Business Lessons Learned from President-Elect Barack Obama

What should the new President’s priorities be? Here are some views from a few CEOs interviewed by BusinessWeek:

It’s a cliche, but big business fears Democratic leaders. Turns out that Democratic presidents are better for the economy than Republicans! Details, details
Jack Welch has his own take on why Obama succeeded: a clear vision, clean execution, and friends in high places.
A far more insightful piece comes from HBR blogger Umair Haque: Obama’s Seven Lessons for Radical Innovators. I don’t agree with all of his points (Obama did not “minimize strategy,” he minimized tactics!) but I do commend Haque for his insights (see this post, for example, on why Obama is the Google of Politics.)
Bill Taylor has a fun post titled: How Obama Became CEO of the USA — and What It Means for CEOs Everywhere
in which he argues that “being different makes all the difference.”
John Quelch says it’s all about better marketing.
Barbara Kellerman argues that Obama is a superior manager.
Gill Corkindale calls Obama The World’s First 21st Century Leader
For Stew Friedman, it’s authenticity.
My own view is that Obama is a true leader. And what we witnessed was the birth of Politics 2.0.
And in the end, it’s still about results, and to that end, Obama has already taken the first step.
Go Barack!

Michael Porter: Why America Needs an Economic Strategy

“The stark truth is that the U.S. has no long-term economic strategy—no coherent set of policies to ensure competitiveness over the long haul. Strategy embodies clear priorities, based on understanding the strengths we need to preserve and the weaknesses that threaten our prosperity the most. Strategy addresses what to do, but also what not to do. In dealing with a crisis, experience teaches us that steps to address the immediate problem must support a long-term strategy. Yet it is far from clear that we are taking the steps most important to America’s long-term economic prosperity.”
That’s the Portermeister in BusinessWeek.
What he’s saying is Vote Obama 🙂

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

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

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

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

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

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

What Would Peter Drucker Do?

Looks like Rupert Murdoch’s WSJ is thinking along the same lines we are (for a few seconds at least).
They’ve gone an dug up an old article Peter Drucker wrote for them: Planning for Uncertainty.
Here are some of the key questions:
– …traditional planning asks, “What is most likely to happen?” Planning for uncertainty asks, instead, “What has already happened that will create the future?”
– “What do these accomplished facts mean for our business? What opportunities do they create? What threats? What changes do they demand — in the way the business is organized and run, in our goals, in our products, in our services, in our policies? And what changes do they make possible and likely to be advantageous?”
– “What changes in industry and market structure, in basic values (e.g., the emphasis on the environment), and in science and technology have already occurred but have yet to have full impact?”
– “What are the trends in economic and societal structure? And how do they affect our business?”
– “What is this company good at? What does it do well? What strengths, in other words, give it a competitive edge? Applied to what?”
He ends with a serious warning for the bean-counters:
There is, however, one condition: that the business create the resources of knowledge and of people to respond when opportunity knocks. This means developing a separate futures budget.
The 10% or 12% of annual expenditures needed to create and maintain the resources for the future — in research and technology, in market standing and service, in people and their development — must be put into a constant budget maintained in good years and bad. These are investments, even though accountants and tax collectors consider them operating expenses. They enable a business to make its future — and that, in the last analysis, is what planning for uncertainty means.

And don’t forget his advice for retail strategy >>

5 Questions about Strategy and Business Design

Now is a good time to ask yourself these five business design questions (ht to Oliver Wyman):
1. Who is the customer and what do we offer? Which customer segments should we serve, and what is our value proposition for each segment?
2. What is our profit model for each of our offerings?
3. What do we perform in-house and what do we outsource?
4. How do we build in strategic control? Is there a way to create sustainable differentiation?
5. How should we organize ourselves to make it happen? What is the right organizational architecture to execute the business for each segment?
You can download the business blueprint (registration required): level-one flowcharts of how to run a profitable, sustainable, online business.
1) Offer development process
2) Offer creation process
3) Sales process
4) Marketing process
5) Order fulfillment & support process
6) Financial process
7) Licensee certification process
8) Licensee business development process
9) Events process
10) Archival process

God is in the Process: The Legacy of Michael Hammer

I have to say I was shocked when I saw the news about Michael Hammer. He was just sixty. Goes to show you how precious every second is. It may be that they need to do some process re-engineering up in heaven. Maybe make it more customer friendly or something…

Down here on Earth, process re-engineering isn’t as fashionable as it used to be. And I wonder how many people got laid off because of Reengineering the Corporation: A Manifesto for Business Revolution (Collins Business Essentials).

But Hammer was misunderstood. His ideas were abused by company executives and the management consulting industry. Today his ideas live on in the heads of IT nerds and companies like Zara.

Where do you (and your company) stand? Check out the maturity models he created:
1) for process maturity, and 2) for enterprise maturity.

Too bad we didn’t see the one on leadership maturity.

