Downturn 2008: Harvard Business Review’s Survival Guide

And now, a survival guide from HBR.
My favorite entries:
Why Entrepreneurs Love a Downturn
How to Market in a Recession
Staying Green in a Tough Economic Climate
Three Steps to Innovating in Struggling Industries
America’s Addiction and the New Economics of Strategy
Beyond the Banking Crisis: A Strategy Crisis
Hard Times Demand Teamwork — Not an MVP
Non sequitur: What is the difference between Palin and a Muslim fundamentalist? Lipstick.

Piracy and Cannibalism: Do Digital Downloads Reduce Revenue?

economist_digitaldownloads.jpg
From The Economist:
In 2007 digital downloads accounted for 15% of global music sales compared with almost nothing in 2003. But the outlook for the music industry is worrying. Despite the growing market for digital downloads, music sales have declined over the past four years and are set to continue to dwindle, partly as a result of piracy.
BTW, does anyone really believe that Sarah Palin reads The Economist?

Friedman versus Senge: The Race for the Green Business Bestseller

My opinion: Tom Friedman will win the bestseller race easily, but Peter Senge‘s book is more important. The good news? They’re both serious about business and sustainability.
Here’s Senge:

And here’s his book: The Necessary Revolution: How Individuals And Organizations Are Working Together to Create a Sustainable World
Check out this interview with Senge>>
And this download>>
And here’s Friedman’s book pitch:

His book: Hot, Flat, and Crowded: Why We Need a Green Revolution–and How It Can Renew America
His website>>
And finally, a little column from Friedman>>
Exxon, your days are numbered.

Leadership Assessment: What John McCain can learn from GE

Does anyone believe that a Fortune 500 company would pick Sarah Palin as their CEO?
When Jack Welch transformed GE, he introduced several new criteria for evaluating executive leadership and performance. His successor, Jeffrey Immelt went through an exhaustive succession planning (er, vetting) process to replace him.
Here’s a look at GE’s leadership assessment matrix. The key attributes are:
– Vision
– Customer / Quality Focus
– Integrity
– Accountability / Commitment
– Communication / Influence
– Shared Ownership / Boundaryless
– Team Builder / Empowerment
– Knowledge / Expertise / Intellect
– Initiative / Speed
– Global Mind-set
Not bad. Does your company look at leadership this way?
Here are the details:
Vision
– Has developed and communicated a clear, simple, customer-focused Vision / direction for the organization.
– Forward-thinking, stretches horizons, challenges imaginations.
– Inspires and energizes others to commit to Vision. Captures minds. Leads by example.
– As appropriate, updates Vision to reflect constant and accelerating change impacting the business.
Customer / Quality Focus
– Listens to customer and assigns the highest priority to customer satisfaction, including internal customers.
– Inspires and demonstrates a passion for excellence in every aspect of work.
– Strives to fulfill commitment to Quality in total product / service offering.
– Lives Customer Service and creates service mind-set throughout organization.
Integrity
– Maintains unequivocal commitment to honesty / truth in every facet of behavior.
– Follows through on commitments; assumes responsibility for own mistakes.
– Practices absolute conformance with company policies embodying GEI&PS commitment to ethical conduct.
– Actions and behaviors are consistent with words. Absolutely trusted by others.
Accountability / Commitment
– Sets and meets aggressive commitments to achieve business objectives.
– Demonstrates courage / self-confidence to stand up for the beliefs, ideas, – Fair and compassionate yet willing to make difficult decisions.
– Demonstrates uncompromising responsibility for preventing harm to the environment
Communication / Influence
– Communicates in open, candid, clear, complete, and consistent manner – invites response / dissent.
– Listens effectively and probes for new ideas.
– Uses facts and rational arguments to influence and persuade.
– Breaks down barriers and develops influential relationships across teams, functions, and layers.
Shared Ownership / Boundaryless
– Self-confidence to share information across traditional boundaries and be open to new ideas.
– Encourages / promotes shared ownership for Team Vision and goals.
– Trusts others; encourages risk taking and boundaryless behavior.
– Champions Work-Out as a vehicle for everyone to be heard. Open to ideas from anywhere.
Team Builder / Empowerment
– Selects talented people; provides coaching and feedback to develop team members to fullest potential.
– Delegates whole task; empowers team to maximize effectiveness. Is personally a Team Player.
– Recognizes and rewards achievement. Creates positive / enjoyable work environment.
– Fully utilizes diversity of team members (cultural, race, gender) to achieve business success.
Knowledge / Expertise / Intellect
– Possesses and readily shares functional / technical knowledge and expertise. Constant interest in learning.
– Demonstrates broad business knowledge / perspective with cross-functional / multicultural awareness.
– Makes good decisions with limited data. Applies intellect to the fullest.
– Quickly sorts relevant from irrelevant information, grasp essentials of complex issues and initiates action.
Initiative / Speed
– Creates real and positive change. Sees change as an Opportunity.
– Anticipates problems and initiates new and better ways of doing things.
– Hates / avoids / eliminates “bureaucracy” and strives for brevity, simplicity, clarity.
– Understands and uses speed as a competitive advantage.
Global Mind-set
– Demonstrates global awareness / sensitivity and is comfortable building diverse / global teams.
– Values and promotes full utilization of global and work force diversity.
– Considers the global consequences of every decision. Proactively seeks global knowledge.
– Treats everyone with dignity, trust, and respect.
So, how do you measure up?
To me this is another dimension on the Ram Charan / Ben Franklin leadership model I blogged about a while back.
And now, sit back and listen carefully:

