Foreign Affairs: It’s Judgement, Not Experience!

For those of us who say that Obama doesn’t have the experience to lead us in foreign affairs, let me just remind everyone that it’s not experience that counts but judgment. Unlike Dubya, Rumsfeld, Cheney and gang had plenty of experience, but they lacked judgment.
And it was this lack of judgment which led us into Iraq, diverted our attention and resources from Al-Qaeda, and ultimately caused severe damage to our relationships with allies like Germany, France, and yes, England (just ask Tony Blair). And that doesn’t take into account that we’ve dropped the ball on nuclear non-proliferation, Pakistan, Russia, North Korea, Iran, and Saudi Arabia.
So how does a President reach out to mend fences?
It helps if they are liked.
Remember JFK’s “ich bin ein Berliner” line? Well, now the Germans have taken a liking to Obama. Check out these headlines:
Lincoln, Kennedy, Obama Frankfurter Rundschau
Der neue Kennedy Berliner Morgenpost
Dieser schwarze Amerikaner wird der neue Kennedy! Bild
Even the French are into it:
Obama Superstar Le Monde
In Spain:
Barack Obama: “El cambio ha llegado esta noche a América” El Pais
And how about the UK?
The first caucus of the revolution Financial Times
Groundswell for Obama leaves Clinton campaign on the rack Guardian
The White House? Political earthquake propels Obama towards presidency Independent
Hope and experience gave Obama the edge Telegraph
Iowa voters hail ‘turning point’ BBC
Finally, in India, of course the Indians are taking credit for Obama’s victory:
South Asian organisation a factor in Obama’s success in Iowa Times of India
So much for experience. It’s change, stupid.

Brand Destruction 101: How ABC News shot itself in the foot, and how you can watch the latest New Hampshire presidential debate in its entirety

What does it say for ABC when you can download the entire season of full-length episodes of “Desperate Housewives” but not the latest presidential debate held in New Hampshire?
I guarantee you this hurts the ABC brand. What were they thinking? Is this a deliberate “mainstream corporate media” black-out strategy or is this just plain incompetence? Probably both.
ABC News does a great disservice to the American people. Do they think anyone is going to trust Charles Gibson now?
What a joke.
Luckily there are alternatives >>










Score another “win” for YouTube.

8 Business Tech Trends to Watch in 2008

The McKinsey nerds have been doing their homework. In particular they seem to be paying attention to the ideas of McKinsey alumnus John Hagel who foretold almost every single one of these “trends” a decade ago.
In Eight business technology trends to watch they tell us that “Technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business.”
Here are the eight technology-enabled business trends they’ve identified:
1. Distributing cocreation
“Technology now allows companies to delegate substantial control to outsiders—cocreation—in essence by outsourcing innovation to business partners that work together in networks.”
2. Using consumers as innovators
“As the Internet has evolved—an evolution prompted in part by new Web 2.0 technologies—it has become a more widespread platform for interaction, communication, and activism. Consumers increasingly want to engage online with one another and with organizations of all kinds. Companies can tap this new mood of customer engagement for their economic benefit.”
3. Tapping into a world of talent
“Top talent for a range of activities—from finance to marketing and IT to operations—can be found anywhere. The best person for a task may be a free agent in India or an employee of a small company in Italy rather than someone who works for a global business services provider. Software and Internet technologies are making it easier and less costly for companies to integrate and manage the work of an expanding number of outsiders, and this development opens up many contracting options for managers of corporate functions.”
4. Extracting more value from interactions
“The application of technology has reduced differences among the productivity of transformational and transactional employees, but huge inconsistencies persist in the productivity of high-value tacit ones. Improving it is more about increasing their effectiveness—for instance, by focusing them on interactions that create value and ensuring that they have the right information and context—than about efficiency. Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations—smarter and faster ways for individuals and teams to create value through interactions—that will be difficult for their rivals to replicate. Companies in sectors such as health care and banking are already moving down this road.”
5. Expanding the frontiers of automation
“Companies, governments, and other organizations have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, and HR; product and customer databases; and Web sites. Now these systems are becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes. What’s more, this information can be combined in new ways to automate an increasing array of broader activities, from inventory management to customer service.”
6. Unbundling production from delivery
“Technology helps companies to utilize fixed assets more efficiently by disaggregating monolithic systems into reusable components, measuring and metering the use of each, and billing for that use in ever-smaller increments cost effectively. Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems.”
7. Putting more science into management
“Just as the Internet and productivity tools extend the reach of and provide leverage to desk-based workers, technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data.”
BTW, this “trend” is owned by one Tom Davenport.
8. Making businesses from information
“Accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities.”
Take for example, ecosystema >>
So what have they left out? What business-tech trends have they overlooked?
Here are a few I came up with:
a. Internal Branding
The use of technology to improve internal communications and encourage employee engagement. Read up on Tammy Erickson!
b. The Return of Online Communities
An old idea, but with Web 2.0, companies must learn to engage their partners, suppliers, customers, and yes their competition. This does overlap trend # 4 (extracting value from interactions) but it’s far more than that. More about this from John Hagel >>
c. Greenwashing
Every business, even in the technology world, must learn how to become sustainable in this age of environmental activism. Companies that do so half-heartedly will pay the price.
d. Authentic Marketing
Using technology to drive a company’s message to capture attention using techniques that are authentic and reflect the core values of the company. The key to this will be ecosystem management.
What else?

