November 2005 Archives

How Sick is Your Company?

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Is your company Passive-Aggressive, Fits-and-Starts, Outgrown, Overmanaged, Just-in-Time, Military Precision, or Resilient? These are the fun categories that make up your organization’s DNA, according to the folks at BAH.

Read the HBR article: The Passive-Aggressive Organization by Gary L. Neilson, Bruce A. Pasternack, and Karen E. Van Nuys.

"Healthy companies are hard to mistake. Their managers have access to good, timely information, the authority to make informed decisions, and the incentives to make them on behalf of the organization, which promptly and capably carries them out. A good term for the healthiest of such organizations is “resilient,” since they can react nimbly to challenges and recover quickly from those they cannot dodge. Unfortunately, most companies are not resilient. In fact, fewer than one in five of the approximately 30,000 individuals who responded to a global online survey Booz Allen Hamilton conducted describe their organizations that way. The largest number—over one-quarter—say they suffer from the cluster of pathologies we place under the label “passive-aggressive.’’ The category takes its name from the organization’s quiet but tenacious resistance, in every way but openly, to corporate directives.

"In passive-aggressive organizations, people pay those directives lip service, putting in only enough effort to appear compliant."

I used to work for someone like that once. Her strategy was to say yes and do nothing. The result? Nothing happened. Everything I accomplished happened despite of my boss, not because of her. I also knew an entire IT department at a Fortune 500 company that behaved the same way. The modus operandi was: "What can we NOT do today?"

Wait. There's more.

Here's a full report on the research - "A Global Check-Up: Diagnosing the Health of Today's Organizations"

Why does shop.org do something like this? So they can sell more stuff.

Read the BusinessWeek article "Cyber Monday, Marketing Myth." Well done, BusinessWeek.

But the Best Buy site was down:

Says TD: "Most interventions to improve performance in business are at the organizational or process level, but it doesn’t have to be that way. We can also improve individual capabilities. Ultimately, knowledge worker performance comes down to the behaviors of individual knowledge workers. If we improve their individual abilities to create, acquire, process and use knowledge, we are likely to improve the performance of the processes they work on, and the organizations they work for."

Right on! Read this insightful post on Tom Davenport's blog- BabsonKnowledge.org.

For several years, Harrisinteractive of the Harris polling company has done an annual survey of the 'reputation quotient' of what it calls the 60 'most visible' companies. The survey asks respondents to evaluate companies against 20 attributes ranging from social responsibility to financial performance to product quality. Each of the twenty can earn a top score of 7 and a low of 1.

Here's what Doug Smith thinks...

Says the Economist:

"Executive compensation in America—already far ahead of the rest of the world, despite the best efforts of overseas managers to catch up—is now rising inexorably again. In fiscal year 2004 the total compensation of the median American company boss rose in every industry, by between 9.7% in commercial banking and 46.1% in energy, according to a new report by the Conference Board, a research organisation. In the big companies that comprise the S&P 500 index, median total chief-executive compensation increased by 30.2% last year, to $6m, compared with a 15% rise in 2003, according to a study published last month by the Corporate Library, a firm that tracks corporate-governance data."

One of the interviewees - Bob Pozen, chairman of MFS Investment Management, is pissed off at executive pay packages that reward bosses generously even if they fail. He is extremely critical of the role of compensation consultants. They, he says, tend to be chosen by the chief executive, and to drive up pay by recommending that the top man should be paid more than his peers, having chosen a group of peers whose pay errs on the high side.

Hmmm. Can we outsource the CEO to a low-cost country? Is there no cure for Enron-ititis? Read the full article.

Maybe that's why Peter Drucker wasn't so popular at the end. He called this "looting."

The last word - again from the Economist: "...hell is more likely to freeze than bosses' pay."

Why do so many PR and branding companies have the worst websites? Because they don't understand how branding works online.

In spite of their website, they've done some interesting work at Futurebrand. I'm talking about their Country Brand Index.

Apparently Italy ranks as the top overall destination, according to a global survey that identifies countries as brands... Australia and the U.S. take the second and third positions.

China is the “most improved” country brand, the U.S. is “best country brand for business travel” and Italy is the “best country brand for art and culture.”

“If a ‘brand’ is defined as an experience, then some of the world’s most powerful and recognizable brands should be countries. The challenge the industry faces is that it must move away from the traditional reactive and tactical marketing approaches and instead, create and deliver an overall brand experience that drives sales and turns visitors into country-brand evangelists,” says Rene A. Mack of Weber Shandwick, the agency involved in the creation of the index.

He's right and wrong. Your travel experience in a country is not the same as the country's brand. These days its important how you act in public. Like children, some countries behave better than others. Some are unruly, some loud, some mild-mannered...

A better survey is the Anholt-GMI Nation Brands Index. I talked about it in a previous post - The Rise and Fall of Brand America.

Also: see what Peter Drucker thinks. You have to listen to the whole thing!

William Dunk gets it.

Here's a letter he posted on his Global Province site back in 2004.

"Basically there are a couple of ways of making sales. Either you shoot them down or they come to you. For most of the mass market era, we took a shotgun, cost be damned, and pumped lead into the skies, hoping to knock as many pigeons—i.e., customers—down as possible. Right now, as we transition out of the mass era, we are using rifles, and assuming that with careful targeting, we can hit a choice quail, duck, or wild turkey on the wing, and then send a bird dog out to retrieve. The idea is to hit many less prospects, but to hit the choice ones that count. You should understand that any form of marketing that has targeting in its name is expensive and probably a poor return on investment. Nonetheless, targeting is the craze of this moment.

"But then there’s catching fish. We put a worm or fly down in the water and wait for the fish to come to us. Stream fishing. It’s more subtle. Less energetic. We use the inquisitive hunger of fish to lure them into our clutches. Sight and sound and touch are compounded. This is allure. It’s very, very related to “word of mouth,” which, at the end of the day, is the most effective form of marketing.

"We think longer term that it’s time to lay down lures in the water. That will drive companies to provide horribly accurate product information that tells the user how to get good results at low cost from a product, even suggesting alternatives to their own that may work better for some applications. Straight poop becomes the strongest form of advertising."

He's describing double-loop marketing... read the article.

"Exaggerated motions, exaggerated smiles, exaggerated enthusiasm - they learn those things and they can get people to do what they want." - LYNN WILLIAMSON, an adviser at the University of Kentucky, on why so many former cheerleaders are hired as sales representatives for pharmaceutical companies.

This article in the NYTimes says that drug companies hire "sexy drug representatives as a variation on the seductive inducements like dinners, golf outings and speaking fees that pharmaceutical companies have dangled to sway doctors to their brands."

"In a crowded field of 90,000 drug representatives, where individual clients wield vast prescription-writing influence over patients' medication, who better than cheerleaders to sway the hearts of the nation's doctors, still mostly men."

"But pharmaceutical companies deny that sex appeal has any bearing on hiring. "Obviously, people hired for the work have to be extroverts, a good conversationalist, a pleasant person to talk to; but that has nothing to do with looks, it's the personality," said Lamberto Andreotti, the president of worldwide pharmaceuticals for Bristol-Myers Squibb."

Right.

I'm comforted to know that our doctors, with all their years of "education," are swayed so easily... Sex still sells. Maybe we should use cheerleaders as environmental lobbyists...

Thomas Nast: Turkey Day 1881

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Competing on Analytics is a Babson Executive Education report by Tom Davenport, Don Cohen and Al Jacobson.

The report describes the emergence of a new form of competition based on the extensive use of analytics, data, and fact-based decision making. The analytics— quantitative or statistical models to analyze business problems—may be applied to a variety of business problems, including customer management, supply chains, and financial performance. The research assessed 32 firms with regard to their orientation to analytics; about one-third were classified as fully engaged in analytically oriented strategies. Both demand and supply factors for analytical competition are described. Of the two, demand factors are the more difficult to create. The presence of one or more committed senior executives is a primary driver of analytical competition.

Registration is required for download, but it's worth it.

A human look at Drucker's contributions from John Byrne and Lindsey Gerdes at BW:

-- It was Drucker who introduced the idea of decentralization -- in the 1940s -- which became a bedrock principle for virtually every large organization in the world.

-- He was the first to assert -- in the 1950s -- that workers should be treated as assets, not as liabilities to be eliminated.

-- He originated the view of the corporation as a human community -- again, in the 1950s -- built on trust and respect for the worker and not just a profit-making machine, a perspective that won Drucker an almost godlike reverence among the Japanese.

-- He first made clear -- still the '50s -- that there is "no business without a customer," a simple notion that ushered in a new marketing mind-set.

-- He argued in the 1960s -- long before others -- for the importance of substance over style, for institutionalized practices over charismatic, cult leaders.

-- And it was Drucker again who wrote about the contribution of knowledge workers -- in the 1970s -- long before anyone knew or understood how knowledge would trump raw material as the essential capital of the New Economy.read it here

Check out this very, very interesting podcast... John Byrne talks about his first meeting with Peter Drucker and his wife Doris at the YMCA in Estes Park, on how Drucker saw "business as an opportunity to build community" - executive pay - and much, much more.

Warren Bennis: "Peter Drucker, how do you learn?"
Answer: " By listening, only to myself!"

Great podcast!

During his 42 years at ABC News and 26-year run on "Nightline," Ted Koppel has seen — and reported — it all.

As he prepared to anchor his last edition of "Nightline" Tuesday night, Koppel spoke about his experiences as an anchor and reporter for the show long regarded as the smartest news program on TV.

Read the ABC Interview here.

Note that it is filed under "entertainment." Prediction: Nightline is finished.

The new format stinks. Since when is "less news, more crap" a formula for success? Oh I forgot, this is US TV- i.e. "entertainment."

Note to the BBC: you can now safely take over the news marketspace in the US.

November 2005 - Strategy Magazine

One is enough
Q's and cocktails with...Neil French, outgoing worldwide CD, WPP Group
by Lisa D'Innocenzo

By now, you surely must have heard about the Neil French kerfuffle. The short version: Last month, he resigned his post at WPP because of reaction to controversial comments he made about female CDs during a Toronto event, organized by ad site ihaveanidea.org.

Strategy interviewed French a day before that fateful night and felt he made some salient points about the state of the industry, as well as what it takes to be brilliant. So, despite the fact that he called said reporter "Sweetpea," we thought this was still worth a read.

LD: What do you think of the state of the ad industry?

NF: What in Canada? Please don't ask me, because I don't know. I could have got somebody to brief me about Canadian advertising. That would have been wrong, because it's like a politician being told what to say. I don't do that shit. I've never been to Canada before - what the hell would I know about Canada? I like the place - I love the weather. [Spoken on a 28 degree day in late September.]

LD: How about overall?

NF: There's this hysteria on at the moment about how television is dead and it's all going to interactive. That's such bollocks. Yes, in the Western World there are a lot of computers out there and interactive thingy-bobs. But actually 90% of the population of the earth is not sitting in front of an Apple tonight. You go to some huge shack city in Brazil, or Thailand, and that light from the shack is a television. Why is everybody panicking? I remember when radio was dead. I remember when newspapers were dead. They're fine. Now television is dead. No it's bloody not. It's just a lot of inept people who think that with the next thing, there might be some good ads. There won't be of course, because they are genetically inept.

LD: What do you think of the fact that more money is going into interactive then?

NF: If you put everything into mobile, it's going to piss people off much more than the television ads. Mostly mobile's used by kids. They are going to make the phone calls, they are going to text their mates, they do not want to be interrupted by some jerk who wants to sell them a soft drink. So this is more likely to burn out very quickly. They will watch the stuff they want to see, and that's when you get them. Yes, TiVo can make sure you don't watch the ads, but if it's a really good ad that appears during the moto racing or the soccer, you'll leave it on to hope the ad comes on. I've heard people say this: "I love this one. I'm not going out for a pee." It's human nature. If the media buyer's clever enough, it's going to always be in the same program. Having your ad liked by the consumer, that's the Holy Grail. No more conversation needed on that subject; move on.

LD: So what does it take to make a good ad?

NF: Talk to people. That's all it is. When Winston Churchill said: "We shall fight them on the beaches," he was talking to one bloke. Every single person in his little house in the middle of England saw himself standing shoulder to shoulder with Winston, with a pitchfork in his hand on the seashore. And when Hitler said: "We're going to take over the world; we've had a rough deal," every soldier at Nuremberg, said: "He's talking to me, and I must not let him down." So good or evil, the great communicators talk to one person. That's what advertising does - I'm talking to you, this is the right car for you, or beer, or insurance company, or whatever the hell it is. Only for you. Luckily, there are millions of people like you and they will all buy it, but you don't say that in the ad. There's no you plural in advertising, it's you singular.

LD: How come more advertisers don't get that?

NF: Because 95% of the people in this business are buffoons. They're clowns. The creatives blame the clients and the suits, and that's only because the suits frequently come into advertising because they couldn't get into banking or retail, so you get an awful lot of those. But the client has every right to make his own decision on his own product. It is our responsibility to explain to him why this will work better than that, and if we fail to do that, we don't deserve to do good advertising.

LD: What work have you seen recently that gets it right?

NF: I have to bring this one up, because it's a great example of talking to the audience. It was an ad [I did] for [Panadol] in China. They researched aspirins and the Chinese got a bit upset that it said: "Take two," because they thought: "It seems like such a waste, using all these aspirins up." So they brought out the single pill.

If you want to talk to people, tell them something that's relevant to them, and then twist it in the direction of your product. So I wrote the line of "One is enough," and the picture was a picture of George Bush and George Bush. It was huge.

Next year's big winner is going to be the Big Ad from Australia [for Carlton Draught]. It is the heaviest irony possibly ever used in advertising and utterly hilarious. If you look at it and deconstruct it, it's the perfect ad for beer, without having to show a lot of people in the public going "yo-ho-ho."

LD: Why do so many ads in categories like beer look the same?

NF: Why? I'll tell you why, and this is where the client is to blame. He sees an ad, and says: "Oh, that's good, can we have one like that?" And it's the very thing he shouldn't say. He should say: "Can we have one not like that." Otherwise, how can a consumer, who doesn't really care, ever differentiate? The client's problem is only that his widget means to him his house, his wife, their kids, their education, their retirement and his funeral. Whereas to anyone in the street, it doesn't come in the top million of things to worry about. Our job is to say: "This might be irrelevant, this widget," but of course the client's saying "No, no it's really important; this is the best widget in the world." But actually, they don't care, mate. All we can say is: "When you need a widget, we do good ones." So our job is to bridge the gap between the client's enthusiasm and the audience's apathy.

LD: How hard is that to do?

NF: It can be extremely difficult. The whole trick is to explain gently to the client why this is so. There are stupid people, but generally speaking the guy that runs the client is highly intelligent and highly motivated and a bit of a pirate. You don't get to run a big brewery or big car company without being a little ballsy. Unfortunately for the hewers of wood and fetchers of water, further down the hierarchy, their interest is keeping their job.

I can't remember a single occasion I've sold a decent campaign to anyone but the top guy. I did a campaign for Martel brandy, which was long copy and nobody had ever done long copy for brandy before. People down the line weren't sure about it, but I made them let me present it to Edgar Bronfman, who in those days was the head of Seagram's. The suits put me up front with great trepidation and I explained the ad. Edgar got it before I explained it to him. He understood the whole concept. He said: "Yeah, that's great. We'll go there. Looks like nothing we've ever seen before." All the racks of suits sighed with relief because they didn't have to make any decisions. At the end, he walked all the way down to the far end of the table, and said: "Neil, when these guys screw this up, you call me." And I said: "You mean if?" And he said: "No, I mean when."

LD: Are presidents getting more involved in marketing?

NF: No. I wish they bloody did. The only benefit of being old and wizened, like myself, is I can generally see the top man. Because I've been around forever, longer than God. The guy they want to see is the superstar, somebody like Bogusky, or an old bozo like me.

LD: How do you convince marketers to take a risk?

NF: Something I say to clients a lot is: "Are you actually just spending this money to mark time, or do you really want to make a difference? And how much of a difference do you want to make specifically? How much do you want sales to go up? How much can you supply if this was successful?" Ask all those questions and then you can say: "Now I know how brave you're going to be. Not at all or very." And of course, all bravery is risky, and so is safety.

LD: When do you know you can't work with a marketer?

NF: There are three things important when running an ad agency. Someone called it the three F's: fun, funds and fame. If a client gives you money and fame, that's great. If he gives you fun and fame, but not much money, that's still great. If he gives you lots of money and lots of fun, that's ok. But if there's no money in it, and no fun, but it will make you famous, you have to think about it. If it's just fun, then you should have left years ago. One is bad. Two is ok, three is unbearably wonderful. After all, it is your life. The client doesn't own you; you're not a slave; you can say uncle.

LD: Why are boutique agencies becoming increasingly popular?

NF: The boutiques are attractive to big clients because they have a personal stake in the success of this relationship. The client joins and asks a smaller agency to help them in the knowledge that there might be a few moments of stress in this relationship, but in the end they will succeed. These are the mistresses, not the wives. The mistresses get the jewelry, the wives get the washing machine. It's sad but true.

I was once talking to a boss of another very, very big agency. And I said: "You've had these clients so long. How do you do it?" He said: "Because they can't be bothered to fire us." It's too much hassle.

LD: Like a divorce?