Is Nick Carr Making us Stupid?

John Hagel writes about Nick Carr’s talent for “stirring debate”:
the Internet is subtly molding our minds to favor brief snippets of information rather than the nuance and complexity that can only be communicated in much longer forms such as books.
Hagel’s point is:
“…snippets of information alone are deeply dangerous. They distract us with never-ending waves of surface events, spreading us ever thinner and obscuring the deeper structures and dynamics that ultimately are shaping these surface events. Those of us who stay only on the surface, swimming in a sea of snippets, will ultimately lose sight of land.
We need books, or whatever the digital long forms of content are that will replace the book, to help us penetrate the surface and explore the deeper structures and dynamics that make sense of the changes around us.”

I wanted tell Carr that it was TV that made us stupid before Google, but that we keep discovering new ways to demonstrate it. Every generation proves its stupidity in new and wondrous ways.
Now if we could just get the Republican presidential candidate to start reading a book or two, we might be onto something.

Putin’s Bet

So why did Putin send the Russian army into Georgia?
Apparently this incursion has been some time in the planning. And despite the political reasons, I still feel there’s an oil game going on.
Putin’s rewrite of reality is something he’s adopted by watching the US administration’s actions in Iraq. If the US can invade a country like Iraq on false pretenses, why can’t we?
And again, there’s an oil connection as well.

The War on Science: Bush takes scientists out of decision-making on species status

This administration is evil. They destroy life on earth every chance they get. All for a few bucks
That’s what you get with the GOP: rubber stamps (er, dodos) for industry.
Scientists can now go suck eggs.
Heckuva job, Bush! Here’s your contribution to world history:
Arctic
Greenland ice sheet will virtually completely disappear, raising sea levels by over 30 feet, submerging coastal cities, entire island nations and vast areas of low-lying countries like Bangladesh
Latin America
The Amazon rainforest will become dry savannah as rising temperatures and falling water levels kill the trees, stoke forest fires and kill off wildlife
North America
California and the grain-producing Midwest will dry out as snows in the Rockies decrease, depriving these areas of summer water
Australia
The Great Barrier Reef will die. Species loss will occur by 2020 as corals fail to adapt to warmer waters. On land, drought will reduce harvests
Europe
Winter sports suffer as less snow falls in the Alps and other mountains; up to three-fifths of wildlife dies out. Drought in Mediterranean area hits tourism
Africa
Harvests could be cut by up to half in some countries by 2020, greatly increasing the threat of famine. Between 75 million and 250 million people are expected to be short of water within the next 30 years
Final note: so what’s a scientists to do these days? They can work on building invisible clothes for Bush and Exxon-Mobil executives.
And now, a word from our sponsors:
Global warming is brought to you by the Bush administration and is generously underwritten by Exxon-Mobil.

China: Police State 2.0?

The opening ceremonies were spectacular. I’ll give them that.
But they were quite Orwellian as well…
Propaganda as theater. Theater as in the world stage.

Naomi Klein explains:
“The goal of all this central planning and spying is not to celebrate the glories of Communism, regardless of what China’s governing party calls itself. It is to create the ultimate consumer cocoon for Visa cards, Adidas sneakers, China Mobile cell phones, McDonald’s happy meals, Tsingtao beer, and UPS delivery — to name just a few of the official Olympic sponsors. But the hottest new market of all is the surveillance itself. Unlike the police states of Eastern Europe and the Soviet Union, China has built a Police State 2.0, an entirely for-profit affair that is the latest frontier for the global Disaster Capitalism Complex.”
What a disaster! Bring on the smog and mirrors.
P.S. – more on MacHistory here>>