Management Secrets of Chairman Mao

Years ago, I read an article in the McKinsey Quarterly about the totalitarian structure of corporate governance. Why is it, asked Rajat Gupta (this was before he became the head of McKinsey), that in a democracy like the US, our corporate institutions are so undemocratic?
The Economist reminded me of that article a few days ago when they published an article titled “Mao and the art of management.”
Here are some “best practices” –
1. A powerful, mendacious slogan (in Mao’s case “Serve the People”…)
2. Ruthless media manipulation
3. Sacrifice of friends and colleagues
4. Activity substituting for achievement
Who does that remind you of? Exxon Mobil? The Republican Party? Cheney & W? All of the above?
By the way, here’s the answer to Rajat’s question = $$$.

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…

Gore Kicks off Presidential Run by Winning Nobel Prize

That’s the kind of headline I’d like to see…
While Gore is unexpectedly leaving the country to pick up his Nobel Prize, DraftGore.com has turned up the volume with an ad in the NYTimes (see full text below – I’ve added a few hyperlinks and a video or two to add context).
An Open Letter To Al Gore
Dear Mr. Vice President:
In the dark days of December 2000, when you bravely conceded the election you knew in your heart you had won, you said:
“I do have one regret: that I didn’t get the chance to stay and fight for the American people … especially for those who need burdens lifted and barriers removed, especially for those who feel their voices have not been heard. I heard you and I will not forget.”
Today we respectfully ask that you honor that pledge and hear us now.
You say you have fallen out of love with politics, and you have every reason to feel that way. But we know you have not fallen out of love with your country. And your country needs you now — as do your party and the planet you are fighting so hard to save.
You often quote Winston Churchill to remind us that we are entering a period of consequences with regard to the global climate crisis. You have done a superhuman job of bringing world attention to this issue. But this effort needs to be raised to a higher level. Only from the Oval Office can you wield the kind of influence needed to move countries, policies and corporations to bring about meaningful change.
The period of consequences you talk about is upon us in many other equally critical areas as well. Our Constitution is being trampled and our most cherished civil liberties are in grave danger. The executive branch is not accountable to anyone. And the people most in need of a voice in this country need someone in the White House who will speak for them.
Thousands of Americans are dying needlessly in Iraq while our reputation in the world has plummeted to an all-time low. The war on terror is backfiring as our enemies grow stronger and our resources are drained in an endless and unwinnable war. This is one of the most serious foreign policy crises our country has ever faced.
You were the first American political figure to brave political waters and warn us of the perils of starting a preemptive war in Iraq. You were right. But time to reverse the damage is running out. Given your experience, insight and the respect you enjoy among world leaders, you are uniquely positioned to bring this war to an end and restore America’s good name.

