather the spirit and resolve used to get back up. The same is now true of our Company.
It’s time for us to get back up.
I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity – in fact the invitation – to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change. Our current course and speed simply will not get us there. Short-term band-aids will not get us there.
It’s time for us to get back up and seize this invitation.
I imagine there’s much discussion amongst the Company’s senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.
Recognizing Our Problems
We lack a focused, cohesive vision for our company. We want to do everything and be everything — to everyone. We’ve known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.
Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like — rather than a leadership team rallying around a single cohesive strategy.
I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should.
We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure — admittedly created with the best of intentions — that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.
Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations… there are so many people in charge (or believe that they are in charge) that it’s not clear if anyone is in charge. This forces decisions to be pushed up – rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold… thinking outside the box.
There’s a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing the same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision – we have become timid in our pursuit. Again, the ball drops.
We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.
We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch
• Flickr vs. Photos
• YMG video vs. Search video
• Deli.cio.us vs. myweb
• Messenger and plug-ins vs. Sidebar and widgets
• Social media vs. 360 and Groups
• Front page vs. YMG
• Global strategy from BU’vs. Global strategy from Int’l
We have lost our passion to win. Far too many employees are “phoning” it in, lacking the passion and commitment to be a part of the solution. We sit idly by while — at all levels — employees are enabled to “hang around”. Where is the accountability? Moreover, our compensation systems don’t align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren’t adequately recognized for their efforts.
As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.
Solving our Problems
We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.
If we get back up, embrace dramatic change, we will win.
I don’t pretend there is only one path forward available to us. However, at a minimum, I want to be part of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope, The plan here is not perfect; it is, however, FAR better than no action at all.
There are three pillars to my plan:
1. Focus the vision.
2. Restore accountability and clarity of ownership.
3. Execute a radical reorganization.
1. Focus the vision
a) We need to boldly and definitively declare what we are and what we are not.
b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.
My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy — that is narrowly focused.
We can’t simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI — then let’s not be bashful about reducing our investment in other areas. We need to make the tough decisions, articulate them and stick with them — acknowledging that some people (users / partners / employees) will not like it. Change is hard.

2. Restore accountability and clarity of ownership

a) Existing business owners must be held accountable for where we find ourselves today — heads must roll,
b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!’s new focus)
c) We must redesign our performance and incentive systems.
I believe there are too many BU leaders who have gotten away with unacceptable results and worse — unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.
By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability — leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.
My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.
3. Execute a radical reorganization
a) The current business unit structure must go away.
b) We must dramatically decentralize and eliminate as much of the matrix as possible.
c) We must reduce our headcount by 15-20%.
I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision making to a new set of business units and their leadership. But we can’t achieve this with baby step changes, We need to fundamentally rethink how we organize to win.
Independent of specific proposals of what this reorganization should look like, two key principles must be represented:

Blow up the matrix.
Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience & design, engineering, business development & operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.

Kill the redundancies.
Align a set of new BU’s so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise — decentralization can create inefficiencies, but I believe we can find the right balance.
I love Yahoo! I’m proud to admit that I bleed purple and yellow. I’m proud to admit that I shaved a Y in the back of my head.
My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don’t pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company – a company with a clearer vision and clearer ownership and clearer accountability.
We may have fallen down, but the race is a marathon and not a sprint. I don’t pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.
So let’s get back up.
Catch the balls.
And stop eating peanut butter.

Carr: Top-Down Disruptive Innovation

Our friend Nicholas “IT Doesn’t Matter” Carr has written a wonderful essay on top-down innovation – the anti-thesis to Clayton Christensen’s Innovator’s Dilemma.
Carr tells us that top-down disruptive innovations actually outperform existing products when they’re introduced, and they sell for a premium price rather than at a discount.
Exhibit A: Apple’s iPod. Writes Carr: “The iPod upped the performance stakes immensely. By using a tiny hard drive to store music, it allowed people to carry hundreds, even thousands, of songs with them at all times. Its price, starting at $399, was equally eye-opening — the price of a mid-range component stereo system.”
Good point.
The article definitely make you think that there is some benefit (profit) to providing high-end products. So why are so few companies doing it?
Because to compete on quality is much more difficult than competing on cost. For one, it takes imagination. And even more important, it takes execution. And that takes good leadership. Would Apple be succeeding without Jobs? Look what happened to Apple when they had that guy from Pepsi running it. Almost destoyed the company.
So it’s not that easy. But top-down innovation can be done. The question is: can it be sustained?