Losing the Talent War: Immigration Policy and The Reverse Brain Drain

As a kid in India, the phrase “brain drain” meant someone smart just left India to work in the US.
Now it looks like the tables have turned:
“…more than 1 million highly skilled professionals such as engineers, scientists, doctors, researchers, and their families are in line for a yearly allotment of only around 120,000 permanent-resident visas for employment-based principals and their families in the three main employment visa categories (EB-1, EB-2, and EB-3). These individuals entered the country legally to study or to work. They contributed to U.S. economic growth and global competitiveness. Now we’ve set the stage for them to return to countries such as India and China, where the economies are booming and their skills are in great demand. U.S. businesses large and small stand to lose critical talent, and workers who have gained valuable experience and knowledge of American industry may become potential competitors.”
Ouch.
Skilled immigrants create jobs:
“…more than half of the engineering and technology companies started in Silicon Valley and a quarter of those started nationwide from 1995 to 2006 had immigrant founders. These companies employed 450,000 workers and generated $52 billion in revenue in 2006.”
We need a new policy on skilled immigration, Obama.
More info: an editorial by Alan Webber on the same topic>>

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 >>

Exxon & Peabody Coal: Crimes Against the Earth

Sit tight and listen keenly >>
This is not a joke… if you have children (or a conscience) please read this:
Twenty Years Later: Tipping Points Near on Global Warming
by James Hansen
Tomorrow I will testify to Congress about global warming, 20 years after my 23 June 1988 testimony, which alerted the public that global warming was underway. There are striking similarities between then and now, but one big difference.
Again a wide gap has developed between what is understood about global warming by the relevant scientific community and what is known by policymakers and the public. Now, as then, frank assessment of scientific data yields conclusions that are shocking to the body politic. Now, as then, I can assert that these conclusions have a certainty exceeding 99 percent.
The difference is that now we have used up all slack in the schedule for actions needed to defuse the global warming time bomb. The next President and Congress must define a course next year in which the United States exerts leadership commensurate with our responsibility for the present dangerous situation.
Otherwise it will become impractical to constrain atmospheric carbon dioxide, the greenhouse gas produced in burning fossil fuels, to a level that prevents the climate system from passing tipping points that lead to disastrous climate changes that spiral dynamically out of humanity’s control.
Changes needed to preserve creation, the planet on which civilization developed, are clear. But the changes have been blocked by special interests, focused on short-term profits, who hold sway in Washington and other capitals.
I argue that a path yielding energy independence and a healthier environment is, barely, still possible. It requires a transformative change of direction in Washington in the next year.
On 23 June, 1988, I testified to a hearing, chaired by Senator Tim Wirth of Colorado, that the Earth had entered a long-term warming trend and that human-made greenhouse gases almost surely were responsible. I noted that global warming enhanced both extremes of the water cycle, meaning stronger droughts and forest fires, on the one hand, but also heavier rains and floods.
My testimony two decades ago was greeted with skepticism. But while skepticism is the lifeblood of science, it can confuse the public. As scientists examine a topic from all perspectives, it may appear that nothing is known with confidence. But from such broad open-minded study of all data, valid conclusions can be drawn.
My conclusions in 1988 were built on a wide range of inputs from basic physics, planetary studies, observations of on-going changes, and climate models. The evidence was strong enough that I could say it was time to “stop waffling.” I was sure that time would bring the scientific community to a similar consensus, as it has.
While international recognition of global warming was swift, actions have faltered. The U.S. refused to place limits on its emissions, and developing countries such as China and India rapidly increased their emissions.
What is at stake? Warming so far, about two degrees Fahrenheit over land areas, seems almost innocuous, being less than day-to-day weather fluctuations. But more warming is already “in-the-pipeline,” delayed only by the great inertia of the world ocean. And climate is nearing dangerous tipping points. Elements of a “perfect storm”, a global cataclysm, are assembled.
Climate can reach points such that amplifying feedbacks spur large rapid changes. Arctic sea ice is a current example. Global warming initiated sea ice melt, exposing darker ocean that absorbs more sunlight, melting more ice. As a result, without any additional greenhouse gases, the Arctic soon will be ice-free in the summer.
More ominous tipping points loom. West Antarctic and Greenland ice sheets are vulnerable to even small additional warming. These two-mile-thick behemoths respond slowly at first, but if disintegration gets well underway it will become unstoppable. Debate among scientists is only about how much sea level would rise by a given date. In my opinion, if emissions follow a business-as-usual scenario, sea level rise of at least two meters is likely this century. Hundreds of millions of people would become refugees. No stable shoreline would be reestablished in any time frame that humanity can conceive.
Animal and plant species are already stressed by climate change. Polar and alpine species will be pushed off the planet, if warming continues. Other species attempt to migrate, but as some are extinguished their interdependencies can cause ecosystem collapse. Mass extinctions, of more than half the species on the planet, have occurred several times when the Earth warmed as much as expected if greenhouse gases continue to increase. Biodiversity recovered, but it required hundreds of thousands of years.
The disturbing conclusion, documented in a paper I have written with several of the world’s leading climate experts, is that the safe level of atmospheric carbon dioxide is no more than 350 ppm (parts per million) and it may be less. Carbon dioxide amount is already 385 ppm and rising about 2 ppm per year. Stunning corollary: the oft-stated goal to keep global warming less than two degrees Celsius (3.6 degrees Fahrenheit) is a recipe for global disaster, not salvation.
These conclusions are based on paleoclimate data showing how the Earth responded to past levels of greenhouse gases and on observations showing how the world is responding to today’s carbon dioxide amount. The consequences of continued increase of greenhouse gases extend far beyond extermination of species and future sea level rise.