As you so often say, Mr. Vice President, these are not political issues. They are moral issues.
That’s why more than 136,000 people have signed our petition asking you to run for president in 2008. Ours is an urgent call to service on behalf of the country we love, the democracy that’s slipping away from us, and a world and planet that are in peril. We write on behalf of our children and grandchildren and plead with you to to lead us to a brighter future.

Many good and caring candidates are contending for the Democratic nomination. But none of them has the combination of experience, vision, standing in the world, and political courage that you would bring to the job. Nor do they have the support among voters that you enjoy and that would lead you to victory in 2008.
Mr. Vice President, there are times for politicians and times for heroes. America and the Earth need a hero right now — someone who will transcend politics as usual and bring real hope to our country and to the world. Please rise to this challenge, or you and millions of us will live forever wondering what might have been.
Sincerely yours,
Draft Gore,
on behalf of the thousands of our volunteers and the 136,000 people who signed our petition asking you to run for president
Download PDF version here>>

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.

John Hagel’s FAST Strategy Webinar – May 9, 2007

Over the last sixty years, the average lifetime of companies on the S&P 500 list has declined by 80%, from 75 years to 15 years.
John Hagel asks: “What if everything you learned about business strategy is WRONG?”
According to JH3, the basic principles of traditional strategy – the principles still taught at most business schools and company executive education programs – are wrong:
· WRONG: Develop a detailed strategy before moving to operational implementation
· WRONG: Focus on a one to five year time horizon to develop robust strategies.
· WRONG: Pursue a portfolio approach to business initiatives to cope with growing uncertainty.
· WRONG: Strategy is a specialized discipline that needs to be pursued by experts.
So what’s the alternative? Hagel has developed a powerful approach he calls FAST STRATEGY and it’s being used by some of the world’s most successful (and innovative) companies.
On May 9, Hagel’s doing a webinar with StrategyWorld.org titled appropriately – FAST Strategy: How to Get Results in Disruptive Markets

The webinar will provide you with a basic understanding of how to use FAST Strategy in both your business and as a personal tool to improve your career.
Check it out >>
Note: the way I see it is that Hagel normally charges $25,000 for an hour long presentation on strategy. And now you can join the conversation (live) for $1497.00 on May 9. That’s chump change, especially if your company pays for it! See you there>>

Her Majesty’s Royal Podcast

I’m laughing and applauding at the same time.
The Queen of England will address the Commonwealth in her traditional Christmas Day speech, stressing the importance of the relationship between the generations. The Royal Podcast (free MP3 download) will be available here >>
BTW, this is the BBC’s doing–they supplied the file for Her Majesty’s Royal Podcast.
Will she start blogging next?
The real question: does anyone care?

Fred Reichheld: “Drop Lengthy Customer Surveys”

Your next customer survey needs to ask one question, just one:

“How likely would you be to recommend our company to a friend?”

That’s what Mr. Loyalty has been saying for some time now.
And:
“Our research indicates that customer-satisfaction numbers fail to show a consistent correlation with actual customer behavior and growth. Many companies have benefited from measuring customer retention, which provides a vital link to profits. Yet, measuring what we call “net promoters”-the percentage of customers who are promoters minus the percentage who are detractors-is even more accurate and makes the economics of retention more practical and achievable.”
I’ve been asked many times by clients what I think about net promoter scoring when it comes to online business. To which I say, net promoter scores are important online, because people trust their peers, more than they trust Gartner and Forrester for example. So start by make this one question the only question you ask in your online survey!

Jaron Lanier on Internet Mobs

I have never believed in the “wisdom of the crowd.”
Now I feel better because Lanier apparently feels the same way:
“All too many entrepreneurs seem to think that if you reduce the human element, the scheme will become more efficient. Instead of asking people to create videos or avatars, which require creativity and commitment, just watch their clicks, have them take surveys, have them tweak collective works, add anonymous, unconsidered remarks, etc. This trend is lousy, in my opinion, because it encourages people to lose themsleves into groupthink.”
I also like his take on Web 2.0:
“The Web 2.0 notion is that an entrepreneur comes up with some scheme that attracts huge numbers of people to participate in an activity online — like the video sharing on YouTube, for instance. Then you can “monetize” at an astronomical level by offering a way to bring ads or online purchasing to people in your gigantic crowd of participants. What is amazing about this idea is that the people are the value — and they also pay for the value they provide instead of being paid for it. For instance, when you buy something that is advertized, part of the price goes to the ads — but in the new online world, you yourself were the bait for the ad you saw. The whole cycle is remarkably efficient and concentrates giant fortunes faster than any other business scheme in history.”
Ouch.