NF: Absolutely. "God, this is a problem. Oh, well, stick with it. It could be worse, not much, but it could be worse." How sad is that? There comes a time, where you're going to say: "Actually, screw this." Or go get yourself a mistress, for just part of the time. And that's what these big clients do. "We're tied up to the teeth with these people, but I hate the bloody work, so I'm going to get a babe, and go out to dinner with a babe a lot, which will be great. It's much more fun, makes us feel good, and hey, then we've got to get back to the sodding wife again."

There will be more and more boutiques. There was a point where it was just about the big, big blocks taking over, but then the big, big blocks [started] buying the boutiques. Why do they buy the boutiques? Not for the money they're making. They buy them to give themselves a certain sexiness - a nice set of legs, or high heels.

LD: A boob job?

NF: A boob job! Very good. Absolutely. That's exactly it. Let's stick them on to the front and it looks like we have big boobs. It doesn't work.

LD: Does it help to have an ego in the ad business?

NF: I taught myself self confidence in my early teens. I was very shy. Pain and agony, and beating down embarrassment, teaching myself not to blush and all those awful things. Ego is really: "Do you really believe in yourself?"

[In Canada], there's a cringe factor. There's the permanent apology. I mean, I love the fact that people on the street are all saying "sorry" all the time. But, come on guys. Politeness is great, but sometimes it's not said in a politeness way, as much as a "Please don't hit me" way. That's sad. I remember a young guy, saying: "You're an egomaniac. You're all ego and no talent." That may be true. I said: "Do you have an ego?" "No," he says. "Do you bathe? Then you have an ego. You care about what people think about you. You take a shower, you care."

Here are more views on Drucker from some very smart people:

>> John Hagel on his Edgeperspectives Blog:

Drucker's Gone
"I am laid up with the flu so I am still having trouble processing the reality that Drucker’s gone. Drucker was an iconoclast who lived on the edge throughout his life. Prolific until the very end of a long life (he was 95 when he passed away last Friday), he always sought to move beyond established boundaries, believing that they limit the potential for insight and understanding..." Read the post >>

>> Tom Peters, in his "Dispatches from the New World of Work" blog:

Peter F. Drucker: Right Man for His/Our Times
"...Peter Drucker did arguably (1) "invent" modern management as we now think of it; (2) give the study and craft of management-as-profession credibility and visibility, even though biz schools like Harvard had been around for a long time; and (3) provide a (the first?) comprehensive toolkit-framework for addressing and even mastering the problems of emergent enterprise complexity..." More >>

>> William Dunk at Global Province:

Death at Claremont.
"The ultimate prophet of profit, Peter Drucker died last Friday, his mind churning to the end. He had spent his last years in residence at Claremont, having made his early imprint at New York University with Juran, Deming, and Feigenbaum, and as one of these four horsemen helped remake Japan’s economy after the war. Standard reading in business schools and corporate suites, his books turned heads from here to Tokyo. Compared to him, all the gurus out of McKinsey and the business schools have always seemed to be pretty tame stuff..." Read more >>

BTW, I'm amazed at the response my Drucker cartoons are getting. It seems like the "community of Drucker fans" is alive and well.

Do you Speak Soccer?

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Emerson Ferreira da Rosa in the Economist:

I am increasingly aware of how football has become an effective and universally known “language” that can project images of pure sport, beautiful play and enjoyment: a “language” that is used and appreciated all over the world. I am amazed at the number of dads who play football with their kids in Central Park on Sunday morning. In the United States soccer is starting to compete with baseball, American football and basketball. There is also a “desire for football” in China, in Japan—where Juventus recently played in a tournament—and in the Middle East. This shows us unequivocally that football can “speak” with the greatest simplicity—through different media, but above all through television—to millions of fans.

Read the article here >>

Another article from McKinsey...

On the supply side

What, for instance, would be the effect on the wages of engineers in emerging markets if labor costs were the most important factor for US companies choosing offshore locations? Our analysis shows that salary levels for engineers in the lowest-cost countries would likely double (exhibit). But salaries in emerging markets wouldn't reach the prevailing level in the United States or Western Europe, since they will be capped at about 30 percent of average US wages, or the current level in Brazil and Mexico.

Local wage inflation will probably continue in some offshoring locations as long as the multinationals concentrate their demand in a few cities. Because of the sunk costs of setting up an offshore facility, if demand in that location begins to outstrip local supply, the wages paid by individual companies may rise above the levels prevailing in neighboring countries. Dispersing demand will slow down overheating in the hot spots.

Overall, although wages in the supply-side countries will probably rise, they won't reach the level of wages in the demand-side countries.

On the demand side

Companies are moving their operations offshore at a slow pace, which means that over the next five years offshoring will have a negligible effect on overall employment in the demand-side countries for the occupations we analyzed.

Consider the impact in the United States. Over the past 30 years, the share of manufacturing jobs in total US employment has declined by 11 percentage points, to 21 percent, from 32 percent. By comparison, we estimate that only 9 percent of all US service jobs could, even in theory, be performed remotely, and it is unlikely that all of them will move offshore during the next 30 years. Wage levels too are unlikely to drop, for the same reason. Indeed, in the United States, growth rates for wages and the number of jobs in computer and data-processing services—a sector where offshoring is prevalent—are higher than those in the economy as a whole.1

This moderate impact and generally slow pace won't soften the blow for people who do lose their employment to offshoring. A sustained effort to retrain them is likely to yield results, since most of them are college graduates.

I think this is much too narrow a view. There will be another effect as well: wage deflation in the West.

Management consulting firms to always paint a narrow picture without looking at social costs. Let's talk about this again in three years. Predication: India will eat our lunch, China our dinner, and we're going to eat one meal a day - breakfast - like the poor in so many third world countries.

Tata speaks about the Indian group's international strategy, his plan to create a $2,200 "people's car," his vision of India as a knowledge center for the world, and his dedication to the social responsibilities required from companies operating in developing markets.

On the car:

"Today we're producing a $7,000 car, the Indica. Here we're talking about a $2,200 car, which will be smaller and will be produced in larger volumes, with all the high-volume parts manufactured in one plant. We're also looking at more use of plastics on the body and at a very low-cost assembly operation, with some use of modern-day adhesives instead of welding. But the car is in every way a car, with an engine, a suspension, and a steering system designed for its size. We will meet all the emissions requirements. We now have some issues concerning safety, mainly because of the car's modest size, but we will resolve them before the car reaches the market, in about three years' time.

"In addition—and this again touches on the social dimension—we're looking at small satellite units, with very low breakeven points, where some of the cars could be assembled, sold, and serviced. We would encourage local entrepreneurs to invest in these units, and we would train these entrepreneurs to assemble the fully knocked-down or semi-knocked-down components that we would send to them, and they would also sell the assembled vehicles and arrange for their servicing. This approach would replace the dealer, and therefore the dealer's margin, with an assembly-cum-retail operation that would be combined with very low-cost service facilities.

On India:

"If we play our cards right as a country, we could be a supplier of IT services and IT solutions to the world. We could also be a product-development center for pharmaceuticals. We could be a very good global R&D center in biotechnology and in some of the emerging technologies, such as nanotechnology, provided we really give them the focus they would need.

On bringing talent back to India:

"Indians coming back to India really go through a cultural shock. They give up a lot in terms of the quality of life, the education of their children, the availability of medical facilities. This will also have an impact when we want to hire people who are not Indians, as we will have to do in a world without boundaries. Even if we start only with pockets of the country and make those pockets less of a cultural shock, the benefits will spread. In some ways, this is what China did with the economic zones.

On values:

"What I feel most proud of is that we have been able to grow without compromising any of the values or ethical standards that we consider important. And I am not harping on this hypocritically. It was a major decision to uphold these values and ethics in an environment that is deteriorating around you. If we had compromised them, we could have done much better, grown much faster, and perhaps been regarded as much more successful in the pure business sense. But we would have lost the one differentiation that this group has against others in the country. We would have been just another venal business house.

"I think it is wrong for a company in India to operate in exactly the same way, without any additional responsibilities, as if it were operating in the United States, let's say. And even in the United States, I think if you had an enlightened corporation that went into the Deep South, you would see more of a sense of social responsibility, of doing more for the community, than the company might accept in New York City or Boston. Because it is inevitable that you need to be a good corporate citizen in that kind of environment. And companies that are not good corporate citizens—those that don't hold to standards and that allow the environment and the community to suffer—are really criminals in today's world."

Read the McKinsey Quarterly article >>


I received an email from Laurence Haughton, the author, on Peter Drucker.

With his permission, here it is:

It is now five days since Peter Drucker passed away and the tributes have filled the air like so many streamers and confetti at a ticker tape parade.

According to columnists in journals and blogs Drucker was, “an American sage,” “the uber-guru,” “profound,” and “a visionary.”

America’s two most popular business pundits agree. “[Drucker was] the right man for our times,” wrote one. And the other was just as reverential, “The most influential management thinker in the second half of the twentieth century.”

But I don’t see it that way.

If Drucker was “the most influential” shouldn’t he have changed a lot of executive behavior? If he truly was “profound” or the “right man for our times” wouldn’t he have a lot of followers who practice what he prescribed?

Peter Drucker is, as he himself once wrote about management sciences pioneer Mary Parker Follett, the “most quoted and least heeded” teacher of management.

Why he is so quoted is easy to understand. Pick up anything he wrote. I just went back and skimmed through 1964’s “Managing for Results.” You’ll find Drucker is incredibly insightful yet totally clear and practical. He’s no ivory tower theorist. Drucker explains exactly what to do and what not to do, giving systematic, logical, and consistent answers to all the fundamental challenges of management. If you are opining about management, he’s a perfect source to quote.

But as far as being heeded… I don’t think so. What company is managed according to his prescriptions? What leader follows his clear, specific advice? Frankly, is there anyone who gives him anything more than lip service?
Take just one of Drucker’s lessons. He criticized organizations who issued directives to “cut 5 or 10 percent from budgets across the board.” He said, “This is ineffectual at best and at worst, apt to cripple the important, result-producing efforts that usually get less money that they need to begin with.” Yet, when have you seen a company cut costs using Drucker’s clear distinctions between efficiency and effectiveness instead of the across-the-board cop out?

And I’ll bet others can find 100 additional quoted and ignored lessons from Peter Drucker just like that one.
Years ago I was told “performance is the proof that the learning took place.” If that’s true I’m sorry to say that despite all the tributes, up to now, we’ve learned very little from Peter Drucker.

 

Rebranding Intel

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"This might be the company's most important makeover campaign ever."

What's the big deal? Apparently the Intel logo no longer has the “e” letter dropped, and the blue label is now wrapped around the corporate name.

The chip names are rebranded: single core Yonah processors will be named “Core Solo” and dual core versions will be called “Core Duo”.

Yawn.

Another giant step in Googlespace?

"Help the world find your content. Google Base is a place where you can add all types of information that we'll host and make searchable online."

And so Google takes another step with another micro-service. Try it here.

And it's not just about classifieds. It's about Open Knowledge Management.

Wonder what Tom Davenport and Larry Prusak have to say about this... I'll let you know when I find out.

Back in 2000, Bill Joy, Sun's Chief Scientist and co-founder, told people that the economic future of technology is rooted in the notion of what he called "the six Webs."

- the "near" Web, the traditional desktop computing environment.
- the "far" Web, which includes simple interaction through, for example, a remote control while flipping through an interactive television screen.
- the "here" Web, or the industry of mobile Internet devices, which, Joy stresses are going to continue to grow in importance and popularity.
- the "weird" Web, or those systems of access that actually immerse the senses, like virtual reality or voice-activated surfing.
- the eCommerce (Business-to-Business) Web and, quite simply, the "pervasive computing" Web, or "the networks that connect people to other people and the information they need, enabling them to act on it anytime, anyplace."

Today, there's a 7th web- the "Search-driven" Web, i.e. the Googlespace. The "search-driven" web will bridge all 6 faces of Bill Joy's web. And that's why Microsoft is is trouble.

A simple way of looking at this: Joy's 6 faces are technology or platform-based. This is the old geek view of technology- shared by Microsoft et al.

In reality, the user doesn't care about platforms - just finding what they need- the "user-based" view. And that is fast becoming Googlespace.

The Hidden Drivers of Demand

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Customer Value Engineering™ reveals what matters most, says MercerMC:

"Customers often start a negotiation by emphasizing price and product features. These things always matter, of course. But buying decisions encompass many other considerations, such as reliability, service arrangements, certainty of delivery date, and the opinions of users inside the organization or expert analysts.

"Cumulatively, these influences may account for 70% to 80% of the purchase decision. That’s why there is gold to be mined by truly understanding the customer’s world.

"The Customer Value Engineering approach goes beyond market research to uncover what customers will value and actually pay for, link these insights with the economics of the business, and create a process for building consensus and driving rapid implementation. It combines four capabilities:

- Uncovering the drivers of demand
- Segmenting customers in a smarter way than traditional categories of size or demographics
- Modeling the drivers of business economics to determine whether a given move will make or lose money
- Creating dynamic, robust modeling of the strategy that can evaluate “what if” scenarios and rapidly turn strategy into action with a minimum of risk

Download the article >>

Here's a dead blog from a very popular writer. Why did he even start one?

AOL, Warner Bros Team for Online TV- In2TV.

The channels are:

- LOL TV (comedies such as Welcome Back Kotter, Perfect Strangers and Hangin’ With Mr. Cooper),
- Dramarama (Falcon Crest, Sisters and Eight Is Enough)
- Toontopia (animated shows like Beetlejuice and Pinky and the Brain)
- Heroes and Horrors (Wonder Woman, Lois & Clark: The Adventures of Superman and Babylon 5)
- Rush (action shows such as La Femme Nikita, Kung Fu and The Fugitive)
- Vintage (Growing Pains, F-Troop and Maverick)

Soon this will go global, and we'll be able to watch TV from other countries on our "Internets." Cricket, anyone?

Terry Heaton's essay: TV News in a Postmodern World

"...driven by the very real demand of less time, we've begun the process of tasting that which is unbundled. We unbundle television shows by skipping the commercials with our DVRs. We unbundle CDs by downloading the songs we want. We unbundle the national media by subscribing to specific RSS feeds. The signs of a burgeoning unbundled media world are everywhere."

What Terry doesn't say: we are unbundling reality: our politics, our minds, our society, and our souls as well...

Via outsourcingstrategy.org- from the McKinsey Quarterly:

"Many people in the United States have looked at the enormous US trade deficit and concluded that a flood of imported goods from China and the offshoring of services to India are to blame for the loss of US jobs. CNN's Lou Dobbs has called the problem "a clear call to our business and political leaders that our trade policies simply are not working."1 The issue isn't the concern solely of US policy makers: the same fears about trade are rampant throughout Europe and Japan, while protectionist sentiment is rising around the world.

"But trade, particularly rising imports of goods and services, didn't destroy the vast majority of the jobs lost in the United States since 2000. We analyzed detailed trade and industry data to estimate the extent of job dislocation due to offshoring in the manufacturing and service sectors from 2000 to 2003. This work was the first complete analysis of how the economic downturn, imports, exports, and global competition interact—directly and indirectly—to affect employment.

So who or what's to blame? Read the article >>

The U.S. government is growing more dependent on investors from abroad just as their appetite for Treasury securities is waning.

Overseas investors, who own half of all U.S. government debt, bought 14 percent of the $79 billion in benchmark 10-year notes auctioned this year, down from 21 percent in 2004, Treasury Department data show. Bidders including foreign central banks purchased a smaller percentage of the $44 billion in three-, five- and 10-year notes the Treasury sold last week than they did a year ago.

more from Bloomberg >>

Looks like interest rates will rise with or without inflation...

Gartner's Nick Gall:

"I just played with Windows Live this morning, and it's (so far) nothing but an AJAX-enabled portal - and a pretty poor one at that.

"I think the real news is how far behind Microsoft is. If this is all it has at this late stage of the consumer portal market, the company is really in trouble. With no synergy with the Windows OS or even IE (there's not even a toolbar yet), and no compelling content on the site itself, what would possibly draw users from another consumer portal?

more>>

Microsoft is always slow. In the past they've always been great at catching up and passing their opponents. Google isn't going to make the Netscape mistake, though!

Claude Monet: Happy Birthday!

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The kids told me it was Monet's birthday today...

Springtime in Giverny- I cropped the picture for detail.

How does a band like Steel Pulse make it?

Word-of-mouth plus quality...

They've been around forever [over 25 years], nobody plays them on the radio, and yet they're everywhere. We do live in a global village. And David Hinds is a global voice.

Here's a Steel Pulse history from NPR >> Check it!

Take a look- Google Analytics gives you a free ride into the world of web behavior, and it's integrated w/ adwords.

Here's the pitch:

"Google Analytics tells you everything you want to know about how your visitors found you and how they interact with your site. You'll be able to focus your marketing resources on campaigns and initiatives that deliver ROI, and improve your site to convert more visitors.... blah blah blah

So what's really going on? Here's what: Microsoft used to own your desktop, but Google will own your universe. Google will learn how users behave across websites, beating Alexa/Amazon.com at its own game and setting the stage for the final fight with Microsoft.

Every website manager will sign up for free, and Microsoft can them make them part of their network- from Adsense, to Adwords, to the applications which will replace Office.

BTW, did I forget to mention that Google is also buying cable companies? I'm sure Microsoft is freaking out right about now. This is going to be a war.