REWIND: Remember The Cluetrain?

Some of my clients (both B2B and B2C) need to go back in time and read The Cluetrain Manifesto.
Here are the classic “95 Theses” (try substituting the word “market” with “customers” or “friends”):
95 Theses
————————————————-
1. Markets are conversations.
2. Markets consist of human beings, not demographic sectors.
3. Conversations among human beings sound human. They are conducted in a human voice.
4. Whether delivering information, opinions, perspectives, dissenting arguments or humorous asides, the human voice is typically open, natural, uncontrived.
5. People recognize each other as such from the sound of this voice.
6. The Internet is enabling conversations among human beings that were simply not possible in the era of mass media.
7. Hyperlinks subvert hierarchy.
8. In both internetworked markets and among intranetworked employees, people are speaking to each other in a powerful new way.
9. These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge.
10. As a result, markets are getting smarter, more informed, more organized. Participation in a networked market changes people fundamentally.
11. People in networked markets have figured out that they get far better information and support from one another than from vendors. So much for corporate rhetoric about adding value to commoditized products.
12. There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone.
13. What’s happening to markets is also happening among employees. A metaphysical construct called “The Company” is the only thing standing between the two.
14. Corporations do not speak in the same voice as these new networked conversations. To their intended online audiences, companies sound hollow, flat, literally inhuman. ‘
15. In just a few more years, the current homogenized “voice” of business—the sound of mission statements and brochures—will seem as contrived and artificial as the language of the 18th century French court.
16. Already, companies that speak in the language of the pitch, the dog-and-pony show, are no longer speaking to anyone.
17. Companies that assume online markets are the same markets that used to watch their ads on television are kidding themselves.
18. Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity.
19. Companies can now communicate with their markets directly. If they blow it, it could be their last chance.
20. Companies need to realize their markets are often laughing. At them.
21. Companies need to lighten up and take themselves less seriously. They need to get a sense of humor.
22. Getting a sense of humor does not mean putting some jokes on the corporate web site. Rather, it requires big values, a little humility, straight talk, and a genuine point of view.
23. Companies attempting to “position” themselves need to take a position. Optimally, it should relate to something their market actually cares about.
24. Bombastic boasts—”We are positioned to become the preeminent provider of XYZ”—do not constitute a position.
25. Companies need to come down from their Ivory Towers and talk to the people with whom they hope to create relationships.
26. Public Relations does not relate to the public. Companies are deeply afraid of their markets.
27. By speaking in language that is distant, uninviting, arrogant, they build walls to keep markets at bay.
28. Most marketing programs are based on the fear that the market might see what’s really going on inside the company.
29. Elvis said it best: “We can’t go on together with suspicious minds.”
30. Brand loyalty is the corporate version of going steady, but the breakup is inevitable—and coming fast. Because they are networked, smart markets are able to renegotiate relationships with blinding speed.
31. Networked markets can change suppliers overnight. Networked knowledge workers can change employers over lunch. Your own “downsizing initiatives” taught us to ask the question: “Loyalty? What’s that?”
32. Smart markets will find suppliers who speak their own language.
33. Learning to speak with a human voice is not a parlor trick. It can’t be “picked up” at some tony conference.
34. To speak with a human voice, companies must share the concerns of their communities.
35. But first, they must belong to a community.
36. Companies must ask themselves where their corporate cultures end.
37. If their cultures end before the community begins, they will have no market.
38. Human communities are based on discourse—on human speech about human concerns.
39. The community of discourse is the market.
40. Companies that do not belong to a community of discourse will die.
41. Companies make a religion of security, but this is largely a red herring. Most are protecting less against competitors than against their own market and workforce.
42. As with networked markets, people are also talking to each other directly inside the company—and not just about rules and regulations, boardroom directives, bottom lines.
43. Such conversations are taking place today on corporate intranets. But only when the conditions are right.
44. Companies typically install intranets top-down to distribute HR policies and other corporate information that workers are doing their best to ignore.
45. Intranets naturally tend to route around boredom. The best are built bottom-up by engaged individuals cooperating to construct something far more valuable: an intranetworked corporate conversation.
46. A healthy intranet organizes workers in many meanings of the word. Its effect is more radical than the agenda of any union.
47. While this scares companies witless, they also depend heavily on open intranets to generate and share critical knowledge. They need to resist the urge to “improve” or control these networked conversations.
48. When corporate intranets are not constrained by fear and legalistic rules, the type of conversation they encourage sounds remarkably like the conversation of the networked marketplace.
49. Org charts worked in an older economy where plans could be fully understood from atop steep management pyramids and detailed work orders could be handed down from on high.
50. Today, the org chart is hyperlinked, not hierarchical. Respect for hands-on knowledge wins over respect for abstract authority.
51. Command-and-control management styles both derive from and reinforce bureaucracy, power tripping and an overall culture of paranoia.