Arid subtropical climate zones are expanding poleward. Already an average expansion of about 250 miles has occurred, affecting the southern United States, the Mediterranean region, Australia and southern Africa. Forest fires and drying-up of lakes will increase further unless carbon dioxide growth is halted and reversed.
Mountain glaciers are the source of fresh water for hundreds of millions of people. These glaciers are receding world-wide, in the Himalayas, Andes and Rocky Mountains. They will disappear, leaving their rivers as trickles in late summer and fall, unless the growth of carbon dioxide is reversed.
Coral reefs, the rainforest of the ocean, are home for one-third of the species in the sea. Coral reefs are under stress for several reasons, including warming of the ocean, but especially because of ocean acidification, a direct effect of added carbon dioxide. Ocean life dependent on carbonate shells and skeletons is threatened by dissolution as the ocean becomes more acid.
Such phenomena, including the instability of Arctic sea ice and the great ice sheets at today’s carbon dioxide amount, show that we have already gone too far. We must draw down atmospheric carbon dioxide to preserve the planet we know. A level of no more than 350 ppm is still feasible, with the help of reforestation and improved agricultural practices, but just barely – time is running out.
Requirements to halt carbon dioxide growth follow from the size of fossil carbon reservoirs. Coal towers over oil and gas. Phase out of coal use except where the carbon is captured and stored below ground is the primary requirement for solving global warming.
Oil is used in vehicles where it is impractical to capture the carbon. But oil is running out. To preserve our planet we must also ensure that the next mobile energy source is not obtained by squeezing oil from coal, tar shale or other fossil fuels.
Fossil fuel reservoirs are finite, which is the main reason that prices are rising. We must move beyond fossil fuels eventually. Solution of the climate problem requires that we move to carbon-free energy promptly.
Special interests have blocked transition to our renewable energy future. Instead of moving heavily into renewable energies, fossil companies choose to spread doubt about global warming, as tobacco companies discredited the smoking-cancer link. Methods are sophisticated, including funding to help shape school textbook discussions of global warming.
CEOs of fossil energy companies know what they are doing and are aware of long-term consequences of continued business as usual. In my opinion, these CEOs should be tried for high crimes against humanity and nature.
Conviction of ExxonMobil and Peabody Coal CEOs will be no consolation, if we pass on a runaway climate to our children. Humanity would be impoverished by ravages of continually shifting shorelines and intensification of regional climate extremes. Loss of countless species would leave a more desolate planet.
If politicians remain at loggerheads, citizens must lead. We must demand a moratorium on new coal-fired power plants. We must block fossil fuel interests who aim to squeeze every last drop of oil from public lands, off-shore, and wilderness areas. Those last drops are no solution. They yield continued exorbitant profits for a short-sighted self-serving industry, but no alleviation of our addiction or long-term energy source.
Moving from fossil fuels to clean energy is challenging, yet transformative in ways that will be welcomed. Cheap, subsidized fossil fuels engendered bad habits. We import food from halfway around the world, for example, even with healthier products available from nearby fields. Local produce would be competitive if not for fossil fuel subsidies and the fact that climate change damages and costs, due to fossil fuels, are also borne by the public.
A price on emissions that cause harm is essential. Yes, a carbon tax. Carbon tax with 100 percent dividend is needed to wean us off fossil fuel addiction. Tax and dividend allows the marketplace, not politicians, to make investment decisions.
Carbon tax on coal, oil and gas is simple, applied at the first point of sale or port of entry. The entire tax must be returned to the public, an equal amount to each adult, a half-share for children. This dividend can be deposited monthly in an individual’s bank account.
Carbon tax with 100 percent dividend is non-regressive. On the contrary, you can bet that low and middle income people will find ways to limit their carbon tax and come out ahead. Profligate energy users will have to pay for their excesses.
Demand for low-carbon high-efficiency products will spur innovation, making our products more competitive on international markets. Carbon emissions will plummet as energy efficiency and renewable energies grow rapidly. Black soot, mercury and other fossil fuel emissions will decline. A brighter, cleaner future, with energy independence, is possible.
Washington likes to spend our tax money line-by-line. Swarms of high-priced lobbyists in alligator shoes help Congress decide where to spend, and in turn the lobbyists’ clients provide “campaign” money.
The public must send a message to Washington. Preserve our planet, creation, for our children and grandchildren, but do not use that as an excuse for more tax-and-spend. Let this be our motto: “One hundred percent dividend or fight!”
The next President must make a national low-loss electric grid an imperative. It will allow dispersed renewable energies to supplant fossil fuels for power generation. Technology exists for direct-current high-voltage buried transmission lines. Trunk lines can be completed in less than a decade and expanded analogous to interstate highways.
Government must also change utility regulations so that profits do not depend on selling ever more energy, but instead increase with efficiency. Building code and vehicle efficiency requirements must be improved and put on a path toward carbon neutrality.
The fossil-industry maintains its strangle-hold on Washington via demagoguery, using China and other developing nations as scapegoats to rationalize inaction. In fact, we produced most of the excess carbon in the air today, and it is to our advantage as a nation to move smartly in developing ways to reduce emissions. As with the ozone problem, developing countries can be allowed limited extra time to reduce emissions. They will cooperate: they have much to lose from climate change and much to gain from clean air and reduced dependence on fossil fuels.
We must establish fair agreements with other countries. However, our own tax and dividend should start immediately. We have much to gain from it as a nation, and other countries will copy our success. If necessary, import duties on products from uncooperative countries can level the playing field, with the import tax added to the dividend pool.
Democracy works, but sometimes churns slowly. Time is short. The 2008 election is critical for the planet. If Americans turn out to pasture the most brontosaurian congressmen, if Washington adapts to address climate change, our children and grandchildren can still hold great expectations.
Check this as well:

Time to stop the greenwashing, and get to work.

Can the U.S. Learn from Indian R&D?

Duke’s Vivek Wadhwa writes in BusinessWeek:
“…India is rapidly becoming a global R&D hub in several industries. Its scientists are doing sophisticated drug discovery for Big Pharma (BusinessWeek.com, 6/10/08). Its engineers are designing key components of jetliners for Boeing (BA) and Airbus; developing next-generation networking equipment for companies like Cisco Systems (CSCO); and building auto bodies, dashboards, and power trains for such vehicle manufacturers as General Motors (GM). Indian companies are also innovating for the Indian marketplace; witness the $2,500 car by Tata Motors (TTM).”
So how are they doing it?
Hint: it’s all about developing your company’s most valuable asset.

Why India Will Beat China: Transparency Wins!

The Conrad Group’s William Nobrega writes in BusinessWeek:
“The advantage comes in the form of an entrenched and vibrant democracy that will ultimately drive India to outperform China socially and economically. Messy, frustrating, and more often than not agonizingly slow, India’s democracy would seem to be chaotic at the surface.”
India will eventually outclass China because of its property rights, rule of law, and IP protection, says Nobrega.
Meanwhile in the US: we’re busy protecting the flag and burning the constitution

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?

Bill Gates and Philanthropy 2.0: shouting for the voiceless

Bill Gates’ greatest achievements lie ahead of him. And this time, he really is going to change the world.
Why? Because he understands that there are some things that just can’t be done by business or the marketplace.
His words:
95 percent — actually, 98 percent — of all medical research is done for rich people. It’s done for baldness, erectile dysfunction, cosmetic surgery. That’s where 98 percent of the researchers are working. …
So the voices of the poor are never heard in this marketplace system. That is, the needs of the poorest, they don’t speak in that prioritization, because they’re not paying for medicines. They can’t.
So today’s prioritization is totally for the richest, for the things that they speak by buying those various medicines for. And so as we take our money, which in total is, compared to the overall market, fairly small, and cause some shift in the favor of malaria, AIDS, tuberculosis, to the degree there’s a finite number of scientists in the world, then you could say, OK, there’s a little bit less on baldness.
Because our money is incremental, ideally you’d be growing the pool of scientists, because you have more money, more jobs, more opportunity there. But it is true that the needs of the very richest might get a tiny bit less attention as we cure tuberculosis.