MEMO to Microsoft: guys, open up!!

On the privacy front:

# We may use personal information to provide the services you've requested, including services that display customized content and advertising.
# We may also use personal information for auditing, research and analysis to operate and improve Google technologies and services.
# We may share aggregated non-personal information with third parties outside of Google.
# When we use third parties to assist us in processing your personal information, we require that they comply with our Privacy Policy and any other appropriate confidentiality and security measures.
# We may also share information with third parties in limited circumstances, including when complying with legal process, preventing fraud or imminent harm, and ensuring the security of our network and services.
# Google processes personal information on our servers in the United States of America and in other countries. In some cases, we process personal information on a server outside your own country.

Do no evil, Google.

Jimmy Carter's op-ed in the LA Times is interesting.

Here we have a middle of the road, I'd even call it conservative, view of what's wrong with us these days:

This isn't the real America
By Jimmy Carter, JIMMY CARTER was the 39th president of the United States. His newest book is "Our Endangered Values: America's Moral Crisis," published this month by Simon & Schuster.

IN RECENT YEARS, I have become increasingly concerned by a host of radical government policies that now threaten many basic principles espoused by all previous administrations, Democratic and Republican.

These include the rudimentary American commitment to peace, economic and social justice, civil liberties, our environment and human rights.

Also endangered are our historic commitments to providing citizens with truthful information, treating dissenting voices and beliefs with respect, state and local autonomy and fiscal responsibility.

At the same time, our political leaders have declared independence from the restraints of international organizations and have disavowed long-standing global agreements — including agreements on nuclear arms, control of biological weapons and the international system of justice.

Instead of our tradition of espousing peace as a national priority unless our security is directly threatened, we have proclaimed a policy of "preemptive war," an unabridged right to attack other nations unilaterally to change an unsavory regime or for other purposes. When there are serious differences with other nations, we brand them as international pariahs and refuse to permit direct discussions to resolve disputes.

Regardless of the costs, there are determined efforts by top U.S. leaders to exert American imperial dominance throughout the world.

These revolutionary policies have been orchestrated by those who believe that our nation's tremendous power and influence should not be internationally constrained. Even with our troops involved in combat and America facing the threat of additional terrorist attacks, our declaration of "You are either with us or against us!" has replaced the forming of alliances based on a clear comprehension of mutual interests, including the threat of terrorism.

Another disturbing realization is that, unlike during other times of national crisis, the burden of conflict is now concentrated exclusively on the few heroic men and women sent back repeatedly to fight in the quagmire of Iraq. The rest of our nation has not been asked to make any sacrifice, and every effort has been made to conceal or minimize public awareness of casualties.

Instead of cherishing our role as the great champion of human rights, we now find civil liberties and personal privacy grossly violated under some extreme provisions of the Patriot Act.

Of even greater concern is that the U.S. has repudiated the Geneva accords and espoused the use of torture in Iraq, Afghanistan and Guantanamo Bay, and secretly through proxy regimes elsewhere with the so-called extraordinary rendition program. It is embarrassing to see the president and vice president insisting that the CIA should be free to perpetrate "cruel, inhumane or degrading treatment or punishment" on people in U.S. custody.

Instead of reducing America's reliance on nuclear weapons and their further proliferation, we have insisted on our right (and that of others) to retain our arsenals, expand them, and therefore abrogate or derogate almost all nuclear arms control agreements negotiated during the last 50 years. We have now become a prime culprit in global nuclear proliferation. America also has abandoned the prohibition of "first use" of nuclear weapons against nonnuclear nations, and is contemplating the previously condemned deployment of weapons in space.

Protection of the environment has fallen by the wayside because of government subservience to political pressure from the oil industry and other powerful lobbying groups. The last five years have brought continued lowering of pollution standards at home and almost universal condemnation of our nation's global environmental policies.

Our government has abandoned fiscal responsibility by unprecedented favors to the rich, while neglecting America's working families. Members of Congress have increased their own pay by $30,000 per year since freezing the minimum wage at $5.15 per hour (the lowest among industrialized nations).

I am extremely concerned by a fundamentalist shift in many houses of worship and in government, as church and state have become increasingly intertwined in ways previously thought unimaginable.

As the world's only superpower, America should be seen as the unswerving champion of peace, freedom and human rights. Our country should be the focal point around which other nations can gather to combat threats to international security and to enhance the quality of our common environment. We should be in the forefront of providing human assistance to people in need.

It is time for the deep and disturbing political divisions within our country to be substantially healed, with Americans united in a common commitment to revive and nourish the historic political and moral values that we have espoused during the last 230 years.

What's wrong with us? Wake up, America!

The Zyman Institute of Brand Science at Emory University just put out a collection of branding articles:

- "Branding as Cultural Activism" by Douglas Holt
- "The CEO as Brand Guardian" by Will Rodgers and Christian Sarkar
- "In Search of a Reliable Measure of Brand Equity" by Jonathan Knowles
- "How Market-based Assets Generate Customer Value" by Raj Srivastava
- "Brand Hijack: When Unintended Segments Desire Your Brand" by Greg Thomas
- "ZIBSForum: The Power of Retail Branded Experiences" by Sarah Banick
- "The Power of an Emotional Connection" by William J. McEwen
- "ZIBSFORUM: Emotion Mining - Leveraging the Emotions Underpinning Brand Behavior" by Greg Thomas
- "Restoring the Power of Brands" by John Hagel III

[OK- so I wrote one of 'em.]

Visit zibs.com

Here's a story that woke me up:

(CBS) Five weeks ago, an earthquake struck Pakistan, and then the event seemed to disappear. It disappeared from our newspapers, from our television screens and from our minds.

Perhaps it was just one natural disaster too many this year. But here’s the aftershock: the situation in Pakistan is worsening by the day. The death toll continues to rise and is now close to 90,000.

Three million people are still living without shelter and a harsh winter is weeks away. The United Nations says conditions in Pakistan are worse than after the tsunami and it is the biggest humanitarian nightmare the UN has ever dealt with.

Even if you’ve read about the earthquake, even if you’ve seen the pictures, nothing can prepare you for being there. It’s hard to imagine that all the destruction happened in two minutes.

The towns look like they had been bombarded by a brutal air force for weeks. It’s hard to believe that this happened five weeks ago. It could have been yesterday. Nothing has changed. Even the horizon is still strewn with rubble.

There are sights which defy belief. Streets are littered with clothing, sent up by charities and discarded by people. They don’t need tattered shirts. They need shelter, food, water, medical care.

The large relief agencies and governments are doing what they can in the cities and the towns, building tent cities for the homeless and handing out food.

But go up into the mountains and you will find a different story. Helicopters drop food to villages, but there are no relief workers on the ground. Except for 13 paramedics from New York City.

They came to Pakistan with no backing or support or agenda except to help. They wound up in Pakistani Kashmir, a disputed territory of undisputed beauty.

When they were dropped off here, Chris Summers was surprised to learn they were the only aid workers there. “I can't believe we haven't seen anyone else in this valley,” Summers says. “There's such a need here. You know? And we're isolated here. I don't really know what's happening in the rest of the country. But in this valley, Jeelum Valley, an enormous need and how is it possible that it's just us, you know, 13 knuckleheads from New York here?”

Knuckleheads? This is Osama bin Laden country, dotted with training camps for jihadists, where Islam is at its most radical and America is seen as the enemy.

But now, people were walking for miles to be treated by the Americans. Some 200 a day were making their way to the clinic, people who were being cared for for the first time since the earthquake.

Listen to this:

And, as it learned in Indonesia, when the U.S. military went in after the tsunami, nothing does this as well as helping people after a disaster.

This is not why the New York medics came here, of course. They didn’t come to win hearts and minds, but to save lives. Hearts and minds just seemed to follow, and that’s fine with Steve Muth.

“We can inoculate an entire valley, if we're lucky, against radical Islam,” says Muth. “And it's so simple. I'm just a paramedic. It's just a bandage. It's not a $100 million dollar ad campaign from Madison Avenue. It's not, you know, it's not complicated. Could something work better to change somebody's mind? I can't think of anything.”

C'mon USA, we can do this. Karen Hughes, are you on it?

And the award for the best Peter Drucker obituary goes to- Simon London of the Financial Times:

Peter Drucker, who has died at the age of 95, hated being labelled as a “guru”. But that is what he was for thousands, probably millions, of managers. Never mind that the dictionary definitions of the word range from “venerable” and “weighty” to “mediator of divine truth.” To Drucker, guru was synonymous with “charlatan”. He preferred to be known, he often said, as “just an old journalist”.

As so often in his life, he was indulging not so much in false modesty as in good-humoured self-mockery. For he was manifestly very much more than that.

To his many admirers, in Asia almost as much as his native Europe (he was born in Vienna) and his adoptive United States, he was the grand old man of provocative theory and thoughtful practice. He could always be relied upon to provide a helping hand through the latest trends in politics, society, economics, and especially business.

For people whose only exposure to his work was a single article or speech, his constant use of the quick insight, the aphorism, the analogy and the metaphor sometimes created an impression of glibness. But Drucker saw this as an occupational hazard of communicating clearly about complex issues.

From his early writing days as a journalist in the 1930s to the very last years of his life, with several professorships and three dozen respected books behind him, he continued to believe that the best ideas have to be simplified, often to the limit, in order to be effective. When criticised in the 1980s for writing a cursory newspaper article about “the five rules of successful acquisitions”, he grinned ruefully and pronounced in typically gnomic Drucker-ese: “My best ideas have only one moving part.”

That hardly did justice to the erudition and sense of perspective which underpinned his commentary. His cool, deliberate analysis whether of “pork-barrel” politics, post-communist economics, or a range of management topics from leadership to productivity, motivation to marketing was peppered with a constant flow of vivid references and parallels drawn from history, and from fields as diverse as medicine, music, even the nursery.

Talking about the importance of entrepreneurship and innovation which occupied him powerfully in his later years, along with the growth of what he called “knowledge work” and management's wider role in society he revelled in such observations as “for the first four years, no new enterprise produces profits. Even Mozart didn't start writing music until he was four”.

Such bon mots were often more scurrilous, as in his remark that Friedrich Engels might never have made his seminal observations of the British working class if his sexual behaviour had not so scandalised his parents that they sent him out of his native Germany. Told in Drucker's strongly accented English, such stories produced a mixture of hilarity and wonder in his audiences.

He was certainly “one of the last encyclopaedics”, as he was introduced at a conference a few years ago. His knowledge reached far beyond the world of affairs, deeply into literature, biology and even Oriental art in which he was recognised as an authority even by the Japanese.

One of the most thoughtful analysts of Drucker's contribution to management, Alan Kantrow, says that “many of his ideas have become part and parcel of today's commonsense understanding of business. He had a pervasive influence.” Though by no means all his ideas were original, Drucker's real value, says Kantrow, lay in the rigour with which they were formulated. “One could learn more and more deeply from watching him think than from studying the content of his thought.”

For decades, many managers did just that. Whether they worked for Shell, Gillette, a British bank, a German engineering company, a large hospital complex, or a medium-sized shipping company, they paid repeat visits to sit at his feet, or buy his latest book. One such executive talked of needing his “Drucker fix” every two or three years.

Drucker's reputation, among many practitioners and theorists alike, as the father of post-war management went back to two of his early works, “Concept of the Corporation” in 1946, and “The Practice of Management” in 1954.

The former, a study of the workings of General Motors, was the first detailed account of the way a large company operated. The latter contained pathfinding work on such varied topics as the key role of marketing; the importance of clear objectives, both for the corporation and for the manager; and the need to balance long-term strategy and innovation against short-term performance.

This early work laid the foundation for such basic principles of modern business as asking: “What business are we in, and who are our customers?” It dealt with the recruitment and development of executives, the proper role of boards of directors, the defence of profits as an essential foundation of future survival, and the development of the responsible and productive worker.

Only on the last of these counts did Drucker's principles fail to be translated into practice. In a mid-1980s interview he called this “my most conspicuous failure”, grumbling that “only now that Japan has shown the way is it being taken seriously” in Europe and the US.

It was Drucker's ability to examine complex issues in depth, while also relating them to each other, that had such a strong influence on the study of management. Yet this landed him in bad odour with most business academics. “He is vastly undervalued by most academics”, Tom Peters, the management writer and Drucker disciple, said a few years ago. In several years at Stanford University, first as a masters student and then as a doctoral candidate, Peters found that “Drucker wasn't mentioned once. None of his work was on our reading lists”.

Things were little better at Harvard. Even though it offered him a professorship four times, Drucker chose instead to take up appointments at lesser institutions. Nor does Drucker rate much of a mention in most histories of management thought. All that is in spite of the fact that, as Peters puts it, “Drucker was the first to provide an intellectual framework to analyse the corporation”.

Drucker's own explanation of his relations with academia was revealing, not only of his own character and that of the university system, but of the nature of high-class gurudom. “Earlier theorists wrote only for a small circle their jargon was often impenetrable,' he said.

“I put together the bits and pieces of the jigsaw, including what was missing, such as the role of top management, strategy, management-by-objectives, entrepreneurship and innovation. I went to work on it and built a discipline. But I have a deep horror of obscurity and arrogance, so I presented it in a form that people could apply. I don't believe in specialisation, and academia has always resented that.”

In the words of Tom Peters: “Drucker effectively by-passed the intellectual establishment. So it's not surprising that they hated his guts.”

With the passing of the years, however, relations became a little less strained. Unlike most of the previous generation, several of the top business academics who came to prominance in the 1980s and 90s paid tribute to Drucker's impact on their own work. Rosabeth Moss Kanter, of Yale and then Harvard, admitted to having been influenced heavily by Drucker's early writings and praised his “remarkable” sense of being able to foretell the future.

Yet not everyone agreed. Despite Drucker's protestations about the importance of small business, he remained identifed with the notion that the large corporation was the centre-piece of society. And, right to the end of his life, he was typecast as having an excessively rational view of the management process.

Moreover, despite his praise ever since 1954 for Douglas McGregor's “Theory Y”, Drucker did not seem to fit comfortably into the school of enlightened motivation, which blossomed into management theories of worker 'empowerment'. He tended to use tell-tale phrases such as “the basic task of management is to make (our italics) people productive”. Peters, Moss Kanter et al would prefer the verb “encourage”. In the words of one long-standing student of Drucker's writing, “he was always a bit too top-down”.

In one sense, Drucker could be accused of having lost something of his intellectual vitality in his earlier years. Today's business community is searching for more advice on how to stimulate entrepreneurship and innovation, and how to manage joint ventures and strategic alliances. Drucker was writing about such issues extensively right up to his death, yet his basic view, expressed several years ago, was “we already know how to do all that just organise yourself properly”.

Right across the management spectrum, he claimed, “the academic work that's being done is on perfecting things it's variations on themes we all discovered some time ago”. Business studies had therefore entered a long and rather sterile period, he argued. The main exception to this view of the rather arid future of management studies concerned management as a social function. “We have become a society of organisations,” he used to say, in what became a familiar Druckerism. “Yet who takes care of the public good?”

The need for much better management extended not only to private enterprise, he argued, but also to the public sector and, much more broadly, to the body politic itself. In a memorable phrase, he said “politics has become the theatre of the absurd, with politicians declaiming in front of an empty audience, just like the Comédie Française. There's a new pluralism in society that we don't understand but that we have to make work”.

In his last few years, Drucker felt increasingly in common, to some extent, with Britain's Charles Handy that the major new challenges for management lie well beyond its commonly accepted field of operations. In the process of developing into “the distinct organ of our society” over the past 50 years, management had become intricately bound up with political, legal and social issues. It had, in other words, become “affected with the public interest”. To work out what that implied, for both theory and practice, would constitute the prime management agenda of the next 50 years, he forecast.

Peter Drucker might have ended his life a little weary of the “old” issues, as he saw them, but, half a century after his first breakthrough into management, he was still extending its boundaries with his customary energy and clarity of mind.

The article I mentioned in the previous post also mentions Nathan Myhrvold:

Nathan Myhrvold, part of Microsoft's early brain trust and the former head of its heavily endowed research arm, founded Intellectual Ventures, a fund that he says spends "millions of dollars" annually to support individual inventors in long-term projects. Mr. Myhrvold started his fund about five years ago after he retired from Microsoft; he now backs about 20 inventors in such fields as nanotechnology, optics, computing, biotechnology and medical devices.

"As far as we know, we're the only people who are doing this - which means we're either incredibly smart or incredibly dumb," Mr. Myhrvold said. "There's a network of venture capitalists for start-ups that have created thousands and thousands of businesses, but very little for inventors."

Mr. Myhrvold says that most public and academic grants are for investigating well-defined research problems - and not for backing, as he does, "an invention before it exists." His staff of about 50 people files about 25 patent applications a month on behalf of inventors and his fund. He and his staff also help inventors refine ideas, pay for their time and labor and share ownership stakes in projects with them.

"We all love the goose that lays the golden eggs but somehow we've forgotten about the goose," Mr. Myhrvold said. "This decade I'm hoping will be the decade of the invention."

Very cool:

Intellectual Ventures is an invention company. We conceive and patent our own inventions in-house through a world-renowned staff of internal and external scientists and engineers. We also acquire and license patented inventions from other inventors around the world. Our network of invention sources includes: large and small businesses, governments, academia, and individual inventors. These inventions span a diverse range of technologies including: software, semiconductors, wireless, consumer electronics, networking, lasers, biotechnology, and medical devices. Our current focus is on developing our invention portfolio. Over time, we intend to market our portfolio on a broad and non-exclusive basis through a variety of channels including spin-out companies.