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.

The $40 Entree: Restaurants & Dynamic Pricing

From the NYTimes, an article on pricing in the restaurant and hospitality industry.
“Forty is the new 30,” says Richard Coraine, the chief operating officer of Union Square Hospitality Group, which recently began charging $42 for a 1¾-ounce appetizer portion of lobster at lunchtime at the Modern in New York. Ten percent of its lunch patrons order the dish, it says.
Apparently the $40 entree is migrating from high-end NY restaurant menus to your average restaurant chain across the nation.
Here’s the real story – the use of analytics to increase profit margins:
But what makes the rise of the $40 entree so significant is not just the price creep, it’s the sophisticated calculation behind it. A new breed of menu “engineers” have proved that highly priced entrees increase revenue even if no one orders them. A $43 entree makes a $36 one look like a deal.
“Just putting one high price on the menu will take your average check up,” said Gregg Rapp, one such consultant. “My mom taught me to never order the most expensive thing on the menu, but you’ll order the second.”
With just a few keystrokes, restaurateurs can now digitally view the entire history of a dish: how the lamb sold around this time last year, whether it did better when paired with squash or risotto, and how orders rose or fell when the price went from $39 to $41.
With a few more clicks and a new stack of paper in the office printer, the menu can be revised to test new prices.

Meanwhile the obesity problem just keeps growing. Wonder if that would end if McDonald’s switched to $40 dollar entrees…?!
Speaking of analytics, to learn more about “Competing on Analytics” check out Tom Davenport’s free webinar on the subject – October 31, 2006.

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.

Christian Double Loop Marketing™

I always knew that Double Loop Marketing™ facilitates “putting butts in seats” as one of my clients likes to say, but this is just too funny:
“Themed Web sites create buzz, drive attendance swell for two churches”
Exhibit A: mylamesexlife.com
Result: attendance up 70 percent
Exhibit B: mymarriagesucks.info
Result: attendance up 68 percent
Note the use of TV ads and billboards to get attention for the websites.
Although this is not full-fledged Double Loop Marketing™, it is a start. In some ways, this is identical to the microsites the pharma companies keep pitching on TV.
The one problem I see is that these are not sustainable “thought-leadership” based campaigns.

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.

Michael Porter’s Business Competitiveness Index: US #1

The United States and Germany remain atop the latest Business Competitiveness Index, with China continuing to slip in the rankings while India ascends, according to a report released from Michael Porter’s Institute for Strategy and Competitiveness.
The U.S., ranked number one in four of the last six years, scored high on business environment, financial markets, and innovative capacity. Germany, number two, benefited from its orientation on exports, the unique competitive positions of its companies, and the quality of its legal and regulatory framework.
Rounding out the Top 10 were Finland, Switzerland, Denmark, Netherlands, Sweden, United Kingdom, Japan, and Hong Kong SAR. Hong Kong increased its ranking by seven, in part by strengthening management education, the efficacy of government boards, and local availability of process machinery, the ISC reported.
Other high-income nations increasing their ranking included Qatar, Norway, and Malta. Advanced economies on the decline included Cyprus, the Czech Republic, Taiwan, and France.
China, which has retreated in the rankings since 2002, fell nine spots to 64, according to the ISC. “This year’s decline was driven especially by higher levels of corruption, weaker assessment of buyer sophistication, and concerns about labor relations,” the study found. Also contributing were weak property rights, poor board governance, and low quality of management education. “Overall it is clear that euphoria about China is moderating as the realities of its competitiveness become more apparent,” the report concludes.
India moved up four rankings to 27, aided by improvements in its business environment and increasing levels of company sophistication.
Hmmmm. Porter’s Index should be put next to a Global Standard of Living Index. Then we can learn which countries are the best for both employees and employers. But that might be too much to ask from Harvard. Maybe Yale could do that…

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?