52. Paranoia kills conversation. That’s its point. But lack of open conversation kills companies.
53. There are two conversations going on. One inside the company. One with the market.
54. In most cases, neither conversation is going very well. Almost invariably, the cause of failure can be traced to obsolete notions of command and control.
55. As policy, these notions are poisonous. As tools, they are broken. Command and control are met with hostility by intranetworked knowledge workers and generate distrust in internetworked markets.
56. These two conversations want to talk to each other. They are speaking the same language. They recognize each other’s voices.
57. Smart companies will get out of the way and help the inevitable to happen sooner.
58. If willingness to get out of the way is taken as a measure of IQ, then very few companies have yet wised up.
59. However subliminally at the moment, millions of people now online perceive companies as little more than quaint legal fictions that are actively preventing these conversations from intersecting.
60. This is suicidal. Markets want to talk to companies.
61. Sadly, the part of the company a networked market wants to talk to is usually hidden behind a smokescreen of hucksterism, of language that rings false—and often is.
62. Markets do not want to talk to flacks and hucksters. They want to participate in the conversations going on behind the corporate firewall.
63. De-cloaking, getting personal: We are those markets. We want to talk to you.
64. We want access to your corporate information, to your plans and strategies, your best thinking, your genuine knowledge. We will not settle for the 4-color brochure, for web sites chock-a-block with eye candy but lacking any substance.
65. We’re also the workers who make your companies go. We want to talk to customers directly in our own voices, not in platitudes written into a script.
66. As markets, as workers, both of us are sick to death of getting our information by remote control. Why do we need faceless annual reports and third-hand market research studies to introduce us to each other?
67. As markets, as workers, we wonder why you’re not listening. You seem to be speaking a different language.
68. The inflated self-important jargon you sling around—in the press, at your conferences—what’s that got to do with us?
69. Maybe you’re impressing your investors. Maybe you’re impressing Wall Street. You’re not impressing us.
70. If you don’t impress us, your investors are going to take a bath. Don’t they understand this? If they did, they wouldn’t let you talk that way.
71. Your tired notions of “the market” make our eyes glaze over. We don’t recognize ourselves in your projections—perhaps because we know we’re already elsewhere.
72. We like this new marketplace much better. In fact, we are creating it.
73. You’re invited, but it’s our world. Take your shoes off at the door. If you want to barter with us, get down off that camel!
74. We are immune to advertising. Just forget it.
75. If you want us to talk to you, tell us something. Make it something interesting for a change.
76. We’ve got some ideas for you too: some new tools we need, some better service. Stuff we’d be willing to pay for. Got a minute?
77. You’re too busy “doing business” to answer our email? Oh gosh, sorry, gee, we’ll come back later. Maybe.
78. You want us to pay? We want you to pay attention.
79. We want you to drop your trip, come out of your neurotic self-involvement, join the party.
80. Don’t worry, you can still make money. That is, as long as it’s not the only thing on your mind.
81. Have you noticed that, in itself, money is kind of one-dimensional and boring? What else can we talk about?
82. Your product broke. Why? We’d like to ask the guy who made it. Your corporate strategy makes no sense. We’d like to have a chat with your CEO. What do you mean she’s not in?
83. We want you to take 50 million of us as seriously as you take one reporter from The Wall Street Journal.
84. We know some people from your company. They’re pretty cool online. Do you have any more like that you’re hiding? Can they come out and play?
85. When we have questions we turn to each other for answers. If you didn’t have such a tight rein on “your people” maybe they’d be among the people we’d turn to.
86. When we’re not busy being your “target market,” many of us are your people. We’d rather be talking to friends online than watching the clock. That would get your name around better than your entire million dollar web site. But you tell us speaking to the market is Marketing’s job.
87. We’d like it if you got what’s going on here. That’d be real nice. But it would be a big mistake to think we’re holding our breath.
88. We have better things to do than worry about whether you’ll change in time to get our business. Business is only a part of our lives. It seems to be all of yours. Think about it: who needs whom?
89. We have real power and we know it. If you don’t quite see the light, some other outfit will come along that’s more attentive, more interesting, more fun to play with.
90. Even at its worst, our newfound conversation is more interesting than most trade shows, more entertaining than any TV sitcom, and certainly more true-to-life than the corporate web sites we’ve been seeing.
91. Our allegiance is to ourselves—our friends, our new allies and acquaintances, even our sparring partners. Companies that have no part in this world, also have no future.
92. Companies are spending billions of dollars on Y2K. Why can’t they hear this market timebomb ticking? The stakes are even higher.
93. We’re both inside companies and outside them. The boundaries that separate our conversations look like the Berlin Wall today, but they’re really just an annoyance. We know they’re coming down. We’re going to work from both sides to take them down.
94. To traditional corporations, networked conversations may appear confused, may sound confusing. But we are organizing faster than they are. We have better tools, more new ideas, no rules to slow us down.
95. We are waking up and linking to each other. We are watching. But we are not waiting.
Special thanks to Levine, Locke, Searls & Weinberger. And John Hagel before them.