A new intellectual-property business model.

"Are U.S. Innovators Losing Their Competitive Edge? asks as article in today's New York Times.

The article cites a report from the National Academy of Sciences which tries to ring the alarm: "Although many people assume that the United States will always be a world leader in science and technology, this may not continue to be the case inasmuch as great minds and ideas exist throughout the world. We fear the abruptness with which a lead in science and technology can be lost - and the difficulty of recovering a lead once lost, if indeed it can be regained at all."

The report cites China and India among a number of economically promising countries that may be poised to usurp America's leadership in innovation and job growth.

"For the first time in generations, the nation's children could face poorer prospects than their parents and grandparents did," the report said. "We owe our current prosperity, security and good health to the investments of past generations, and we are obliged to renew those commitments."

The Industrial Research Institute, an organization in Arlington, Va., that represents some of the nation's largest corporations, is also concerned that the academic and financial support for scientific innovation is lagging in the United States. The group's most recent data indicate that from 1986 to 2001, China, Taiwan, South Korea and Japan all awarded more doctoral degrees in science and engineering than did the United States. Between 1991 and 2003, research and development spending in America trailed that of China, Singapore, South Korea and Taiwan - in China's case by billions of dollars.

Read the report. Here's the TOC:

1 A Disturbing Mosaic
2 Why Are Science and Technology Critical to America\'s Prosperity in the 21st Century
3 How is America Doing Now in Science and Technology
4 What Actions Should America Take to Remain Prosperous in the 21st Century
5 Ten Thousand Teachers-Ten Million Minds
6 Sowing the Seeds
7 Best and the Brightest
8 Innovation Incentives
9 What Might the United States Be Like if it is Not Competitive in Science and Technology

Ouch!

BTW, the National Academy of Sciences also has this report available online: Science and Creationism: A View from the National Academy of Sciences, Second Edition (1999)

Heck, just listen to what Peter Drucker had to say.

All is not lost, yet. But we took a wrong turn somewhere.

The article raises another point:

"The inventiveness of individuals depends on the context, including sociopolitical, economic, cultural and institutional factors," said Merton C. Flemings, a professor emeritus at M.I.T. who holds 28 patents and oversees the Lemelson-M.I.T. Program for inventors. "We remain one of the most inventive countries in the world. But all the signs suggest that we won't retain that pre-eminence much longer. The future is very bleak, I'm afraid."

Mr. Flemings said that private and public capital was not being adequately funneled to the kinds of projects and people that foster invention. The study of science is not valued in enough homes, he observed, and science education in grade school and high school is sorely lacking.

But quantitative goals, he said, are not enough. Singapore posts high national scores in mathematics, he said, but does not have a reputation for churning out new inventions. In fact, he added, researchers from Singapore have studied school systems in America to try to glean the source of something ineffable and not really quantifiable: creativity.

"In addition to openness, tolerance is essential in an inventive modern society," a report sponsored by the Lemelson-M.I.T. Program said last year. "Creative people, whether artists or inventive engineers, are often nonconformists and rebels. Indeed, invention itself can be perceived as an act of rebellion against the status quo."

Which brings us to Richard Florida...

Cartoon: "Drucker's Dilemma"

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I just stumbled on to the best Peter Drucker interview ever. The interview aired on Tuesday, August 02, 2005 - so this is fairly recent stuff. It's an hour long, but terribly important for us now.

In the interview, we find out what Drucker thinks about:

- US involvement in Iraq
- Roosevelt, Truman, Hitler, Stalin, Mao, a hint about Bush
- The Future of America
- Executive Pay
- Knowledge Worker Productivity
- The Knowledge Society
- The American College system
- Capitalism & Free Markets
- The Future of Government
- Cutting the Things that Government is Good At
- Power and its Limits
- The First Constituent - NOT the Shareholder but the Consumer (!)
- Power Sharing in the New World
- The Prosperity of Denmark and Holland
- Where the World is Going
- The End of Western Dominance
- Pluralism: Values and Co-Existence
- Information not Power
- 30 Rough Years Ahead
- America's Return to Humility
- God

The interview blew me away. Listen to it here

I also found a great print interview with Drucker with Forbes' Rich Karlgaard. Here are some excerpts:

What Needs to Be Done
Successful leaders don't start out asking, "What do I want to do?" They ask, "What needs to be done?" Then they ask, "Of those things that would make a difference, which are right for me?" They don't tackle things they aren't good at. They make sure other necessities get done, but not by them. Successful leaders make sure that they succeed! They are not afraid of strength in others. Andrew Carnegie wanted to put on his gravestone, "Here lies a man who knew how to put into his service more able men than he was himself."

Check Your Performance
Effective leaders check their performance. They write down, "What do I hope to achieve if I take on this assignment?" They put away their goals for six months and then come back and check their performance against goals. This way, they find out what they do well and what they do poorly. They also find out whether they picked the truly important things to do. I've seen a great many people who are exceedingly good at execution, but exceedingly poor at picking the important things. They are magnificent at getting the unimportant things done. They have an impressive record of achievement on trivial matters.

Mission Driven
Leaders communicate in the sense that people around them know what they are trying to do. They are purpose driven--yes, mission driven. They know how to establish a mission. And another thing, they know how to say no. The pressure on leaders to do 984 different things is unbearable, so the effective ones learn how to say no and stick with it. They don't suffocate themselves as a result. Too many leaders try to do a little bit of 25 things and get nothing done. They are very popular because they always say yes. But they get nothing done.

Creative Abandonment
A critical question for leaders is, "When do you stop pouring resources into things that have achieved their purpose?" The most dangerous traps for a leader are those near-successes where everybody says that if you just give it another big push it will go over the top. One tries it once. One tries it twice. One tries it a third time. But, by then it should be obvious this will be very hard to do. So, I always advise my friend Rick Warren, "Don't tell me what you're doing, Rick. Tell me what you stopped doing."

The Rise of the Modern Multinational
The modern multinational corporation was invented in 1859. Siemens invented it because the English Siemens company had grown faster than the German parent. Before the Second World War, IBM was a small maker, not of computers, but of adding machines. They had one branch in England, which was very typical for the era. In the 1920s, General Motors bought a German and English and then Australian automobile manufacturer. The first time somebody from Detroit actually visited the European subsidiaries was in 1950. A trip to Europe was a big trip. You were gone three months. I still remember the excitement when the then head of GM went to Europe in the 1920s to buy the European properties. He never went back.

21st Century Organizations
Let me give you one example. This happens to be a consulting firm headquartered in Boston. Each morning, between 8 A.M. and 9 A.M. Boston time, which is 5 A.M. in the morning here in California and 11 P.M. in Tokyo, the firm conducts a one-hour management meeting on the Internet. That would have been inconceivable a few years back when you couldn't have done it physically. And for a few years, I worked with this firm closely and I had rented a room in a nearby motel and put in a videoconferencing screen. Once a week, I participated in this Internet meeting and we could do it quite easily, successfully. As a result of which, that consulting firm is not organized around localities but around clients.

How To Lead a 21st Century Organization
Don't travel so much. Organize your travel. It is important that you see people and that you are seen by people maybe once or twice a year. Otherwise, don't travel. Make them come to see you. Use technology--it is cheaper than traveling. I don't know anybody who can work while traveling. Do you? The second thing to say is make sure that your subsidiaries and foreign offices take up the responsibility to keep you informed. So, ask them twice a year, "What activities do you need to report to me?" Also ask them, "What about my activity and my plans do you need to know from me?" The second question is just as important.

Prisoner of Your Own Organization
When you are the chief executive, you're the prisoner of your organization. The moment you're in the office, everybody comes to you and wants something, and it is useless to lock the door. They'll break in. So, you have to get outside the office. But still, that isn't traveling. That's being at home or having a secret office elsewhere. When you're alone, in your secret office, ask the question, "What needs to be done?" Develop your priorities and don't have more than two. I don't know anybody who can do three things at the same time and do them well. Do one task at a time or two tasks at a time. That's it. OK, two works better for most. Most people need the change of pace. But, when you are finished with two jobs or reach the point where it's futile, make the list again. Don't go back to priority three. At that point, it's obsolete.

How Organizations Fall Down
Make sure the people with whom you work understand your priorities. Where organizations fall down is when they have to guess at what the boss is working at, and they invariably guess wrong. So the CEO needs to say, "This is what I am focusing on." Then the CEO needs to ask of his associates, "What are you focusing on?" Ask your associates, "You put this on top of your priority list--why?" The reason may be the right one, but it may also be that this associate of yours is a salesman who persuades you that his priorities are correct when they are not. So, make sure that you understand your associates' priorities and make sure that after you have that conversation, you sit down and drop them a two-page note--"This is what I think we discussed. This is what I think we decided. This is what I think you committed yourself to within what time frame." Finally, ask them, "What do you expect from me as you seek to achieve your goals?"

The Transition from Entrepreneur to Large Company CEO
Again, let's start out discussing what not to do. Don't try to be somebody else. By now you have your style. This is how you get things done. Don't take on things you don't believe in and that you yourself are not good at. Learn to say no. Effective leaders match the objective needs of their company with the subjective competencies. As a result, they get an enormous amount of things done fast.

How Capable Leaders Blow It
One of the ablest men I've worked with, and this is a long time back, was Germany's last pre-World War II democratic chancellor, Dr. Heinrich Bruning. He had an incredible ability to see the heart of a problem. But he was very weak on financial matters. He should have delegated but he wasted endless hours on budgets and performed poorly. This was a terrible failing during a Depression and it led to Hitler. Never try to be an expert if you are not. Build on your strengths and find strong people to do the other necessary tasks.

The Danger Of Charisma
You know, I was the first one to talk about leadership 50 years ago, but there is too much talk, too much emphasis on it today and not enough on effectiveness. The only thing you can say about a leader is that a leader is somebody who has followers. The most charismatic leaders of the last century were called Hitler, Stalin, Mao and Mussolini. They were mis-leaders! Charismatic leadership by itself certainly is greatly overstated. Look, one of the most effective American presidents of the last 100 years was Harry Truman. He didn't have an ounce of charisma. Truman was as bland as a dead mackerel. Everybody who worked for him worshiped him because he was absolutely trustworthy. If Truman said no, it was no, and if he said yes, it was yes. And he didn't say no to one person and yes to the next one on the same issue. The other effective president of the last 100 years was Ronald Reagan. His great strength was not charisma, as is commonly thought, but that he knew exactly what he could do and what he could not do.

How To Reinvigorate People
Within organizations there are people who, typically in their 40s, hit a midlife crisis when they realize that they won't make it to the top or discover that they are not yet first-rate. This happens to engineers and accountants and technicians. The worst midlife crisis is that of physicians, as you know. They all have a severe midlife crisis. Basically, their work becomes awfully boring. Just imagine seeing nothing for 30 years but people with a skin rash. They have a midlife crisis, and that's when they take to the bottle. How do you save these people? Give them a parallel challenge. Without that, they'll soon take to drinking or to sleeping around. In a coeducational college, they sleep around and drink. The two things are not incompatible, alas! Encourage people facing a midlife crisis to apply their skills in the non-profit sector.

Character Development
We have talked a lot about executive development. We have been mostly talking about developing people's strength and giving them experiences. Character is not developed that way. That is developed inside and not outside. I think churches and synagogues and the 12-step recovery programs are the main development agents of character today.

Wow. And that was in print.

Again, don't forget to listen to the interview here

Farewell Peter Drucker.

The biggest business thinker of them all is gone. Perhaps business will start listening to him now. A sad day.

from the NY Times:

Peter F. Drucker, the political economist and author, whose view that big business and nonprofit enterprises were the defining innovation of the 20th century led him to pioneering social and management theories, died yesterday at his home in Claremont, Calif. He was 95.

His death was announced by Claremont Graduate University.

Mr. Drucker thought of himself, first and foremost, as a writer and teacher, though he eventually settled on the term "social ecologist." He became internationally renowned for urging corporate leaders to agree with subordinates on objectives and goals and then get out of the way of decisions about how to achieve them.

He challenged both business and labor leaders to search for ways to give workers more control over their work environment. He also argued that governments should turn many functions over to private enterprise and urged organizing in teams to exploit the rise of a technology-astute class of "knowledge workers."

Mr. Drucker staunchly defended the need for businesses to be profitable but he preached that employees were a resource, not a cost. His constant focus on the human impact of management decisions did not always appeal to executives, but they could not help noticing how it helped him foresee many major trends in business and politics.

He began talking about such practices in the 1940's and 50's, decades before they became so widespread that they were taken for common sense. Mr. Drucker also foresaw that the 1970's would be a decade of inflation, that Japanese manufacturers would become major competitors for the United States and that union power would decline.

For all his insights, he clearly owed much of his impact to his extraordinary energy and skills as a communicator. But while Mr. Drucker loved dazzling audiences with his wit and wisdom, his goal was not to be known as an oracle. Indeed, after writing a rosy-eyed article shortly before the stock market crash of 1929 in which he outlined why stocks prices would rise, he pledged to himself to stay away from gratuitous predictions. Instead, his views about where the world was headed generally arose out of advocacy for what he saw as moral action.

His first book ("The End of Economic Man," 1939)was intended to strengthen the will of the free world to fight fascism. His later economic and social predictions were intended to encourage businesses and social groups to organize in ways that he felt would promote human dignity and vaccinate society against political and economic chaos.

"He is remarkable for his social imagination, not his futurism," said Jack Beatty in a 1998 review of Mr. Drucker's work "The World According to Peter Drucker."

Mr. Drucker, who was born in Vienna and never completely shed his Austrian accent, worked in Germany as a reporter until Hitler rose to power and then in a London investment firm before emigrating to the United States in 1937. He became an American citizen in 1943.

Recalling the disasters that overran the Europe of his youth and watching the American response left him convinced that good managers were the true heroes of the century.

The world, especially the developed world, had recovered from repeated catastrophe because "ordinary people, people running the everyday concerns of business and institutions, took responsibility and kept on building for tomorrow while around them the world came crashing down," he wrote in 1986 in "The Frontiers of Management."

Mr. Drucker never hesitated to make suggestions he knew would be viewed as radical. He advocated legalization of drugs and stimulating innovation by permitting new ventures to charge the government for the cost of regulations and paperwork. He was not surprised that General Motors for years ignored nearly every recommendation in "The Concept of the Corporation," the book he published in 1946 after an 18-month study of G.M. that its own executives had commissioned.

From his early 20's to his death, Mr. Drucker held various teaching posts, including a 20-year stint at the Stern School of Management at New York University and, since 1971, a chair at the Claremont Graduate School of Management. He also consulted widely, devoting several days a month to such work into his 90's. His clients included G.M., General Electric and Sears, Roebuck but also the Archdiocese of New York and several Protestant churches; government agencies in the United States, Canada and Japan; universities; and entrepreneurs.

For over 50 years, at least half of the consulting work was done free for nonprofits and small businesses. As his career progressed and it became clearer that competitive pressures were keeping businesses from embracing many practices he advocated, like guaranteed wages and lifetime employment for industrial workers, he became increasingly interested in "the social sector," as he called the nonprofit groups.

Mr. Drucker counseled groups like the Girl Scouts to think like businesses even though their bottom line was "changed lives" rather than profits. He warned them that donors would increasingly judge them on results rather than intentions. In 1990, Frances Hesselbein, the former national director of the Girl Scouts, organized a group of admirers to honor him by setting up the Peter F. Drucker Foundation for Nonprofit Management in New York to expose nonprofits to Mr. Drucker's thinking and to new concepts in management.

Mr. Drucker's greatest impact came from his writing. His more than 30 books, which have sold tens of millions of copies in more than 30 languages, came on top of thousands of articles, including a monthly op-ed column in The Wall Street Journal from 1975 to 1995.

Among the sayings of Chairman Peter, as he was sometimes called, were these:

¶"Marketing is a fashionable term. The sales manager becomes a marketing vice president. But a gravedigger is still a gravedigger even when it is called a mortician - only the price of the burial goes up."

¶"One either meets or one works."

¶"The only things that evolve by themselves in an organization are disorder, friction and malperformance."

¶"Stock option plans reward the executive for doing the wrong thing. Instead of asking, 'Are we making the right decision?' he asks, 'How did we close today?' It is encouragement to loot the corporation."

Mr. Drucker's thirst for new experiences never waned. He became so fascinated with Japanese art during his trips to Japan after World War II that he eventually helped write "Adventures of the Brush: Japanese Paintings" (1979), and lectured on Oriental art at Pomona College in Claremont from 1975 to 1985.

Peter Ferdinand Drucker was born Nov. 19, 1909, one of two sons of Caroline and Adolph Drucker, a prominent lawyer and high-ranking civil servant in the Austro-Hungarian government. He left Vienna in 1927 to work for an export firm in Hamburg, Germany, and to study law.

Mr. Drucker then moved to Frankfurt, where he earned a doctorate in international and public law in 1931 from the University of Frankfurt, became a reporter and then senior editor in charge of financial and foreign news at the newspaper General-Anzeiger, and, while substitute teaching at the university, met Doris Schmitz, a 19-year-old student. They became reacquainted after waving madly while passing each other going opposite directions on a London subway escalator in 1933 and were married in 1937.