Marketing Toyota on Second Life


From the Economist:
“Toyota is the first carmaker to enter Second Life. It has been giving away free virtual vehicles of its Scion brand and, in October, will start selling all three Scion models. The price will be modest, says Adrian Si, the marketing manager at Toyota behind the project. Toyota really hopes that an “aftermarket” develops as avatars customise their cars and sell them on, thus spreading the brand “virally”. Toyota will be able to observe how avatars use the cars and might, conceivably, even get ideas for engineering modifications in the real world, he says.
“Those Scion cars have “great driving performance for in-world physics,” says Reuben Steiger, the boss of Millions of Us, a company he founded this year to bring companies like Toyota into Second Life for marketing and brand-building. “How it corners and makes sounds when it changes gears is great.” So Toyota, which is a client of his, along with Sun Microsystems and even Mr Warner, shows that Second Life is “perfect for creating experiences around a brand,” says Mr Steiger. “We don’t think that conventional advertising will be very prevalent,” he says, because it would “be badly received culturally”. Advertising in Second Life is not about “trapping people” but about captivating and stimulating them. A good campaign in Second Life costs about $200,000 dollars, he reckons, of which only a tiny part is property leases and most goes to paying the talented designers to create great virtual stuff.”
MMORPGs meets Web 2.0.
Who has time for reality? For global warming? For politics and corruption? For war-profiteering? See what I mean?
This is a form of double loop marketing all right, but I don’t like it.

Penn State Webinar: Demand Generation Using Double Loop Marketing™

Institute for the Study of Business Markets (ISBM)
Smeal College of Business
The Pennsylvania State University

Webinar: Double Loop Marketing™: The New Online Strategy to Build Brand Awareness, Accelerate Demand & Generate Leads
Presenter: Christian Sarkar, Founder – Double Loop Marketing LLC
When: Wednesday, October 11, 2006
Time: 1:00pm EDT
Free One-Hour Web Event
Description: Double Loop Marketing™ is an emerging online strategy. The “Double Loop” approach requires a company to first develop “mind share” by building a company sponsored site that offers genuinely useful information and advice to consumers in the subject matter areas most relevant to their products. This is the first loop of the firm’s interaction with customers. Only after such a site achieves credibility among its community of visitors can the company, in the second loop of customer interaction, try to convert that “mind share” into “wallet share.”
Double Loop Marketing™ can yield surprising results – often 10 times the number of qualified sales leads generated by conventional advertising and marketing approaches.
In this webinar you’ll learn:
– Where to start: are you positioned in the right ecosystem?
– What is “Double Loop Marketing™?”
– Who is using it: surprise, it’s not just high-tech companies
– How it’s being used: case studies (B2B) from companies using “Double Loop Marketing™”
– The results: comparisons of effectiveness between traditional online advertising and double Double Loop Marketing™
– Barriers to execution: what separates success from failure?
– It’s not about technology: how blogs, RSS, and mobile applications play a role but are not the defining elements of Double Loop Marketing™
Sign up here >>

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.”

Martin Sorrell Doesn’t Get It

The Internets is not just another new media.
And Sorrell should know better.
I must say I’m stunned by his ignorance. It’s not TV. Not even close. If you want Internet strategy, based on Sorrell’s view, I would not talk to these people:
– Grey Global Group
– Ogilvy & Mather Worldwide
– Young & Rubicam
– JWT
– Hill & Knowlton
– Ogilvy Public Relations Worldwide
– Burson-Marsteller
– Cohn & Wolfe
– Mediaedge:cia
– Mindshare
– MediaInsight
– Maximize
Step down Sorrell. No wonder you guys at WPP and Co. don’t have a clue.