Customer Driven Innovation

In strategy + business, Michael Schrage writes about how involving customers in the innovation process can add value to new product designs:
“In industry after industry, a shared model for innovation adoption is emerging. The most valuable “platforms” — the tools and technologies used internally to discover, design, and test new products and services — can be creatively and cost-effectively sold or lent to customers, clients, and prospects. Customers get a chance to “try before they buy.” They can adopt and test new ideas and technologies before investing in them. And the purveyors of new technologies rapidly gain insights into the potential value of their wares — insights that might otherwise take years to gather.”
His examples: Cisco, P&G, and Goldman Sachs.
Cisco: “Cisco had several highly sophisticated customers who weren’t satisfied with “solutions”; they wanted to see and understand the thought process behind the company’s proposals. Were these architectures really the best or most cost-effective that Cisco had to offer? So Cisco began showing these customers its in-house simulations. And the customers, in turn, expressed a desire to adapt these design, configuration, and optimization models for their own use.”
P&G: “Procter & Gamble has begun to share some of its computer modeling and market research techniques with Wal-Mart, Tesco, and other distribution channels. This includes the celebrated P&G “moment of truth” research, which tracks consumer attitudes at two critical times: when the product is chosen and when it is used. To be sure, many of P&G’s biggest distributors are also rivals that offer their own private labels, so there are risks to sharing this type of proprietary innovation platform with them. But the rewards are even greater: They include ongoing close ties with retailers, who often share their own innovative tools for analyzing (for example) how store layout, shelf space, and signage influence purchase decisions. Together, these manufacturers and retailers can develop a relationship that transcends any particular innovation tool or technique.”
Goldman Sachs: “In the early days, we would run simulation after simulation demonstrating that our instruments would help them better hedge their risks,” acknowledges one former Goldman Sachs and Salomon Brothers executive. “But, frankly, they didn’t fully trust either us or our simulations. It wasn’t until we started giving them the simulation tools we used ourselves that they took us seriously.” … These free simulators proved to be the most profitable innovation that the Goldman Sachs derivatives group launched. Soon, clients began asking for custom derivatives and other tailored instruments. “Without the simulators, customers would never have known what to ask for, and we would never have thought to ask,” recalls the bank executive. Yet, despite its success, this innovation appeared nowhere in the bank’s R&D budget or prospectus. It was only a tacit, not an explicit, locus of value creation.
But not everyone is so keen to share their knowledge. The article tells us about Eric von Hippel’s hypothesis that internal innovators frequently view customer innovators as rivals who might undermine their creative role.
Ultimately, we’re talking about demand innovation. A double loop model enables you to learn how to extend your offerings into your customers’ internal value chain, creating a platform for profitable growth. It’s also about identifying unmet customer needs – by going upstream or downstream as dictated by your industry’s value configuration…

The Marketing Survey Rebellion

So many U.S. residents refuse to participate in marketing-research surveys that it has become increasingly difficult to get reasonably reliable consumer data — a problem of potentially catastropic implications for the big marketers who spend tens or even hundreds of millions of dollars for such research each year. “This is a problem of stunning scope,” explains reporter Jack Neff of Advertising Age.
Great news for Double Loop Marketing™ marketers like me. Why? Because marketers can test their new ideas, products, and services on a double loop site in a far more efficient and effective way than traditional surveys.
Listen to the audio interview here >>
I disagree with their take on online surveys – because they’re doing the same old junk.
What needs to happen is this: market researchers need to get off their cushions and start observing people in the marketplace and marketspace. Digital anthropology: the observation of online behavior. That’s it.
The market research community needs to get into Web 2.0, period.