Here are some fun links:
Put Processes First: Make High Performance Possible Michael Hammer
Michael Hammer: A Tribute to the Guru of Operations Anand Raman
Remembering Michael Hammer Tom Davenport

In the end, process matters. Even our buddy Drucker acknowledged that.
BTW, the other process guru who is still (very) alive and kicking isTom Davenport.

Retail Strategy: Tips from Peter Drucker

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

Download the Blueprint: 10 Processes to Run Your Business

blueprint
Level-one flowcharts of how to run a profitable, sustainable, online business. Covers the following work processes:
1) Offer development process
2) Offer creation process
3) Sales process
4) Marketing process
5) Order fulfillment & support process
6) Financial process
7) Licensee certification process
8) Licensee business development process
9) Events process
10) Archival process
You’ll have to register for this one >>

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.

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

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

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

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

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.

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.

Drill First, Think Later

The Republicans continue their desperate smear campaign tactics against Obama. And once again they shoot themselves in the foot.
In TIME:

How out of touch is Barack Obama? He’s so out of touch that he suggested that if all Americans inflated their tires properly and took their cars for regular tune-ups, they could save as much oil as new offshore drilling would produce. Gleeful Republicans have made this their daily talking point; Rush Limbaugh is having a field day; and the Republican National Committee is sending tire gauges labeled “Barack Obama’s Energy Plan” to Washington reporters.

Too bad Obama’s point actually illustrates the total ineffectiveness of the Republican “Drill now, think later” mindset (underwritten by Exxon and friends)…

McCain’s “straight-talk” express gets derailed again and again.
For my part I am now permanently mad at the Republicans for their crimes against the earth.

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.

Watching Ecosystems: a blog about marketspace analytics

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

How to Measure Innovation

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

Lessons Learned: Branding and Online Communities

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

Viewer-Driven TV Programming – Is PBS serious?

I think it’s a nice gesture that PBS is asking viewers for programming suggestions:
What would your prime time lineup look like? Would you emphasize news and public affairs programming over science and nature content? Would you make changes to existing shows? What kinds of new series and specials would you bring to the public airwaves?
When they meet in Palm Desert, CA, the executives should take a look at the suggestions, but I feel they should talk to each other as well.
Why? Because there are serious limitations to heeding the Wisdom of the Crowd.
I blogged about Nick Carr‘s take on this subject a while back: “What crowds are good for is producing average results that are not subject to the biases and other quirks of human minds.”
The PBS bigwigs have forgotten their mission. (Maybe not, since a lot of them are now Republicans; I have to confess, when I heard about that I was sure we were soon all going to be watching infomercials on PBS 24/7).
So let’s remind them what public television stands for. What’s the brand personality they need to be faithful to?
Seth Godin weighs in on this issue with a brilliant post about the purpose of the New York Times. Same deal for PBS.
So let’s ask: What’s important? What’s true?
Big opportunity for big stories, PBS. Go where the corporate media can’t go:
News, Education, and the Arts. And don’t forget to add “Global Warming” as a new category.
PBS, you knew that once.
Look what happened to Ted Koppel and Nightline. Or David Brinkley’s This Week. I’ll Fly Away. That’s commercial television. PBS, please don’t go there.
One more thing: make sure every show is archived online for viewing over the Internet. All the way back to the very beginning of PBS (including Mr. Rodgers’ Neighborhood). That would be a real public service. Heck, put ’em all on YouTube.
I’m a fan of customer feedback, but I’m a bigger fan of the customer experience.
Don’t mess this up, PBS.

Ranking Business Gurus: The Librarian’s Dilemma

Tom Davenport has done it again. He’s come up with a list of top business gurus in Rupert Murdoch’s Wall Street Journal.

Using the same methodology he used in his book, Tom tells us that things have changed. These are the new Big Idea boys in business.
Why all boys? Because the business world still seems to be sexist? Or maybe the women thinkers aren’t focusing on “selling” their ideas as much? Where’s Dorothy Leonard-Barton? Or Tammy Erickson, for that matter?
The Times has its own list of business gurus.
Accenture still points to the 50 Gurus that Tom Davenport came up for them a few years ago.
God is in the details. The issue I have is that Tom and H.J. have not really taken into account how Google works. They’re measuring quantity, not quality.
In terms of popularity, no one uses Lexis Nexis or the SSCI database, except for academics and librarians. So I’ve got to discount those two components of the guru index.
Let’s get less academic and try to measure who’s really getting attention. (By the way, Tom has a great book on that subject as well).
So to measure real-time popularity, here’s what I propose: let’s measure the influence network for each of these management gurus. Let’s see how far their reach extends in the ecosystem they’ve built with their ideas. Let’s look at who’s linking to them. Let’s look at their site traffic. Let’s compare their ecosystem rankings. Let’s take Google, Yahoo, and the blogs into account.
Stay tuned. We’re going to have some fun using our ecosystem mapping tool.

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.

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 >>

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

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