The Return on Attention

John Hagel is his usual insightful self in his blog post “Paying Attention“…
He asks: what is behind the desire to receive attention?
Is it a weak sense of self? A desire to be recognized and liked? An unhealthy need to be seen? Envied?
Let’s go back to before Goldhaber, to someone like St. Augustine, perhaps.

Ignoring the Death of our Planet

These are sad days. The president, the business community, and the religious establishment have all turn their backs on Life on Earth.
Now Al Gore wants to save the world, with a powerpoint slideshow (and a movie).
At least he’s doing something.
The oil lobby has already come out with anti-Gore attack ads defending Carbon Dioxide (and their profits). Yay!
America, when did we lose the ability to think? At what point did we decide that the future doesn’t matter any more?

What Would Jesus Do to Save the Planet? Play bingo? Drive an SUV? Hint: He kicked the money lenders out of the temple…

The Meaning-Driven Business

Does your business have meaning? A purpose beyond the purpose of making money?
See Guy Kawasaki’s “Art of the Start” clip below (hat-tip to Dominic Basulto from businessinnovationinsider.com)

Funny thing – we must find a way to do what we love, or we are wasting our lives:
Dr. K. Anders Ericsson’s research on performance suggests that when it comes to choosing a life path, you should do what you love — because if you don’t love it, you are unlikely to work hard enough to get very good. Most people naturally don’t like to do things they aren’t “good” at. So they often give up, telling themselves they simply don’t possess the talent for math or skiing or the violin. But what they really lack is the desire to be good and to undertake the deliberate practice that would make them better…
– from the NYTimes article by the Freakonomics nerds – read the article at soccer blog >>

Blogger Becomes CEO at Sun

Jonathan Schwartz gets his day in the Sun!
Scott McNealy’s still around, but Schwartz now gets a chance to lead.
“Scott has a short haircut,” says Schwartz. “And unless he pulls something out that mandates it as a part of my employment contract, I’m keeping my haircut.”
Here, on his blog, Schwartz meets Brazil’s Lula to discuss the World Cup which starts in 45 days, 14 hours and 56 minutes. Any tips for Bruce Arena, Jonathan? Be sure to send them on to our soccer blog!
I wonder what the first post as CEO will be? Let’s hope he doesn’t stop blogging… my guess is he’ll be the CEO to change the landscape of corporate communications – using his blog!

Mira this Miro!


Last Thursday’s Google logo had painted versions of each letter in the Google name — allegedly incorporating images from Miró’s “The Escape Ladder,” 1940; “Nocturne,” 1940; and “The Beautiful Bird Revealing the Unknown to a Pair of Lovers,” 1941.
The artist’s family showed their true colors by demanding Google take down image.
Morons. They don’t care about art at all, simply money.
Google actually did them a great service. Now millions more know who Miro is. They should be paying Google!
Next we’ll have the Earth suing Google as well – for Earth Day copyright violations! 🙂

Womenomics: The Business Value of Women

Question: What would happen to the world if the CEOs of ExxonMobil, the NY Times, Wal-Mart, GE and Microsoft were all women?

The Economist tells us that women are now the most powerful engine of global growth. Apparently over the past decade, the increased employment of women in developed economies has contributed much more to global growth than China has.
Listen to this:
Making better use of women’s skills is not just a matter of fairness. Plenty of studies suggest that it is good for business, too. Women account for only 7% of directors on the world’s corporate boards—15% in America, but less than 1% in Japan. Yet a study by Catalyst, a consultancy, found that American companies with more women in senior management jobs earned a higher return on equity than those with fewer women at the top. This might be because mixed teams of men and women are better than single-sex groups at solving problems and spotting external threats. Studies have also suggested that women are often better than men at building teams and communicating.
To make men feel even worse, researchers have also concluded that women make better investors than they do. A survey by Digital Look, a British financial website, found that women consistently earn higher returns than men. A survey of American investors by Merrill Lynch examined why women were better at investing. Women were less likely to “churn” their investments; and men tended to commit too much money to single, risky ideas. Overconfidence and overtrading are a recipe for poor investment returns.