Mr. Drucker had moved to England to work as a securities analyst and writer after watching the rise of the Nazis with increasing alarm. In England, he took an economics course from John Maynard Keynes in Cambridge, but was put off by how much the talk centered on commodities rather than people.

Mr. Drucker's reputation as a political economist was firmly established with the publication in 1939 of "The End of Economic Man." The New York Times said it brought a "remarkable vision and freshness" to the understanding of fascism. The book's observations, along with those in articles he wrote for Harpers and The New Republic, caught the eye of policy makers in the federal government and at corporations as the country prepared for war, and landed him a job teaching at Sarah Lawrence College in Bronxville, N.Y.

Writing "The Future of Industrial Man," published in 1942 after Mr. Drucker moved to Bennington College in Vermont, convinced him that he needed to understand big organizations from the inside. Rebuffed in his requests to work with several major companies, he was delighted when General Motors called in late 1943 proposing that he study its structure and policies. To avoid having him treated like a management spy, G.M. agreed to let him publish his findings.

Neither G.M. nor Mr. Drucker expected the public to be interested because no one had ever written such a management profile, but "The Concept of the Corporation" became an overnight sensation when it was published in 1946. " 'Concept of the Corporation' is a book about business the way 'Moby Dick' is a book about whaling," said Mr. Beatty, referring to the focus on social issues extending far beyond G.M.'s immediate operating challenges.

In it, Mr. Drucker argued that profitability was crucial to a business's health but more importantly to full employment. Management could achieve sustainable profits only by treating employees like valuable resources. That, he argued, required decentralizing the power to make decisions, including giving hourly workers more control over factory life, and guaranteed wages.

In the 1950's, Mr. Drucker began proclaiming that democratic governments had become too big to function effectively. This, he said, was a threat to the freedom of their citizens and to their economic well-being.

Unlike many conservative thinkers, Mr. Drucker wanted to keep government regulation over areas like food and drugs and finance. Indeed, he argued that the rise of global businesses required stronger governments and stronger social institutions, including more powerful unions, to keep them from forgetting social interests.

According to Claremont Graduate University, Mr. Drucker's survivors include his wife, Doris, an inventor and physicist; his children, Audrey Drucker of Puyallup, Wash., Cecily Drucker of San Francisco, Joan Weinstein of Chicago, and Vincent Drucker of San Rafael, Calif.; and six grandchildren.

Early last year, in an interview with Forbes magazine, Mr. Drucker was asked if there was anything in his long career that he wished he had done but had not been able to do.

"Yes, quite a few things," he said. "There are many books I could have written that are better than the ones I actually wrote. My best book would have been "Managing Ignorance," and I'm very sorry I didn't write it."

HBS Working Knowledge:

The image of artist, cast as a metaphor for those who provide acts of leadership, immediately evokes two primary responses—affirmation and resistance. Those who think of themselves as artists in the conventional sense of the word—for example, painters, sculptors, musicians, writers, architects, photographers, and some athletes and gardeners—may pick up the metaphor with ready enthusiasm, recognizing that incorporating their artist-self into their practice of leadership opens into a horizon of powerful possibilities. But those who suffered through their last required art project in school, or who hold the stereotype of an artist as nonrational, asocial, marginal, or soft—may cast a more jaundiced eye upon this metaphor.

It is highly likely, however, that the jaundiced eye belongs to someone who in some aspect of his or her professional or personal life exemplifies the power and qualities of an artist: the ability to work on an edge, in an interdependent relationship with the medium, with a capacity for creative improvisation. (Entrepreneurs and some politicians, physicians, and educators, for example, are akin to artists, seeking to bring into being what has not yet taken form.)

Hmmm.

The 18th Annual celebration of innovation - the 100 most impressive technologies of the year, from the A380 to Zubbles. I thought this was useful.

Complete list here.

IBM Goes a Blogging

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From AdAge:

IBM SEES BLOGGING AS MARKETING'S NEXT BIG THING
Company's 'Blogger in Chief' Encourages Employees to Publish to Outside World

Far from viewing workday blogging as bad thing, IBM sees it as the next big thing for marketing.

Eyeing blogging's potential as a way to influence potential employees and business partners, IBM began formally offering blogging tools to its workers six months ago. The tools came complete with a list of a dozen guidelines assembled, in true new-media fashion, by contribution to an internal "wiki" (an open-source encyclopedia) over a 10-day period.

IBM's 'blogger in chief' “Other companies have fired people for blogging, but IBM is encouraging it,” said Christopher Barger, Big Blue’s unofficial “blogger in chief.”

The list offers simple, almost common-sense pointers, such as follow the IBM business code of conduct; respect copyright laws; and don’t reveal proprietary information. The company now has 15,000 registrants on its internal blog, with more than 2,200 of those employees maintaining external blogs. Wikis and RSS feeds are used internally for collaboration and automated information feeds.

Its embrace of digital marketing also extends to podcasting, with the company creating podcasts around cultural tech themes such as the home of the future, the car of the future and the store of the future.

Bonding technique “Marketers should look at blogs as a real-time cheat sheet on how to be relevant with customers,” said Intelliseek's chief marketing officer, Pete Blackshaw. “The name of the game is to be as conversational as possible vs. being static. ... It’s a bonding technique with your consumer.”

It’s also an established technique among tech companies such as Microsoft and Sun Microsystems that also have extensive employee blogging and emerging media programs. Microsoft blogger Robert Scoble (known also by his blog’s name, Scobleizer) and developer network Channel9 have gone a long way in helping reverse the company’s so-called evil empire reputation.

In some respects, employee blogging is reminiscent of traditional employee testimonial advertising -- after all, if pilots and flight attendants can extol the virtues of Southwest Airlines in ads, why shouldn’t IBM’s own experts open blog discussions with consumers?

“What [Vice Chairman] Bob Lutz is doing with the General Motors blog [fastlane/gmblogs.com] is not much different than what Lee Iacocca did in the '80s,” Mr. Blackshaw said. “It’s all about being genuine and relevant and conversational with consumers.”

The problem, however, can sometimes be the tenor of the conversation and whether employees running amok on the Internet fits with a well-crafted, traditional marketing strategy.

“If employees are given appropriate guidelines, it can certainly be right on strategy,” said Jonathan Paisner, brand director at CoreBrand. “The broadcast model of a centralized voice saying this is our one voice out to the world isn’t realistic anymore.”

Different for tech companies
Experts caution that tech companies should be viewed differently than other companies when it comes to new media in that they likely have uncommonly large number of purveyors, experts and leading-edge adopters who are more comfortable with these technologies. That comfort goes a long way in personalizing brands and creating one-to-one relationships with customers. While IBM says it does not want to use new media as traditional sales and marketing tools, it has succeeded in opening discussions in health care and video gaming with “outsiders,” which in turn could lead to new business relationships.

“This is a way to get our expertise out there, not by shoving it down people’s throats, but by just starting conversations,” Mr. Barger said. “It expands our reputation, perceptions and reach of IBM, at the same time expanding the number of people we can learn from.”

10 Rules for Neo-Dotcoms

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A while back Tom Foremski wrote about the rise of the New Rules Enterprise:

"There is a new kind of dotcom company that will emerge during Internet 2.0—this current and very distinct emerging phase of the Internet. I’m not sure what to call the new dotcom but I know what it is. It is a company that plays by the emerging new rules of the economy. New-rules companies will decimate established companies in many/most sectors but at varying rates."

Here are Foremski's 10 rules for the New Rules Enterprise

The first rule of the New Rules enterprise is that it is new, brand spanking new.

The second rule is it is staffed by a small group of executives that know the most efficient business processes for what the venture will produce.

The third rule is to stick as much open source/industry platform software and hardware onto the business processes as you can, creating a highly automated highly-efficient business venture with virtually free IT.

The fourth rule is to use as much web services IT as possible.

The fifth rule is you do not use venture capital--you and four others throw your credit cards into a bowl and work free for six-months to create the nucleus of the venture. It’s an atomic ventures world. It’s the $40k startup. When IT, and other infrastructure costs are so cheap and available to everyone then knowledge capital becomes the competitive differentiator—who is on your team.

The sixth rule is don’t put anybody on the payroll unless you absolutely have to.

The seventh rule is the venture does not go public, it stays private. It will have private investors/owners and those investors would be paid in dividends. By staying private newrules enterprises are a blackbox corporation. Competitors cannot peek inside because it is private and thus cannot benchmark their business model against it.

The eighth rule of the newrules enterprise is that there will be a lot of intellectual property that is not patented but is kept secret.

The ninth rule is don’t put anybody on the payroll unless you absolutely have to.

The tenth rule, and the most important, is that the newrules enterprise uses blogging techniques and technologies to market research/help produce and sell products and services that near-perfectly match the needs of their customer communities.

Guy Kawasaki says he's "living proof that if you do one thing right in your career, you can coast on your reputation for 20 years."

Don't believe it. This is a man of action, and shares his philosophy in this Always-On article:

"I think the world is essentially divided into two groups: the prototypers, the people who build stuff, and the typers, the people who think the key to entrepreneurship and innovation is Microsoft Office. If you think that the key to innovation and entrepreneurship is Microsoft Office, something is wrong with you. If you're thinking, "I have to write a business plan with Word; I need to create a pitch with PowerPoint; I need to build a 30-page financial model with Excel," you're on the wrong track. The key to all of this is to prototype, not type."

Also:
"I look at that computer now and say, 'My God, there are elements of crap in it that really embarrass me.' It was a revolutionary product, don't get me wrong, but we charged $2,500 for a computer that had 128K of RAM, and we were proud of that. We thought this was an ocean of RAM. And there was no software, no hard disk—which was OK because if you don't have software, there's nothing to copy to the hard drive. No color, no fast printing, no fast networking. What crap. But it was revolutionary crap. Don't worry, be crappy. Ship it then test it. Don't wait for the perfect world where chips are cheap enough and fast enough: Ship it; get your product out there."

"Fundamental Shifts in the U.S. Media and Advertising Industries" - a report from the New Politics Institute.

Findings include:

• Extensive audience migration across and within media formats is driving major shifts in advertising spending, benefiting formats with targeting ability

• Advertisers are shifting ad dollars to digital media slower than they should given the cost and effectiveness of digital media

• The most innovative advertisers will utilize sophisticated direct marketing techniques (e.g., segmentation, targeting, etc.) and will adjust the digital marketing vehicle mix for each customer category

• Effectively creating “at scale” digital campaigns and integrating them into traditional marketing requires direct marketing skills that traditional marketers, particularly brand marketers, often lack

• Commercial advertisers are rapidly shifting dollars to internet advertising, in particular internet video, and are aggressively experimenting with new formats such as wireless and videogame advertising

Download here.

Nobuo Masataka, a professor at the Kyoto University Primate Research Institute and author of the monster best seller "Keitai wo Motta Saru (Monkeys With Mobile Phones)," argues that the proliferation of mobile phones has got young Japanese making monkeys of themselves, aping the behavior patterns of chimpanzees.

The primate specialist says the actions of the dearuki-zoku closely resemble behavior patterns in chimpanzees, which tend to travel in groups, walking around for a long time without going to any specific place, then eating and disposing of their wastes in the same place before bedding down on piles of grass whenever and wherever the inclination takes them.

Read all about it!

Another great leader. I remember reading Maverick back in '94 and handing a copy to Riley Bechtel, the CEO of the company I used to work for when I started my career.

I've never forgotten Semler, and it's great to see that he hasn't changed!

Read this.

One more thing: Semco's annual rate of staff turnover is 2%!!

UPDATE: Here's a longer post on Ricardo Semler and Workplace Democratization.

Here's the best executive interview I've read in a long time. It took place back in 2003, but it reminds us why Southwest Airlines has succeeded where so many others have failed.

A few excerpts:

"We've never tried to lecture other companies as to how they should behave, what kind of environment they should try to create, because there are a hundred roads to Rome and you can get to Rome by any one of those roads. But our focus has always been on the well-being and the joy that we want our people to experience.

"I just always have felt that people should be natural in their behavior, that they should be able to derive enjoyment from whatever they do. When they derive enjoyment they tend to work together better, they tend to be more productive. One time a ramp agent wrote me, he said, Herb, I've caught on to what you're doing, you're making work fun - and home is work. Now, I've never repeated that to anybody because I thought that wouldn't make me very popular in certain quarters but he did get it. And you know I don't think that in order for people to be effective they have to act like automatons.

"We don't hire a great many people in management positions from other airlines, but we have hired some over the years where we felt that the expertise was required as we grew. And it's interesting to see their response because they get into the Southwest environment and for awhile they are like a new dog in town, just kind of sniffing around, because they want to see if this is legitimate, whether it's genuine, whether it's heartfelt. And after about six months, I would say, you get either one of two reactions: they feel liberated for the first time in their business lives and they say, "Hey, this is for real. I can say what I want to. I can joke. I can be friendly with people." Or in some cases they say, "This makes me feel very insecure, the fluidity of it is daunting to me. I need a more structured environment than Southwest Airlines has in order for me to be comfortable."

"one of the things that I want to tell you with respect to a mission statement is that a lot of people hire outside people to prepare their mission statements. My suggestion is that if you need someone outside your company to prepare a mission statement for you, then you really don't know what your mission is and you probably don't have one.

"the thing about it is that a group got together and said, We want to define spirit. And I said, I don't think you want to do that. Because Wordsworth said, "It's murder to dissect." And I think it's murder to dissect to take a concept like that and make it too narrow and make it confining and a strait jacket instead of as expansive as anybody wants it to be. So we're not going to define it. As long as it's a positive attitude, that's the Southwest Airlines spirit. Don't chain it. Don't put it in jail.

"we've said we're in the customer service business and we happen to operate an airline. But then any business is about providing great customer service to the people you serve. We just happen to be in one branch of the customer service business. And if you have a great customer service organization it doesn't matter whether you're flying people or selling steel or cleaning houses or whatever it might be.

"when we built this building I said give me an interior office because fundamentally bureaucrats scrap over space, which in and of itself I think should be somewhat meaningless, physical space. It's the space between your ears that should be the important thing. So I did say, I want an office without a window, away from a corner.

Read the complete interview here.

We should all be so lucky to work with a leader like this!

From a report and survey by the Economist Intelligence Unit, sponsored by Tata Consulting Services:

1. Business needs—and the kinds of knowledge required to fulfil them—have to be identified first before tools and processes are implemented. Many initiatives have failed where technology has dictated knowledge management (KM).

2. Successful KM is about shifting culture and behaviour—technology is an important element, but is subsidiary.

3. A basic mechanism in large organisations is also one of the most effective: keeping tabs on who knows what—and how to get in touch with them.

4. Though improving, KM tools are often too complicated: they have to be delivered in a way executives and staff want to use them, and to adapt to the areas/depth of knowledge needed by the individual.

5. Markets, customers, technology and competition are continually changing; knowledge gets stale fast. Is the KM framework able to handle change?

6. Can the organisation track whether kowledge is being acted on, and what value is gained from it? Even where knowledge flows quite efficiently round an organisation, companies can often do more to ensure information is acted on.

7. Is there a means to learn from experience — good and bad — and share that learning when a similar situation occurs? A vast amount of resource is wasted in corporations just by unwittingly repeating the same mistakes, or failing to repeat useful discoveries.

8. Who leads KM? Many large organisations now have a dedicated head of KM, or at least a high-ranking sponsor, to ensure the right collaborative environment.

9. Bulletin boards and web logs have begun to prove their worth to a range of organisations: they supply an instant exchange of learning or can be used by executives to communicate and keep their ear to the ground.

10. You can only get people to volunteer knowledge—you can’t force it. However, firms that provide forums, tools and opportunities for informal networking can encourage employees actively to share knowledge.

Full report here>>

ECOnomics: The Environmental Business Plan Challenge: GE and Dow Jones are looking for great business ideas that combine environmental innovation and profitability, because they truly believe that "green" business represents good business.

So if you're a university student, an MBA candidate or a confident entrepreneur, submit your business idea and you could win $50,000. If you have an enterprise to help the earth, it's time to get it off the ground.

Contest begins: Saturday, October 15, 2005 12:01 AM (ET)
Deadline for entries: Thursday, December 15, 2005 11:59 PM (ET)

Open to residents of the 50 United States and the District of Columbia who are 21 years of age or older.

Enter here >>

Terror 2.0

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Aargh.

Now we learn that the french rioters are using blog messages to incite violence and cellphones to organize attacks in guerrilla-like tactics they have copied from anti-globalisation protesters...

see the Yahoo story: French youths turn to Web, cellphones to plan riots

Dave Winer: RSS This!

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The funny thing about the leaked Microsoft memos is the Dave Winer story behind them.

He's inimitable!

The Leaked Ray Ozzie Memo

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To: Executive Staff and direct reports

From: Ray Ozzie

Date: October 28, 2005

Subject: The Internet Services Disruption

It is an exciting time, as we’re at the beginning of the biggest product cycle in the company’s history. In a week we ship new versions of Visual Studio, SQL Server and BizTalk Server. Later this month we ship Xbox 360. Next year we have a double barreled release of our two largest products with Windows Vista and Office “12”. It’s a great time for customers, our partners, and for those at Microsoft who have put so much of themselves into these products.