It’s refreshing to hear this from a leader of Gates’ caliber.
Another point of note: Gates doesn’t want incremental innovation and since he knows the current model of medical research isn’t working, he’s ready to change it.
There’s a lot more on this new version of Gates here, here, and here. What I like about it is the fact that Buffet is on board with him, and that between the two of them, they’re going to redefine the meaning of philanthropy.
The Gates Foundation is focused, and rightly so, on health and development.
But there’s just one thing they’ve forgotten: energy.
As Bob Freling says, “Energy is a human right.” The point Freling makes every day is absolutely critical and one Gates needs to understand: “You can’t have X-rays, or crop irrigation, or vaccines, without electricity. And in places like Africa, the only effective way to get that electricity – when you’re off the grid – is solar power.” So the Gates Foundation is going to have to look at energy as well. And the sooner they do, the faster they’ll get there with their other objectives – food security, health care for the poorest of the poor, etc.
I can’t wait to see more billionaires get on the Philanthropy 2.0 bandwagon. What are you waiting for Larry Ellison? And how ’bout getting A.G. Lafley and the P&G open innovation nerds on board as well. Let’s cure malaria instead of whitening teeth. eh?
Go, Bill, Go.

Active Inertia: Why Good Companies Go Bad

The Economist has just begun a series on “big ideas” in management thinking. These may be the buzzwords of the past, but many of them are worth understanding.
Active Inertia. That’s how successful companies (and governments) lose their way. Here’s how Don Sull explains his idea:
My research suggests that companies fall prey to active inertia—responding to even the most disruptive market shifts by accelerating activities that succeeded in the past. When the world changes, organizations trapped in active inertia do more of the same. A little faster perhaps or tweaked at the margin, but basically the same old same old. Managers often equate inertia with inaction, like the tendency of a billiard ball at rest to remain immobile. But executives in failing companies unleash a flurry of initiatives—indeed they typically work more frenetically than their counterparts at competitors which adapt more effectively. Organizations trapped in active inertia resemble a car with its back wheels stuck in a rut. Managers step on the gas. Rather than escape the rut, they only dig themselves in deeper.
What Sull says is that we get trapped in our assumptions in the following areas:
Strategic frames: What we see when we look at the world, including definition of industry, relevant competitors and how to create value.
Processes: How we do things around here entailing both informal and formal routines.
Resources: Tangible and intangible assets that we control which help us compete, such as brand, technology, real estate, expertise, etc.
Relationships: Established links with external stakeholders including investors, technology partners or distributors
Values: Beliefs that inspire, unify and identify us.
So we just dig a deeper hole.
How do we get out of the mess? It starts with a sense of urgency.
By the way, this idea of active inertia applies at the individual level as well. How many of us go through life doing the same thing over and over?

Greenwashing is the New Red, White, and Blue

How do you motivate your employees in this, the age of cynicism?
Instead of handing out Chinese-made flag pins to all their employees (yes, this actually happens) companies can start by supporting a few good causes.
The Economist has a nice write-up on companies taking this leap. A few examples:
IKEA, the world’s largest furniture-maker, joins forces with Rainforest Alliance and WWF to promote forest certification in China by the Forest Stewardship Council
Marriott International teams up with Conservation International and the Brazilian state of Amazonas to protect a big area of Amazon rainforest.
Wal-Mart, the world’s biggest retailer, set up an ambitious programme in 2005 with the long-term aim of becoming a zero-waste, renewably powered enterprise.
OK. Does this mean that business is finally waking up to do the right thing?

Not exactly.

The real danger with the “greening of business” is hypocrisy, i.e. greenwashing:

So if your business is going to go green (and it should), make sure you don’t do it as a PR stunt.
If you do, your company just might end up here >>

Humble Pie for Steve Ballmer and Tom Friedman

Two separate public incidents with similar overtones.
Today Steve Ballmer got pelted by a egg-throwing Hungarian nerd:

A few weeks earlier, on Earth Day no less, Tom Friedman gets a pie in the face:

Is this “The Wisdom of the Crowd”?
What I found interesting was the reactions of the “victims.” Ballmer cracked a joke and went on. Friedman took it a bit harder – walking off the stage in a huff.
Apparently, this is nothing new for Microsoft execs. Here’s a bonus clip from 2006:

Still, I don’t think this is funny. Especially in this day and age. What ever happened to old fashioned heckling?

Bill Gates’ 2007 Harvard Commencement Address

Inevitably, we want to compare this to Jobs’ speech at Stanford.
I’m going to resist that temptation because I feel that Bill Gates has finally found a vision worthy of his (and Buffet’s) billions. And the irony is he had to look outside Microsoft to get it. Well done, Melinda Gates!
‘For what purpose?” he asks. Shouldn’t our best minds be more dedicated to solving our worst problems? Poverty, Clean Water, Sexism… Gates nails it (except for global warming; I suppose he’s left that to Al Gore).
My take: Harvard is failing us, as are our other institutions of higher learning, because they are not helping students develop an “informed conscience” as Gates calls it. Heck, they’re not even helping students develop an “un-informed conscience”!
Part 1

Part 2

Part 3

Part 4

Part 5

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…

Will China develop Africa?