Is anybody listening?
I posted about this a while back: Advice to Women who would be CEOs: “Stay away from HR”
I usually think of “business-women” in two camps – the toady – a conservative woman who moved up the ranks by reinforcing the stereotypes (eg. Kay Bailey Hutchison) or – the trailblazer – a talented woman who created her own way despite the barriers and obstacles thrown in her way by the good-old boys (eg. Anita Roddick).
Of course some people in certain parts of the world still think of women as property. Is it a coincidence that our problems with terrorism stem from these same places?

The World’s Most Innovative Companies

The Boston Consulting Group and BusinessWeek tell us that these are the 100 most innovative companies in the world:
Rank Company
1 Apple
2 Google
3 3M
4 Toyota
5 Microsoft
6 General Electric
7 Procter & Gamble
8 Nokia
9 Starbucks
10 IBM
11 Virgin
12 Samsung
13 Sony
14 Dell
15 IDEO
16 BMW
17 Intel
18 eBay
19 IKEA
20 Wal-Mart
21 Amazon
22 Target
23 Honda
24 Research In Motion
25 Southwest
26 Porsche
27 Genentech
28 Cisco
29 Nike
30 Motorola
31 DaimlerChrysler
32 Infosys
33 Ryanair
34 Pixar
35 SonyEricsson
36 Whole Foods
37 Capital One
38 Tesco
39 Danone
40 BP
41 PepsiCo
42 Hewlett Packard
43 Disney
44 jetBlue
45 W.L. Gore & Associates
46 Skype Technologies
47 FedEx
48 Bang & Olufsen
49 Renault
50 L’Oreal
51 ExxonMobil
52 Siemens
53 Johnson & Johnson
54 Shell
55 Pfizer
56 Singapore Airlines
57 Nissan
58 DuPont
59 Zara
60 TiVo
61 Yahoo!
62 Macquarie Bank
63 Audi
64 Harley Davidson
65 Progressive Insurance
66 Volvo
67 Philips Electronics
68 ING Bank
69 Nestle
70 Boeing
71 Matsushita Electric Industrial
72 easyJet
73 UPS
74 Coca-Cola
75 Cirque du Soleil (tied)
75 McKinsey (tied)
75 Woolworths (tied)
78 Hutchison Telecommunications
79 Salesforce.com
80 ACS
81 ITC
82 Time Warner
83 Danaher
84 Costco Wholesale
85 LG Electronics
86 bankinter
87 Amgen
88 Caterpillar
89 Accenture
90 SAP
91 SK Telecom
92 Home Depot
93 LVMH
94 Gap
95 Unilever
96 Goldman Sachs
97 John Deere & Co.
98 Whirlpool
99 Entel
100 McDonald’s
To me this makes no sense. This is in fact a list of the world’s most innovative dinosaurs. Massive companies which are still able to create value using new ideas. But these companies (w/ the exception of IDEO and a few others) are NOT at the forefront of innovation. Rather, that honor belongs to small companies, often at the periphery, which introduce the dinosaurs to these innovations.
Furthermore, innovation is relative, and needs to be measured in the industry or marketspace of the company. IDEO is more innovative than McDonald’s in absolute terms, but what really matters is how innovative McDonald’s is against its competitors.
What I enjoyed was the cover story:
Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it’s about selecting and executing the right ideas and bringing them to market in record time.
In the 1990s, innovation was about technology and control of quality and cost. Today, it’s about taking corporate organizations built for efficiency and rewiring them for creativity and growth. “There are a lot of different things that fall under the rubric of innovation,” says Vijay Govindarajan, a professor at Dartmouth College’s Tuck School of Business and author of Ten Rules for Strategic Innovators: From Idea to Execution. “Innovation does not have to have anything to do with technology.”

Here’s an article from Tom Davenport on the types of innovation. I think it helps make the point that product innovation is just one type of innovation.
Another great insight comes to us from John Hagel, who talks about the limits of western thinking in his critique of Gary Hamel‘s latest thinking. Hagel tells us to focus on understanding the continuous management innovations across enterprises that are emerging in Asia.
Question: How does one link innovation to brand? to shareholder value? to sustainability? Branding, design, eco-imagination. They’re all linked…