But we bring these innovations to market at a time of great turbulence and potential change in the industry. This isn’t the first time of such great change: we’ve needed to reflect upon our core strategy and direction just about every five years. Such changes are inevitable because of the progressive and dramatic evolution of computing and communications technology, because of resultant changes in how our customers use and apply that technology, and because of the continuous emergence of competitors with new approaches and perspectives.

In 1990, there was actually a question about whether the graphical user interface had merit. Apple amongst others valiantly tried to convince the market of the GUI’s broad benefits, but the non-GUI Lotus 1-2-3 and WordPerfect had significant momentum. But Microsoft recognized the GUI’s transformative potential, and committed the organization to pursuit of the dream – through investment in applications, platform and tools – based on a belief that the GUI would dramatically expand and democratize computing.

When we reflected upon our dreams just five years later in 1995, the impetus for our new center of gravity came from the then-nascent web. With a clear view upon the challenges and opportunities it presented, the entire company pivoted to focus on the internet to pursue that ‘fully connected’ dream with support for internet standards throughout our product line: a web browser, server and development tools, and a service in MSN that was transformed into a web portal. Many things we developed in that era continue to fuel the growth of today’s internet: the technologies of AJAX – DHTML and XMLHTTP – were created in 1998 and used in products such as OWA.

In 2000, in the waning days of the dot com bubble, we yet again reflected on our strategy and refined our direction. After taking a more deliberative look at the internet and its implications for software, we came to the conclusion that the internet would go beyond browsing and should support programmability on a global scale. We observed that certain aspects of our most fundamental platform – the tools and services that developers use when building their software – would not likely satisfy the emerging security and interoperability requirements of the internet. So we embarked upon .NET, a transformative new generation of the platform and tools built around managed code, the XML format and web services programming model. At the time, it was a risky bet to build natively around XML, but this bet paid off handsomely and .NET has become the most popular development environment in the world.

It is now 2005, and the environment has changed yet again – this time around services. Computing and communications technologies have dramatically and progressively improved to enable the viability of a services-based model. The ubiquity of broadband and wireless networking has changed the nature of how people interact, and they’re increasingly drawn toward the simplicity of services and service-enabled software that ‘just works’. Businesses are increasingly considering what services-based economics of scale might do to help them reduce infrastructure costs or deploy solutions as-needed and on subscription basis.

Most challenging and promising to our business, though, is that a new business model has emerged in the form of advertising-supported services and software. This model has the potential to fundamentally impact how we and other developers build, deliver, and monetize innovations. No one yet knows what kind of software and in which markets this model will be embraced, and there is tremendous revenue potential in those where it ultimately is.

Just as in the past, we must reflect upon what’s going on around us, and reflect upon our strengths, weaknesses and industry leadership responsibilities, and respond. As much as ever, it’s clear that if we fail to do so, our business as we know it is at risk. We must respond quickly and decisively.

The Landscape
Since 1995, inexpensive computing and communications technologies have advanced at a rapid rate that even exceeded our expectations. It’s so very difficult now for us to imagine a world without the PC, the web and the cell phone. In the US, there are more than 100MM broadband users, 190MM mobile phone subscribers, and WiFi networks blanket the urban landscape. This pattern is mirrored in much of the developed world. Computing has become linked to the communications network; when a PC is purchased, it’s assumed that the PC will have high-speed internet connectivity. At work, at home, in a hotel, at school or in a coffee shop, the networked laptop has become our ‘virtual office’ where we file our information and interact with others. The broad accessibility and rapid pace of innovation in hardware, networks, software and services has catalyzed a virtuous cycle whose pace isn’t slowing. There has never been a more exciting time to be a developer or a user of technology.

Our products have embraced the internet in many amazing ways. We’ve transformed the desktop into a rich platform for interactive internet browsing, media and communications-centric applications. We’ve transformed Windows into best-of-breed infrastructure for internet applications and services. We’ve created, in .NET, the most popular development platform in the world. We’ve got amazing products in Office and our other IW offerings, having fully embraced standards such as XML, HTML, RSS and SIP. Our MSN team has demonstrated great innovation and has held its own in a highly competitive and rapidly changing environment – particularly with Spaces and in growing a base of 180M active Messenger users worldwide. The Xbox team has also built a huge user community and has demonstrated that internet-based “Live” interaction is a high-value, strong differentiator.

But for all our great progress, our efforts have not always led to the degree that perhaps they could have. We should’ve been leaders with all our web properties in harnessing the potential of AJAX, following our pioneering work in OWA. We knew search would be important, but through Google’s focus they’ve gained a tremendously strong position. RSS is the internet’s answer to the notification scenarios we’ve discussed and worked on for some time, and is filling a role as ‘the UNIX pipe of the internet’ as people use it to connect data and systems in unanticipated ways. For all its tremendous innovation and its embracing of HTML and XML, Office is not yet the source of key web data formats – surely not to the level of PDF. While we’ve led with great capabilities in Messenger & Communicator, it was Skype, not us, who made VoIP broadly popular and created a new category. We have long understood the importance of mobile messaging scenarios and have made significant investment in device software, yet only now are we surpassing the Blackberry.

And while we continue to make good progress on these many fronts, a set of very strong and determined competitors is laser-focused on internet services and service-enabled software. Google is obviously the most visible here, although given the hype level it is difficult to ascertain which of their myriad initiatives are simply adjuncts intended to drive scale for their advertising business, or which might ultimately grow to substantively challenge our offerings. Although Yahoo also has significant communications assets that combine software and services, they are more of a media company and – with the notable exception of their advertising platform – they seem to be utilizing their platform capabilities largely as an internal asset. The same is true of Apple, which has done an enviable job integrating hardware, software and services into a seamless experience with dotMac, iPod and iTunes, but seems less focused on enabling developers to build substantial products and businesses.

Even beyond our large competitors, tremendous software-and-services activity is occurring within startups and at the grassroots level. Only a few years ago I’d have pointed to the Weblog and the Wiki as significant emerging trends; by now they’re mainstream and have moved into the enterprise. Flickr and others have done innovative work around community sharing and tagging based on simple data formats and metadata. GoToMyPC and GoToMeeting are very popular low-end solutions to remote PC access and online meetings. A number of startups have built interesting solutions for cross-device file and remote media access. VoIP seems on the verge of exploding – not just in Skype, but also as indicated by things such as the Asterisk soft-PBX. Innovations abound from small developers – from RAD frameworks to lightweight project management services and solutions.

Many startups treat the ‘raw’ internet as their platform. At the grassroots level, such projects actively use standards such as vCards and iCal for sharing contacts and calendars. Most all use RSS in one way or another for data sharing. Remixing and mashing of multiple web applications using XML, REST and WS is common; interesting mash-ups range from combining maps with apartment listings, to others that place RSS feeds on top of systems and data not originally intended for remixing. Developers needing tools and libraries to do their work just search the internet, download, develop & integrate, deploy, refine. Speed, simplicity and loose coupling are paramount.

And the work of these startups could be improved with a ‘services platform’. Ironically, the same things that enable and catalyze rapid innovation can also be constraints to their success. Many hard problems are often ignored – the most significant of which is achieving scale. Some scale issues are technological and result from the fact that they are generally built on application server platforms rather than high-scale service platforms. But new services also need to build user communities from scratch – generally by word of mouth. Many fund their sites using syndicated ads, but have a difficult time transforming their services into higher levels of commerce. Some seek to incorporate client software into their user experience, but then need to reinvent software deployment, update, communications and synchronization mechanisms. User identity and cross-service interoperability mechanisms are still needlessly fragmented. Intuitively there seems to be a platform opportunity in providing such capabilities to developers in a form that retains the speed, simplicity and loose coupling that is so very important for rapid innovation.

Key Tenets
Today there are three key tenets that are driving fundamental shifts in the landscape – all of which are related in some way to services. It’s key to embrace these tenets within the context of our products and services.

1. The power of the advertising-supported economic model.

Online advertising has emerged as a significant new means by which to directly and indirectly fund the creation and delivery of software and services. In some cases, it may be possible for one to obtain more revenue through the advertising model than through a traditional licensing model. Only in its earliest stages, no one yet knows the limits of what categories of hardware, software and services, in what markets, will ultimately be funded through this model. And no one yet knows how much of the world’s online advertising revenues should or will flow to large software and service providers, medium sized or tail providers, or even users themselves.

2. The effectiveness of a new delivery and adoption model.

A grassroots technology adoption pattern has emerged on the internet largely in parallel to the classic methods of selling software to the enterprise. Products are now discovered through a combination of blogs, search keyword-based advertising, online product marketing and word-of-mouth. It’s now expected that anything discovered can be sampled and experienced through self-service exploration and download. This is true not just for consumer products: even enterprise products now more often than not enter an organization through the internet-based research and trial of a business unit that understands a product’s value.

Limited trial use, ad-monetized or free reduced-function use, subscription-based use, on-line activation, digital license management, automatic update, and other such concepts are now entering the vocabulary of any developer building products that wish to successfully utilize the web as a channel. Products must now embrace a “discover, learn, try, buy, recommend” cycle – sometimes with one of those phases being free, another ad-supported, and yet another being subscription-based. Grassroots adoption requires an end-to-end perspective related to product design. Products must be easily understood by the user upon trial, and useful out-of-the-box with little or no configuration or administrative intervention.

But enabling grassroots adoption is not just a product design issue. Today’s web is fundamentally a self-service environment, and it is critical to design websites and product ‘landing pages’ with sophisticated closed-loop measurement and feedback systems. Even startups use such techniques in conjunction with pay-per-click advertisements. This ensures that the most effective website designs will be selected to attract discovery of products and services, help in research and learning, facilitate download, trial and purchase, and to enable individuals’ self-help and making recommendations to others. Such systems can recognize and take advantage of opportunities to up-sell and cross-sell products to individuals, workgroups and businesses, and also act as a lead generation front-end for our sales force and for our partners.

3. The demand for compelling, integrated user experiences that “just work”.

The PC has morphed into new form factors and new roles, and we increasingly have more than one in our lives – at work, at home, laptops, tablets, even in the living room. Cell phones have become ubiquitous. There are a myriad of handheld devices. Set-top boxes, PVRs and game consoles are changing what and how we watch television. Photos, music and voice communications are all rapidly going digital and being driven by software. Automobiles are on a path to become smart and connected. The emergence of the digital lifestyle that utilizes all these technologies is changing how we learn, play games, watch TV, communicate with friends and family, listen to music and share memories.

But the power of technology also brings with it a cost. For all the success of individual technologies, the array of technology in a person’s life can be daunting. Increasingly, individuals choose products and services that are highly-personalized, focused on the end-to-end experience delivered by that technology. Products must deliver a seamless experience, one in which all the technology in your life ‘just works’ and can work together, on your behalf, under your control. This means designs centered on an intentional fusion of internet-based services with software, and sometimes even hardware, to deliver meaningful experiences and solutions with a level of seamless design and use that couldn’t be achieved without such a holistic approach.

The Opportunities
These three tenets are causing a shift in the software landscape that started with consumers and is progressively working its way toward the enterprise – changing how software is monetized, how software is delivered, and what kind of software is ultimately embraced. With our presence in so many markets serving so many audiences, and with such a broad variety of products and solutions, we are well positioned to deliver seamless experiences to customers, enabled by services and service-enhanced software, including:

SEAMLESS OS – The operating system as it would be designed for today’s multi-PC, multi-device, work anywhere, web-based world. Enabling you to login using any of your service-based or enterprise identities. Deploying software automatically and as appropriate to all your devices, and roaming application data and settings. Permitting seamless access to storage across all your PCs, devices, servers and the web.

SEAMLESS COMMUNICATIONS – Communications and notifications – from voice to typing to shared screen; from PC to service-based agent to phone. Maintaining continuous co-presence with intimate friends and family; improving the coordination amongst individuals who need to work together by reducing latency and adding clarity through shared context.

SEAMLESS PRODUCTIVITY – Enabling you to create, find and organize documents and data among all the desktops, devices, servers and services to which you have access, and with all the others with whom you need to work, through ‘shared space’ products that are internet service-based, enterprise server-based and directly peer-to-peer. Working within and across homes, small businesses, virtual workgroups and enterprises.

SEAMLESS ENTERTAINMENT – Enabling you to create, store, organize, present, consume and interact with media of all kinds; accessing, caching and viewing it anywhere you like regardless of where the media resides. Gaming experiences that bring two or two million people together across PCs, devices and the web.

SEAMLESS MARKETPLACE – Enabling you to research, find, buy and sell whatever you want through a seamlessly integrated purchase, billing & payment & points, advertising & lead generation & sales management system designed to satisfy the needs of both buyers and sellers.

SEAMLESS SOLUTIONS – Enabling workgroups and businesses to rapidly create and customize any of a broad class of template-driven, semi-structured data-based applications and solutions that “just work” and provide instant value – whether using them from the web, from enterprise servers, or from mobile client PCs.

SEAMLESS IT – Enabling enterprises to seamlessly and cost-effectively manage many of the things they’ve classically done within their data centers – e.g. PCs, messaging, content and applications. The management experience might be wholly within the cloud, or with the cloud seamlessly integrating enterprise server assist.

Moving Forward
In order to adapt to the requirements underlying these key tenets, groups must reflect upon their existing plans, and assess their designs in the context of the end-to-end experiences they need deliver in order to understand how services might make a substantive impact. Groups should consider how new delivery and adoption models might impact plans, and whether embracing new advertising-supported revenue models might be market-relevant.

In assessing where we are and where we need to be, some new efforts will surely require incubation. But in many areas we have 80% of the product and technical infrastructure already built – we just need to close the 20% gap. Following are but a few thoughts for each division intended to catalyze a “services-enhanced software” mindset.

Platform Products & Services Division

a. BASE vs. ADDITIVE EXPERIENCES – In MSN, and in Windows Update and software deployed by it, we have quite a bit of experience with methods and practices for getting innovations to market on a rapid cycle. In the form of a newly combined division, we should consider many options as to how we might bring user experience innovations and enhancements to users worldwide. Specifically, we should consider the achievability, desirability, and methods of increasing the tempo for both ‘base’ OS experiences as well as ‘additive’ experiences that might be delivered on a more rapid tempo. In doing so, we would better serve a broad range of highly-influential early adopters.

b. SERVICES PLATFORM – Through years of experience, the MSN team understands the methods and practices of building ‘internet scale’ services. The Platform team understands developers and has deep experience in communications and storage architectures. These teams must work together, benefiting from each others’ strengths, to develop a next generation internet services platform – a platform for both internal and external innovation. A platform with capabilities and an operations infrastructure that takes those services to a scale never yet seen on the internet - to our benefit, and to the benefit of our partners and customers.

c. SERVICE/SERVER SYNERGY – A tension has emerged between our products designed for the enterprise and those for the internet. Exchange/Hotmail, AD/Passport, and Messenger/Communicator are but three examples. All our enterprise clients and servers must interoperate with and complement our internet services. Our functional aspirations are generally “server/service symmetry”, but architectural considerations dictate that different implementations may be required to economically reach internet scale. We must quickly find the best path to achieve seamless user, developer, and administration experiences involving servers and services.

d. LIGHTWEIGHT DEVELOPMENT – The rapid growth of application assembly using things such as REST, JavaScript and PHP suggests that many developers gravitate toward very rapid, lightweight ways to create and compose solutions. We have always appreciated the need for lightweight development by power users in the form of products such as Access and SharePoint. We should revisit whether we’re adequately serving the lightweight model of development and solution composition for all classes of development.

e. RESPONSIBLE COMPETITION – We will compete energetically but also responsibly and with recognition of our high legal responsibilities. We will design and license Windows and our internet-based services as separate products, so customers can choose Windows with or without Microsoft’s services. We’ll design and license Windows and our services on terms that provide third parties with the same ability to benefit from the Windows platform that Microsoft’s services enjoy. Our services innovations will include tight integration with the Windows client via documented interfaces, so that competing services can plug into Windows in the same manner as Microsoft’s services. We will compete hard and responsibly in services on the basis of software innovation and price – and on that basis we will offer consumers and businesses the best value in the market.

Business Division

a. CONNECTED OFFICE - How would we extend or re-conceptualize Office modules to fit in this seamless model of connectedness to others, and to other applications? Should PowerPoint directly ‘broadcast to the web’, or let the audience take notes and respond? How should we increase the role of Office Online as the portal for productivity? What should we do to bring Office’s classic COM-based publish-and-subscribe capabilities to a world where RSS and XML have become the de facto publish-and-subscribe mechanisms?

b. TELECOM TRANSFORMATION - How should our investments in RTC evolve to serve not just the enterprise, but also fully embrace the concept of grassroots adoption? How can RTC begin as an individual phenomenon, growing into a small business offering with a level of function that they’d never imagine possible, growing into the enterprise? How should we utilize service-based federation and hosting to ensure a ‘just works’ experience for all users, whether or not an administrator was ever involved?

c. RAPID SOLUTIONS - How can we utilize our extant products and our knowledge of the broad historical adoption of forms-based applications to jump-start an effort that could dramatically surpass offerings from Quickbase to Salesforce.com? How could we build it to scale to hundreds of millions of users at an unimaginably low cost that would change the game? How could we re-shape our client-side software offerings such as Access and Groove, and our server offerings such as SharePoint, to grow and thrive in the presence of such a service? Could these rapid solutions encourage a new ISV ecosystem and business model?