Video: Chad and Steve from YouTube


I love it. The geeks at Google give the geeks at YouTube 1.6 billion dollars – and this is how they announce it. Brilliant!
Now let’s see if they can find a business model. [I think they will – will they go beyond Adwords and Adsense?]

Ethanol versus Exxon: Wake Up!


Biofuels: Think Outside The Barrel
Vinod Khosla is a venture capitalist considered one of the most successful and influential personalities in Silicon Valley. He was one of the co-founders of Sun Microsystems and became a general partner of the venture capital firm Kleiner, Perkins, Caufield & Byers in 1986. In 2004 he formed Khosla Ventures.
Listen to his presentation to the nerds at Google, and you start getting mad at our politicians and oil-businesses.
Why can’t we do this? Because Exxon doesn’t want to. Listen, even the CIA wants to do this. I don’t often agree with those guys, but the facts are simple. Watch the video and call your congresswoman.
In Brazil, VW is debating whether they even need to manufacture “gas-only” cars anymore. Wake up, America. We can create some real wealth in the Mid-West instead of funding the Saudis.

USA Today: IDEO, The Deans of Design

IDEO is all about experiential approaches. Its designers try to see and sense the world by getting inside the heads of their fellow human consumers. The firm-a dream come true for the concerned parents of liberal arts majors everywhere-employs anthropologists, cognitive psychologists, and sociologists, among other right-brain thinkers, to create, improve, or reimagine all manner of products, services, work spaces, and business systems. “It’s a very human-centered process,” says Tom Kelley, the firm’s general manager and brother of founder David Kelley. “Others approach a problem from the point of view that says, ‘We have the smartest people in the world; therefore, we can think this through.’ We approach it from the point of view that the answer is out there, hidden in plain sight, so let’s go observe human behavior and see where the opportunities are.” – from this article in USA Today
What a novel idea.
How come no one in the auto industry gets this?

How Software Platforms Revolutionize Business

From HBSWK
“You can’t see them, but we’ve all used “software platforms” over the last few decades, whether they are embedded in the Windows operating system, a cell phone, or game machine. In a new book, the authors term software platforms “invisible engines that have created, touched, or transformed nearly every major industry for the past quarter century.”
“Think of software platforms as ring leaders of ecosystems in which a few or many companies can participate to reach users. These core products, like Windows, for example, offer software services that can be used as the basis for independent developers to build new features. The cell phone has become a lucrative platform for more than handset makers—also in on the party are makers of digital cameras, music services, and organizer software.
“Not only are existing industries being transformed and sometimes toppled by software platforms, but new industries are also springing up around them; witness the multibillion-dollar ringtone business.”
Yup. Read the article here >>
It’s all about building digital business platforms

Von Hippel: Democratizing Innovation

I meant to do this quite some time ago, but it slipped my mind (like most things). So here it is: a free download of Democratizing Innovation by MIT’s Eric Von Hippel.
The table of contents:
1 Introduction and Overview
2 Development of Products by Lead Users
3 Why Many Users Want Custom Products
4 Users’ Innovate-or-Buy Decisions
5 Users’ Low-Cost Innovation Niches
6 Why Users Often Freely Reveal Their Innovations
7 Innovation Communities
8 Adapting Policy to User Innovation
9 Democratizing Innovation
10 Application: Searching for Lead User Innovations
11 Application: Toolkits for User Innovation and Custom Design
12 Linking User Innovation to Other Phenomena and Fields
Here’s why I keep going back to this book:
Firms can make a profitable business from identifying and mass producing user-developed innovations or developing and building new products based on ideas drawn from such innovations. They can gain advantages over competitors by learning to do this better than other manufacturers. They may, for example, learn to identify commercially promising user innovations more effectively that other firms. Firms using lead user search techniques … are beginning to do this systematically rather than accidentally—surely an improvement. Effectively transferring user-developed innovations to mass manufacture is seldom as simple as producing a product based on a design by a single lead user. Often, a manufacturer combines features developed by several independent lead users to create an attractive commercial offering. This is a skill that a company can learn better than others in order to gain a competitive advantage.”