Because resource-rich Africa has been left out of the development plans of most Western companies, doesn’t mean that Africa won’t find a way to join the wave of globalization sweeping the world from Asia to Eastern Europe and South America.
So how will Africa do it? Through China and India.

This is a not good news for democracy:
In February 2007, Hu Jintao proudly announced the creation of a new special economic zone complete with the usual combination of export subsidies, tax breaks and investments in roads, railways and shipping. However, this special economic zone was in the heart of Africa—in the copper-mining belt of Zambia. China is transplanting its growth model into the African continent by building a series of industrial hubs linked by rail, road and shipping lanes to the rest of the world. Zambia will be home to China’s “metals hub,” providing the People’s Republic with copper, cobalt, diamonds, tin and uranium. The second zone will be in Mauritius, providing China with a “trading hub” that will give 40 Chinese businesses preferential access to the 20-member state common market of east and southern Africa stretching from Libya to Zimbabwe, as well as access to the Indian ocean and south Asian markets. The third zone—a “shipping hub”—will probably be in the Tanzanian capital, Dar es Salaam. Nigeria, Liberia and the Cape Verde islands are competing for two other slots. In the same way that eastern Europe was changed by a competition to join the EU, we could see Africa transformed by the competition to attract Chinese investment.
As it creates these zones, Beijing is embarking on a building spree, criss-crossing the African continent with new roads and railways—investing far more than the old colonial powers ever did. Moreover, China’s presence is changing the rules of economic development. The IMF and the World Bank used to drive the fear of God into government officials and elected leaders, but today they struggle to be listened to even by the poorest countries of Africa. The IMF spent years negotiating a transparency agreement with the Angolan government only to be told hours before the deal was due to be signed, in March 2004, that the authorities in Luanda were no longer interested in the money: they had secured a $2bn soft loan from China. This tale has been repeated across the continent—from Chad to Nigeria, Sudan to Algeria, Ethiopia and Uganda to Zimbabwe.

Read more here >>
Africa’s “imperialism challenges” will now come from the East.
Pranab Mukherjee, India’s Minister of External Affairs, talks a good game.
So why all the fuss over Africa? And why now?
Do China and India really care about African development?
Or is it the news that Africa is the new oil frontier.
Apparently Africa will account for 12% of global oil supplies in the next few years. And that’s not counting other mineral riches…
Don’t be too eager, Africa. Trust, but verify – as someone once said. And heed this African saying: If a little tree grows in the shade of a larger tree, it will die small. But if a little tree stands side by side with a larger tree, you have the start of a forest.

Rice Revolution Ahead?

From the NYTimes >>
“Rising prices and a growing fear of scarcity have prompted some of the world’s largest rice producers to announce drastic limits on the amount of rice they export.”
And The Economist >>
I remember when Indira Gandhi was kicked out of office when the price of onions got too high. And rice is the staple food of most of Asia… It’s all about the price of rice.
And then there’s Marie Antoinette who, it turns out, did not say: “Qu’ils mangent de la brioche” (let ’em eat cake)…

Earth Hour

More fun facts:
The average American produces about 20 tons of the major greenhouse gas carbon dioxide (CO2) every year. That might sound like a lot — and Americans do have among the biggest carbon footprints in the world — but the entire world emits around 27 billion tons of CO2 each year, through transportation, electricity use, deforestation.
So now we have Earth Hour.
Let’s rearrange the deck chairs…

Chinese Democracy: Patriotic Education


The Economist story Welcome to the Olympics states:
“Resenting criticism of its handling of unrest in Tibet, China wages a gruesome propaganda offensive…”
“Meng Jianzhu, China’s most senior police official, also toured Lhasa on March 23rd and 24th. His words were not encouraging. Monasteries, he said, should step up “patriotic education”—ie, a much resented government-led campaign that requires monks to state their rejection of the Dalai Lama, who is hugely revered in Tibet.”
Patriotic Education? Sounds a bit like our Republicans…
Nice.
Read this report as well: “Trashing the Beijing Road

As the Earth Lay Dying…

Here are three stories I came across in the last week or so:
1. Chinook Salmon Vanish Without a Trace – “The Chinook salmon that swim upstream to spawn in the fall, the most robust run in the Sacramento River, have disappeared. The almost complete collapse of the richest and most dependable source of Chinook salmon south of Alaska left gloomy fisheries experts struggling for reliable explanations — and coming up dry.”
Here’s my explanation. Apparently this kind of thing happens up and down the Pacific coast of California.
2. Why are thousands of bats dying in New York? – “Bats in New York and Vermont are mysteriously dying off by the thousands, often with a white ring of fungus around their noses, and scient ists in hazmat suits are crawling into dank caves to find out why.”
3. Massive ice shelf collapsing off Antarctica – “Scientists are citing ‘rapid climate change in a fast-warming region of Antarctica’ as the cause of an initial collapse of the Wilkins Ice Shelf. The damage got started at the end of February when an iceberg dropped off and triggered the “runaway disintegration” of a 160-square-mile portion of the 5,282-square-mile shelf.”
Why is it that we’re still sitting here doing nothing?
I’m amazed at companies like Exxon Mobil – they still try to shirk their responsibility for the damage they cause…
And here’s a story about the Japanese whalers – they’re ready to kill Moby Dick!
Wait, there’s more >>
Please pass the popcorn.