Entertainment & Devices Division

a. CONNECTED ENTERTAINMENT - How can XBox Live benefit from interconnection with other services assets, such as PC-based and mobile-based IM and VoIP? How might both the PC and XBox mutually benefit from a common marketplace? Might PC users act as spectators/participants in XBox games, and vice-versa?

b. GRASSROOTS MOBILE SERVICES – How might the Windows Mobile device experience be transformed by for consumers by connection to a services infrastructure – in particular one enabled by RTC-based unified communications? How might unmediated connection to a rich services infrastructure transform mobile phones into a mass market messaging, media and commerce phenomenon?

c. DEVICE/SERVICE FUSION – What new devices might emerge if we envision hardware/software/service fusion? What new kinds of devices might be enabled by the presence of a service?

What’s Different?
One perspective on this memo might be to say “This is in many ways is pretty close to what we’re already working on. What’s the big deal?” Or “We tried something similar years ago; why will we succeed this time?” These are understandable reactions. Many visions of the future going all the way back to “Information at Your Fingertips” contain elements of what has been laid out here.

That said, I have a number of reasons for optimism that we can deliver well on this vision. First, I know that Bill, Steve and the senior leadership team understand that Microsoft’s execution effectiveness will be improved by eliminating obstacles to developing and shipping products. The recent reorganization into three divisions is a significant step, and the division presidents are committed to changes to improve our agility.

Second, we are just now completing a wave of innovation that has never been seen in this company. 2006 is going to be an amazing year for shipping products, and many across the company will be ready to take on a new mission.

Third, regardless of past aspirations, this is the right time to be focusing on services for two specific reasons: the increasing ubiquity of broadband has made it viable, and the proven economics of the advertising model has made it profitable. It can be argued, for example, whether or not Hailstorm was the ‘right’ undertaking. But regardless, the effort would certainly have benefited from having a known-viable services business model for which to design.

Finally, I believe at this juncture it’s generally very clear to each of us why we need to transform – the competitors, the challenges, and the opportunities. As an outsider, I was repeatedly impressed and awed over the years by how this company’s talent has swarmed to effectively respond to huge business challenges and transitions.

That said, even when we’ve been solidly in pursuit of a common vision, our end-to-end execution of key scenarios has often been uneven – in large part because of the complexity of doing such substantial undertakings. In any large project, the sheer number of moving parts sometimes naturally causes compartmentalization of decisions and execution. Some groups might lose sight of how their piece fits in, or worse, might develop features without a clear understanding of how they’ll be used. In some cases by the time the vision is delivered, the pieces might not quite fit into the originally-envisioned coherent whole. We cannot allow the seams in our organization, or our methods of making decisions, show through in our products, or result in the failure to deliver on key end-to-end experiences.

Complexity kills. It sucks the life out of developers, it makes products difficult to plan, build and test, it introduces security challenges, and it causes end-user and administrator frustration. Moving forward, within all parts of the organization, each of us should ask “What’s different?”, and explore and embrace techniques to reduce complexity.

Some problems are inherently complex; there is surely no silver bullet to reducing complexity in extant systems. But when tackling new problems, I’ve found it useful to dip into a toolbox of simplification approaches and methods. One such tool is the use of extensive end-to-end scenario-based design and implementation. Another is that of utilizing loosely-coupled design of systems by introducing constraints at key junctures – using standards as a tool to force quick agreement on interfaces. Many such tools are not rocket science: for example, by forcing a change in practices to increase the frequency of release cycles, scope and complexity of any given release by necessity is greatly reduced. Another simple tool I’ve used involves attracting developers to use common physical workspaces to naturally catalyze ad hoc face-time between those who need to coordinate, rather than relying solely upon meetings and streams of email and document reviews for such interaction. Embracing change at a local level through such tools can make a real difference – one project at a time.

Next Steps
We’re off to a great start with many initiatives already under way – from efforts occurring now within MSN, to the IW services being launched imminently. We’re in a tremendous position to succeed, but doing so will require your belief, creativity, support, leadership, follower-ship and action.

This memo was intended to get all of us roughly on the same page, and to get you thinking. The next steps are:

1) I am working with the division presidents to assign, by December 15th, “scenario owners” – a role intended to improve our execution of key services-based initiatives through leadership. These leaders will provide an outside-in perspective in mapping out and communicating specific market objectives, while at the same time working with developers and others at the detail level to ensure expedient decision making and continuity. These individuals will be responsible for driving critical decisions such as feature re-prioritization and cuts while appreciating the business tradeoffs and impact of such decisions. They’ll listen. They’ll rapidly effect changes in plans to ensure execution and improve agility, even for scenarios that span divisions. Initial scenarios to be assigned ownership will include the seven seamless experiences described earlier.

2) Beginning in January these individuals will work with me and with product groups to concretely map out scenarios and pragmatically assess changes needed in product and go-to-market plans related to services and service-based scenarios. For some groups this will impact short-term plans; for many others on path to shipping soon, it will factor significantly into planning for future releases.

3) All Business Groups have been asked to develop their plans to embrace this mission and create new service offerings that deliver value to customers and utilize the platform capabilities that we have today and are building for the future. We expect both technical and non-technical communities to be increasingly engaged on the topic of services and service-enhanced software. As we begin planning the next waves of innovation – such as those beyond Vista and Office “12” – we will mobilize execution around those plans.

4) I have created an internal blog that will be used to notify you of further plans as they emerge. There, I’ll point you to libraries of documents that you will find interesting to read, and I’ll be experimenting with ways that you can directly engage in the conversation.

http://blogs/live
These steps are important and necessary, but not sufficient, for us to deliver on our aspirations. The most important step is for each of us to internalize the transformative and disruptive potential of services. We must then focus on the need for agility in execution, and take actions as appropriate where each of us can.

The opportunities to deliver greater value to our customers, to our developer and partner communities, and to our shareholders are significant. I very much look forward to embarking on this journey with all of you.

-- Ray

The Leaked Bill Gates Memo

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From: Bill Gates

Sent: Sunday, October 30, 2005 9:56 PM

To: Executive Staff and Direct Reports; Distinguished Engineers

Subject: Internet Software Services

Microsoft has always had to anticipate changes in the software business and seize the opportunity to lead.

Ten years ago this December, I wrote a memo entitled The Internet Tidal Wave which described how the Internet was going to forever change the landscape of computing. Our products could either prepare for the magnitude of what was to come or risk being swept away. We dedicated ourselves to innovating rapidly and lead the way much to the surprise of many industry pundits who questioned our ability to reinvent our approach of delivering software breakthroughs.

Five years ago we focused our strategy on .NET making a huge bet on XML and Web services. We were a leader in driving these standards and building them into our products and again this has been key to our success. Today, over 92% of the Fortune 100 are utilizing .Net and our current wave of products have XML and Web services at their core and are gaining share because of the bold bet we made back in the year 2000.

Today, the opportunity is to utilize the Internet to make software far more powerful by incorporating a services model which will simplify the work that IT departments and developers have to do while providing new capabilities.

In many ways this is not completely new. All the way back in 1998 we had a company meeting where we outlined a vision in which software would become more of a service over time. We've been making investments since then -- for example, the Watson service we have built into Windows and Office allows us and our partners to understand where our users are running into problems and lets us improve their experience. Our On-line help work gives us constant feedback about what topics are helping our users and which we need to change. Products from MSN like Messenger and Hotmail are updated with new features many times throughout the year, allowing them to deliver innovations rapidly. Our Mappoint service was a pioneer in letting corporations connect up to a web based API on a subscription basis.

However, to lead we need to do far more. The broad and rich foundation of the Internet will unleash a "services wave" of applications and experiences available instantly over the Internet to millions of users. Advertising has emerged as a powerful new means by which to directly and indirectly fund the creation and delivery of software and services along with subscriptions and license fees. Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses.

We will build our strategies around Internet services and we will provide a broad set of service APIs and use them in all of our key applications.

This coming "services wave" will be very disruptive. We have competitors who will seize on these approaches and challenge us – still, the opportunity for us to lead is very clear. More than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital workstyle & digital lifestyle scenarios, and to do so at scale, reaching users, developers and businesses across all markets.

But in order to execute on this opportunity, as we've done before we must act quickly and decisively. This next generation of the Internet is being shaped by its "grassroots" adoption and popularization model, and the cost-effective "seamless experiences" delivered through the intentional fusion of services, software and sometimes hardware. We must reflect upon what and for whom we are building, how best to deliver new functionality given the Internet services model, what kind of a platform in this new context might enable partners to build great profitable businesses, and how our applications might be reshaped to create service-enabled experiences uniquely compelling to both users and businesses alike.

Steve and I recently expanded Ray Ozzie's role as CTO to include leading our services strategy across all three divisions. We did this because we believe our services challenges and opportunities will impact most everything we do. Ray has long demonstrated his passion for software, and through his work at Groove he also came to realize the transformative potential for combining software and services. I've attached a memo from Ray which I feel sure we will look back on as being as critical as The Internet Tidal Wave memo was when it came out. Ray outlines the great things we and our partners can do using the Internet Services approach.

The next sea change is upon us. We must recognize this change as an opportunity to take our offerings to the next level, compete in a manner commensurate with our industry responsibilities, and utilize our assets and our broad reach to reshape our business for the benefit of the users of our products, our customers, our partners and ourselves.

Bill

Two articles from BusinessWeek on the trouble in France:
- "Sarkozy Googles as Paris Riots" and
- "The Economics Fueling the French Riots"

The articles are written from a "US viewpoint." A comment left behind the second article is worth noting:

I did not expect BusinessWeek to come out with such a biased article, very pro-American. Very hypocritical as well. France's social politics is set up to not "leave people behind" and give them an opportunity instead of straight poverty. The only thing that America does offer unemployed youngsters a job in the Army to support their own politics/shake-up/disrespect of Muslim countries; that attitude fuels Muslims worldwide with anger towards all Western societies, including France. The problem isn't just unemployment but it's more about France's ancient "social class differences" and the non-white immigrant population doesn't like to be called "scum" (a French minister's outraged response to the first riots). This was written by a white guy from the Netherlands.

Another view from Parapundit: French Muslim Rioting Hits Yet Another High

I'm not sure what to think about all this craziness. The "white guy" in the Netherlands pretends he lives in a color-blind society. The BusinessWeek folk think it's about unemployment rates. And the french politician is just covering his behind. I should ask Doug Smith.

UPDATE: Economist article

Oil Industry: Profits Happen

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Do you buy this? The WSJ reports:

The chiefs of five major oil companies defended the industry's huge profits Wednesday at a Senate hearing where lawmakers said they should explain prices and assure people they aren't being gouged.

There is a "growing suspicion that oil companies are taking unfair advantage," Sen. Pete Domenici (R., N.M.), head of the Senate Energy and Resources Committee, said as the hearing opened in a packed Senate committee room. "The oil companies owe the country an explanation," he said.

Lee Raymond, chairman of Exxon Mobil Corp., said he recognizes that high gasoline prices "have put a strain on Americans' household budgets" but he defended his companies huge profits, saying petroleum earnings "go up and down" from year to year. Exxon Mobil, the world's largest non-state-owned oil company, earned nearly $10 billion in the third quarter.

COMPANY- PROFIT- REVENUE
BP $6.46 billion, +34% $97.73 billion, +46%
Chevron $3.59 billion, +12% $54.46 billion, +34%
ConocoPhillips $3.8 billion, +89% $49.7 billion, +43%
Exxon Mobil $9.92 billion, +75% $100.72 billion, +32%
Royal Dutch Shell $9.03 billion, +68% $76.44 billion, +8%

Smells like Enron to me. Maybe we need a 10% environmental tax and fight global warming, which of course doesn't exist.

"The PR department must take its hands off the blog in order for it to work properly - no fake blog entries written for the CEO, and no vetting posts before they go live. (If your CEO cannot be trusted, even after being trained in how to blog legally and sensibly, not to drop clangers in the posts he writes, then he should not be blogging.)" - posting at CEO Bloggers Club

Also: "In order to blog well, they also have to be the right CEOs - straight-shooters, engaging and with interesting things to say. Sun Microsystems' Jonathan Schwartz is a great one, as are Thomas Nelson Publishers' Michael Hyatt and Five Across CEO Glenn Reid."

Schwartz isn't the CEO at Sun, but he does have his own views - published recently in HBR: "If You Want to Lead, Blog." Says Schwartz:

Many senior executives at Sun, including me, have blogs which can be read by anyone, anywhere in the world. We discuss everything from business strategy to product development to company values. We host open letters from the outside, and we openly respond to them. We talk about our successes. And our mistakes (if you don’t believe me, go to http://blogs.sun.com/roller/page/jonathan?entry=dear_john).

That may seem risky. But I’d argue that it’s riskier not to have a blog. Remember not long ago when CEOs would ask their assistants to print outtheir email for them to read, and then they’d dictate responses to be typewritten and sent via snail mail? Where are those leaders now? (Thelast of my contacts of that breed just retired.) Ten years from now, most of us will communicate directly with our customers, employees and the wider community through blogs. For executives, having a blog is not going to be a matter of choice, any more than using email is today. If you're not part of the conversation others will speak on your behalf, and I'm not talking about your employees.

So the question is this: if your CEO can't blog, should she still be CEO? What I'm asking is if your CEO cannot communicate in real time, but needs a PR machine to do her messaging, is she really CEO material?

Now there are CEOs who could blog, but don't. I'm sure Bill Gates would love to blog, but I suspect his lawyers won't let him.

Blogging is becoming, in some ways, a test for company transparency. Speaking of which, why aren't the big boys at Google blogging yet? Bill Gates- you can beat them to this one!

Sears, Roebuck and Co. this week launched what it is calling its first fully integrated campaign in years. The effort, “Wish Big,” includes television and print advertising, event marketing, in-store signage and cross-promotion activities, in-mall advertising, direct mail, online programs and public relations. [in Brandweek]

Maybe they need to just work on their strategy. Here's what a recent article in the Chicago Sun Times had to say about that:

A Wall Street analyst gave voice Monday to rumors that Sears' ballyhooed strategy of building new stand-alone stores is in trouble.

Sears is counting on its newest store, Sears Essentials, to compete with big-box rivals such as Target, Kohl's and Wal-Mart, while also selling refrigerators, treadmills, lawn mowers and patio furniture.

Sears has denied reports that it is slowing or halting its plans to convert 400 Kmart stores into Sears Essentials stores within three years -- at a cost of about $3.5 million per store. But Sears hasn't yet announced how many Sears Essentials stores it will open in 2006.

Furthermore, two top Sears executives integral to the strategy have left or are leaving the Hoffman Estates-based retailer, Gregory Melich, an analyst at Morgan Stanley & Co., said in a note to investors Monday.

Catherine David, a former Target executive that Sears named to oversee Sears Essentials and two other stand-alone stores, left the retailer in September.

Sears hired David in July 2004 to turn around the struggling Great Indoors home-decor chain, which Sears had downsized a year earlier to 17 stores.

Sears also is losing Luis Padilla, another former Target executive and a merchandising whiz credited with putting the "chic" in Target's "cheap chic" reputation. Padilla is leaving at month's end, following Sears Chairman Edward S. Lampert's decision to install his own top strategists.

Furthermore, Sears is investing less than its retail rivals in its stand-alone stores, and has cut its advertising by more than 40 percent, Melich wrote.

More than 50 percent of Sears Essentials stores are within five miles of a Target, a Lowe's or a Home Depot, giving them tough conditions under which to compete, he said.

Other analysts have questioned the Sears Essentials format as unfocused and underwhelming.

"The store seems a hodgepodge of everything, and there's no clear message to consumers about what to expect," said Kim Picciola at Chicago-based Morningstar.

Maybe they need to outsource their management...

CEO Eric Schmidt: "I have this fantasy that goes like this. You are the C.E.O. of a large company, and I come to you and say, 'Give me $1 million and give me your Web site, and we will guarantee you will get $100 million in sales.' Which C.E.O. would turn that down?" from paidcontent

Google continues to push the advertising ROI envelope. This time it's the classifieds:

Classified Intelligence Editorial Director Jim Townsend told internetnews.com that making classified ads available through an organic Google search would definitely change the game, but exactly how remains to be determined.

There are two schools of thought, he said. On the one hand, search provided additional distribution of the ad.

"If someone pays to place an ad in a newspaper, wouldn't it make sense to throw that paper on as many streets as possible? It's distribution, distribution, distribution," he said.

On other side of that coin, Townsend said, ads that are freely available through search could destroy the pricing model used by print and online classifieds publishers.

Adds John Zappe from Classified Intelligence:

"Commercial classifieds sites such as CareerBuilder, Cars.com and others have to weigh the additional audience Google could deliver against the potential loss of revenue. Analysts, including us, predict that advertisers will move to free sites if they become convinced that they will reach an audience as large - or larger - on a search engine than on a paid advertising site."

Talent War: China's Woes

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JSB and JH3 are right:

"Where value originates and who captures it will increasingly depend on the evolution of talent markets and the relative capability of firms (and nations) to rapidly develop and amplify the value of this talent. Product markets and financial markets will of course still matter, but the center of gravity for value creation and capture will inexorably migrate to global talent markets..." see The Only Sustainable Edge

The global talent war continues. Now, a McKinsey Quarterly article "China's looming talent shortage" backs up Seely Brown and Hagel, making the following points:

- If China's economy is to go on growing and its base is to evolve from manufacturing to services, it will require a huge number of qualified university graduates.