The Ghost of Tiananmen: China, Tibet and the Olympics


When I was a kid in India, one of the fondest memories I have is of a family vacation in the foothills of the Himalayas – eating at a tiny Tibetan roadside dhaba, being fed tons of cho-cho-momo and heaping piles of noodles. The food was great, but what struck me was the poor Indian peasant family sitting across from me eating their fill as well. Why? because the food was so cheap and so good that everyone could afford to eat well. I’ve never forgotten that day.
The family that ran the dhaba were refugees from Tibet, and I was fascinated by the store, the food, and the way they used an abacus to add up the transactions as they happened. That day I became a believer in a free Tibet.
I wrote earlier about China’s country branding issues and the upcoming Olympics.
I’ve also written about how to measure democracy with the “Journalists-in-Jail Index.”
And now we have pictures of the Chinese government beating up on Tibetans splashed across the pages of every major newspaper and magazine.
And don’t forget YouTube:

Here we go again.
This time Chinese officials are blaming the Dalai Lama for the violence. Give me a break. They’ve even got an army of bloggers and hackers working the media sites posting “pro-chinese” accounts all over the place.
Bush, of course, is silent. He knows that China’s in Tibet for the uranium.
I get a feeling the sponsors of the Olympics are in for a rough ride. Here are the brands which stand to get a black eye:
Coca-Cola
McDonalds
General Electric
Visa
Johnson and Johnson
Kodak
Samsung
Panasonic
Atos Origin
Lenovo
ManuLife
Omega
And let’s not forget the Olympic brand itself. This could do it in completely!
Stay tuned and sign a petition>>
UPDATE: More video >>

Video: Ricardo Semler’s Open-Capitalism

I’ve been following Ricardo Semler for many years now.
In 1993, in a fit of madness I slipped a copy of Maverick into the hands of Riley Bechtel – thinking as I did at the time, that this is the only way to get Bechtel to re-engineer itself. Of course I was a little too naive
Today I don’t think I could work at Semco because I’d rather work for myself. But if I had to get a corporate job again (heaven forbid) I’d choose Semco.
Question: when are they opening a “Semco-proper” office in the US? You can check Semco’s company history here.
Anyway, the revolution has happened and it was televised. Here’s what to expect:


And definitely check this out >> (Journeyman Pictures doesn’t understand YouTube – hence the “Embedding disabled by request”)
Open-capitalism is thriving at Semco, and one of these days, it will show up in your industry. What strikes me though is the fact that this model can be used in non-profits, in government (are you listening, Barack Obama?) and even in the fields without hope – like education. Apparently Bill Gates’ foundation is keeping close tabs on Semler’s schooling experiment.

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.

Marketing in a Downturn

Seth Godin writes about “marketing in a recession” :
The challenge for marketers is to figure out how to change the story they are living so that their customers can change the story they tell themselves. What you make, where you make it, who makes it, how it’s priced and sold and … it all adds up to a perception. If you change these elements the story will change too.
His point is that Starbucks becomes the indulgence of someone who has just traded down to a small rental apartment. Gone are the days of $4.00 coffee just for the heck of it.
I think Starbucks is busy changing their story. They’re trying to be a new, upscale McDonald’s – rapidly working to add in a “drive-in have a happy meal” component to their business model. The trouble is in the demographics. Bill Tancer at TIME tells us that “the Big Mac customer base has remained relatively stable, while Starbucks’ coffee-drinkers have diversified. It used to be that Starbucks attracted customers from a small, elite segment of the country; now, its visitors pervade many more segments across America.”
From my own observations at the local Target, I see far more customer buying ICEEs rather than Starbucks coffees. This is the “threat of substitution” that is always around the corner, no matter how good your product is. Seems like the days of mass-luxury are over.
So where does retail find its consumer, er, citizen? Turns out they’re not citizens at all – you’ve got to sell overseas. India and China are experiencing a huge boom in luxury, thanks to an explosion in middle class prosperity. The fortune is in the middle and the bottom of the pyramid.
And if you can’t reach those consumers? I wrote about that in an earlier post about advertising in a recession.