- While university graduates are plentiful there, new research shows that only a small proportion of them have the skills required for jobs further up the value chain—and competition for these graduates is becoming fierce.

- China must undertake a long-term effort to raise the quality of its graduates by changing the way it finances its universities, revamping curriculums to meet the needs of industry, and improving the quality of English-language instruction.

- China could emerge as a base for IT and business process offshoring, but unless the country addresses its looming labor shortage now the global ambitions of Chinese companies will probably be stymied.

It's all about quality! The paradox:

China's pool of potential talent is enormous. In 2003 China had roughly 8.5 million young professional graduates with up to seven years' work experience and an additional 97 million people that would qualify for support-staff positions. Despite this apparently vast supply, multinational companies are finding that few graduates have the necessary skills for service occupations. According to interviews with 83 human-resources professionals involved with hiring local graduates in low-wage countries, fewer than 10 percent of Chinese job candidates, on average, would be suitable for work in a foreign company in the nine occupations we studied: engineers, finance workers, accountants, quantitative analysts, generalists, life science researchers, doctors, nurses, and support staff.

Read the article here. (registration required)

I must say I loved this ad from Sun. It's actually fairly brilliant because it:

1) states Sun's case in a humorous way,
2) highlights the different strategies the two companies are allegedly pursuing (innovation=Sun, low-cost=Dell),
3) beats Dell at its own game- price,
4) has an environmental angle,
5) tells us about the best server in the world!
6) trumpets open source messaging via Solaris...

I could go on and on.

Lucky for Sun that the NYT refused to print the ad, giving it even more buzz... All the news that's fit to print, eh? They can print Judy Miller, but not an ad?

Well, the ad is on Jonathan Schwartz's blog- which gives it that much more authenticity!

One more thing- will design and innovation rule the future of global competition? Sun thinks so.

I do too.

Interesting analysis from Forrester:

"The iPod video player doesn't matter. Downloading episodes of Lost and Desperate Housewives to computers barely matters. What does matter is the crack in the traditional television business model opened by the Apple/ABC deal to allow consumers on-demand access to current hit TV shows. Unwittingly, Apple is building the proof of concept for the video-on-demand (VOD) business model. Demands by cable operators to put the same deal on the VOD tier, rebellion by network affiliates, and greater availability of niche content will fracture the old business model."

The story here.

Proteus Industries used a special animal protein to create a coating for fried foods that prevents excess oil from penetrating beyond the breading or batter during cooking. The cooked food stays crispy on the outside, but it's not greasy on the inside. That translates into real fat busting: the overall content in fish sticks, for instance, goes from 14 g to as little as 4 g -- a 70 percent drop.

Proteus' process is making its debut in fish sticks from the company's collaborator, Good Harbor Fillet.

Why can't we just eat less fried stuff?

When we express a preference for French holidays, German cars or Italian opera, when we instinctively trust the policies of the Swedish government, comment on the ambition of the Japanese, the bluntness of the Americans or the courtesy of the British, when we avoid investing in Russia, favor Turkey’s entry into Europe or admire the heritage of China and India, we are responding to brand images in exactly the same way as when we’re shopping for clothing or food. But these are far bigger brands than Nike or Nestlé. They are the brands of nations.

Nation brand is an important concept in today’s world. Globalization means that countries compete with each other for the attention, respect and trust of investors, tourists, consumers, donors, immigrants, the media, and the governments of other nations: so a powerful and positive nation brand provides a crucial competitive advantage. It is essential for countries to understand how they are seen by publics around the world; how their achievements and failures, their assets and their liabilities, their people and their products are reflected in their brand image.

Simon Anholt has developed the Anholt-GMI Nation Brands Index - the first analytical ranking of the world’s nation brands. This report: Nation Brands Index - Q3 Report, 2005 tells us how nations view each other. Good stuff.

But even more critical, perhaps, is Anholt's book: Brand America: The Mother of All Brands.

Here's how the book is advertised on Anholt's website:

Q: When is a country like a brand?
A: When it’s the United States of America.

America is more than just a country: it’s the biggest brand in history. Launched as a global brand, managed like a global brand and advertised like a global brand since the Declaration of Independence, America has deliberately marketed itself – as well as its products and culture – with skill, determination and sheer, hardnosed salesmanship.

But today, it’s a brand in trouble. Brand America shows, for the first time in print, how the world’s most successful brand grew to greatness, how close it now is to throwing it all away, and how it might win back those disillusioned 'consumers'.

For anybody who has ever wondered what was the secret behind America’s greatness, and what happens next to the world’s sole superpower, Brand America is essential reading.

It’ll change your mind about brands, about countries and about America for ever.

Here's what Phil Kotler had to say about the book:

"Anholt and Hildreth are to be congratulated for raising the issue of why Brand America is suffering a strong decline around the world. They trace American history, the values of Brand America and the growth of anti-Americanism, and offer stimulating suggestions for how to repair our broken image."

Read it. That's Brand America: The Mother of All Brands.

Most companies assume they're giving customers what they want. Usually, they're kidding themselves. When Bain & Company recently surveyed 362 firms, they found that 80% believe they deliver a "superior experience" to customers. But when they asked the firms' customers, they found that only 8% are really delivering.

Talk about delusion. Why this huge discrepancy?

The folks at Bain found two reasons for the gap:

"The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth-a loyal customer franchise. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.

"The second is that good relationships are hard to build. It's extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers' changing needs. Even initiatives to "better understand" customers can backfire, drowning firms in a sea of data."

I'll give you the third reason: management confuses actions and activity with outcomes. Just because you have a customer feedback program in place, doesn't mean it's effective. The appearance of virtue is not virtue.

More from the report: "Even initiatives to “better understand” customers typically backfire. A company can get so engrossed in collecting and sifting through data on patterns of use, retention, purchases and other transactions that buyers become numbers rather than people, segments rather than individuals. Companies become deaf to the real voices of real customers." [emphasis added]

Download the report here.

How We Buy: Search!

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Yahoo and Compete, Inc., recently announced key findings from a new study which tracked Internet search and transaction activity specifically related to retail apparel Web sites over one year.

The study found that search was used by 20% of the 25 million unique monthly visitors engaging in apparel activity on the sites Compete tracked.

For the study, "Search and the Engaged Customer: An Apparel Study", Compete analyzed the online shopping behavior of its panel of two million Internet users and conducted a survey of over 400 apparel shoppers who used search, visited one of 49 apparel retailer or manufacturer sites and subsequently purchased apparel offline. The study observed both Web search and sponsored search activity across Yahoo!, Google, Ask Jeeves, MSN, Lycos and Hotbot.

Key findings from the study include:

Search Influences Offline Purchasing. According to the findings, 78% of people who purchased apparel offline after using Internet search reported that search influenced their store visit and purchase. Nearly half (47%) of these buyers have also purchased apparel online and spend 26% more on apparel annually than those who do not use search.

Apparel searchers are highly engaged shoppers. The study found that, over a 60-day shopping period, apparel searchers spent more than 30% more time when visiting retail sites than non-search visitors and were more likely to engage in site activities such as customizing a product image, viewing shipping methods or return policies and submitting an email name. The research also showed that apparel searchers were also more likely to make a purchase (online or offline). Apparel searchers generated an average online conversion rate of 21%, compared with the 18% average conversion rate generated by non-search users.

Consumers use search throughout the buying cycle. Consumers conduct multiple searches and use search throughout their purchase decision, with 21% reporting they use search to find out about new styles and brands, 27% using search to find out about sales and deals and over 50% using search to find a store address, phone number or website.

"It's clear from these findings that consumers are using search for multiple objectives throughout their apparel shopping process," said Diane Rinaldo, retail category director, Yahoo! Search Marketing. "Search provides retail marketers a way to reach their customers in a comprehensive manner that allows them to effectively tie together their online and offline sales, enhance brand awareness and increase market share."

Hmmm. All roads lead to Google. It's funny, but I'm beginning to feel sorry for Microsoft.

From Marissa Mayer via Evelyn Rodriguez. Download here>>

Thanks for taking notes, Evelyn!

Some highlights:

Small, Agile Engineering Teams
• 3-person units (like start-ups!)
• Unit is a project - they don't have departments
• Unit is co-located (sit next to each other) also with PM
• Engineers work on project for 3-4 months, then transition to next project
• Very fluid
• With 180 engineers, they can work on 60 projects - so they can afford to invest
on high-risk, high-return projects as well. (They call high-risk projects "Googlettes")
• Each project manager works with 9-10 people across units. For example, maybe a category such as "Enterprise Infrastructure"
• The technical lead in each unit of 3 is responsible for technical excellence of project.
• Documentation
- Very sparse, only what is needed in Product Requirements Document
(PRD)
- Eric Schmidt: "Late binding decision-making process"
- Evolves based on feedback
- Includes information on general market size, revenue in PRD but believe that "if you build something users use, there will be a way to make money"

• Large Projects
- Example: Enterprise Product - broken into logical modules, thus 4 units
(of 3 people) = 12 people
• Monetization teams
- Larry Page: "No such thing as a successful failure; if it is useful to people, later we can make revenue from it in a logical way."
- Focus on providing value to user first.
- Then create team to execute the "monetization" of most useful products/services.

• Marissa (speaker) was on team to monetize search
- Created AdWords, etc.

This is very, very interesting. Beeg trouble for moose and squirrel, er, Microsoft!

" Advertising isn't enough to fund on-demand" says Phil Wainewright in his ZDNet blog, and he's right:

"I am frankly bemused that anyone seriously believes Microsoft or anyone else is going to fund their on-demand applications from advertising revenues. The idea is complete bull, on two counts.

"First up, ads in applications don't work. All the evidence from the past ten years of online services is that the more engaged the user is in pursuing an activity, the less likely their attention will be diverted by an ad. The sole exception, which of course is why Google AdWords has been so spectacularly successful, is search, for the simple reason that clicking on relevant ads is a natural extension of the search activity."

So, what's wrong with Microsoft?

I think they're trying so hard to play catch up to Google, they are now resorting to launching stupid "me-too" business models which try to one-up Google. This is typical geek-panic.

What they need to do, is sip some tea, listen to JSB and John Hagel (aka JH3), and build a future "beyond-Google."

What do I mean by this? Simply that they should build for the future without the shadow of Google crimping their thoughts. Seriously. If Microsoft would spend a little less time blogging and a little more time thinking, they could get their groove back.

Just ask JSB and JH3 what to do, MS!

And listen.

From the Economist:

"For workers from poor countries who venture abroad to earn a better living, sending money home to relatives can be hugely expensive. Such remittances have become an important source of income in many developing countries, dwarfing other inflows of capital from overseas such as foreign direct investment and multilateral aid. But if the money is being sent, say, from America to Venezuela, charges can amount to as much as 34% of the sum involved, according to Dilip Ratha of the World Bank.

"Why are the poor so badly served? The easy answer, that people who have little money do not make suitable clients for sophisticated financial services, is at most a half-truth. A better explanation, this survey will argue, is that the poor have been hurt by massive market and regulatory failure. Fortunately that failure can be, and increasingly is being, remedied."

Read the article here.

All I know is that when money trickles down to the poor, it usually gets siphoned off by a middleman, or the neighborhood mafia.

For those of you that are watching the offshoring market, here are two posts I made on a new blog I've started with Javed Matin, an expert IT analyst and researcher:

- Best Practices: The Hidden Risks of Outsourcing
- Offshoring and the ISO 17799 Imperative

Keep an eye out for more as we build the outsourcingstrategy.org site.

A great interview from S+B.

Daniel Yankelovich - the "father of the public opinion poll" - says:

"...attitudes were replaced in the 1960s and 1970s by unenlightened self-interest: Win at any cost. Strip away regulations and constraints. Anything that isn’t illegal is OK. Conflict of interest isn’t a real issue, except for a few straitlaced dummies. Everybody bends the rules, and you have to do so to survive. Someone caught in an ethically
questionable situation might say, “Well, I didn’t do anything wrong. I didn’t break the law.” For someone from my generation, ethics doesn’t have anything to do with breaking the law. Essentially, there was a dumbing-down of morality that came in with the baby boomers in the 1960s."

Hello! Maybe he's been reading On Value and Values!

For every automobile, and maybe every product, there’s a threshold beyond which your ad budget is wasted.

That's the premise of this startlingly clear analysis from Evan Hirsh and Mark Schweizer from Booz Allen Hamilton's Cleveland office. They ask:

"...What if there was an optimal level of advertising spend for any given product — beyond which the money was completely wasted?"

And explain:

"Economists often speak of “price elasticity”: When prices rise or fall, consumers respond by changing their purchase strategies. That is why price increases do not automatically lead to equivalent rises in revenues. The same kind of elasticity exists with advertising. For any given brand in any given market, there is a saturation point for advertising spend. Up to that point, increases in the ad budget will generate results; but once the market for a product or service is saturated, no matter how much a company spends on advertising, it will not produce enough added sales to justify the cost. The best possible budget places just enough ads to reach the saturation point, and not a dollar’s worth of advertising more. Companies that follow this principle will optimize their overall profitability because they will spend on advertising only what they can recoup in revenues."

An important wake up call for marketing and advertising strategists everywhere. Download here >>

The lead article in this week's Economist: "Tired of globalisation" has a skewed view of what's happening in Latin America. The article even takes a pot shot at Maradona (maybe they're still upset at that "hand of god" goal in the World Cup).

Globalization cannot ignore the consequences and effects on people. This is the lesson that business never learns. That's a fact. And so Maradona and Hugo Chavez have fun at the expense of the US.

Doug Smith's latest blog entry: "Thick We's" takes a hard look at how we've lost track of what matters:

"We lead dual lives -- pursuing value over values from 9 to 5 and the reverse during the remainder of each day."

and

"Today, the vast majority of those organizations pursue value over values. Others -- and the less powerful ones -- pursue values over value. Neither of these strategies are sustainable. Churches, schools, non-profits and so forth cannot sustain themselves by ignoring and being blind to value. But -- and this is by far the more serious challenge -- neither can for-profit organizations (whether Wal-Mart or GM or Roche -- or a small bookstore or cleaners or barbershop) sustain itself if value -- if profits, wealth, shareholder value or winning -- is the trump card for every single serious issue and question on the table. Eventually, that approach eviscerates and hollows out the values -- social, political, spiritual, environmental, medical, legal and others -- on which the very value pursued rests."

Want to know more? Check out Smith's book.

Fishermen in northern Thailand have netted a fish as big as a grizzly bear, a 646-pound Mekong giant catfish, the heaviest recorded since Thai officials started keeping records in 1981.

Unfortunately, the fish did not get away:

The fish was caught and eaten in a remote village in Thailand along the Mekong River, home to more species of giant fish than any other river. Local environmentalists and government officials negotiated to release the record-breaking animal so it could continue its spawning migration in the far north of Thailand, near the borders of Thailand, Laos, Myanmar and China - also known as the "Golden Triangle." But the fish, an adult male, later died. The species is declining, which fishermen in the region blame on upstream dams and environmental deterioration. And that's the real story.

More from the WWF here.

The confidence of US executives in their economy plummeted over the past three months, according to the latest McKinsey Global Survey of Business Executives.

Meanwhile, here's a "fun" chart on where the jobs are going from an article entitled "How India's executives see the world":

A while back BusinessWeek devoted an issue to the issue of China and India.

I particularly liked "Asking The Right Questions" because it looked at new non-western business models being built in India. In India, that's called being non-aligned!

John Hagel has an instructive blog post on China and India titled: "Patterns of Business Innovation in China and India". Read it!

Where does this leave us? You, me, and our kids? What are we going to do for a living? What options are there for kids who go through our stellar educational system?

I decided to look up the high school curriculum in a) Kansas and b) India. Here's what I found:

- Kansas: A Guide to Kansas Curricular Standards [high school]

- India: CBSE [12th grade] - Mathematics, Physics, Chemistry, Biology, Political Science, History, and more.

Looks like we lost the race before we even got started!

So, what are our kids going to be doing? Are we destined to be a nation of used-car salesmen? One nation-under-E-bay...

What would poor Ben Franklin say if he saw us now? How would he earn his living today? Join the military? Wal-Mart? a band? a gang? an evangelical church?

I keep getting emails asking me how "Double Loop Marketing" works. Here's a quick explanation.

Let's say a company like Texas Instruments wants establish itself as a thought-leader in the RFID marketspace.

In the traditional PR world, they could issue a few press releases, give a few speeches, write a few whitepapers, and then hope the media would cover them.

But what if TI decided on a "Double Loop Marketing™" approach?

What if Texas Instruments brought together its partners, industry thought-leaders, R&D professionals, VC shops, and senior executives in an online thought-leadership-based "double-loop" site to:

- Learn about the latest trends and technologies in RFID
- Define and understand the specific factors that contribute to improving strategy
- Develop recommendations for creating a RFID management discipline within your organization
- Present sample business justifications supporting strategic and learning investments in RFID
- Foster discussion of lessons learned from early adopters
- Disseminate news, events, and thought leadership articles on a monthly basis
- Create a framework for measuring performance and ROI
- Build a worldwide community of interested senior executives and target them w/ e-mail bulletins that include messages from TI and its partners
- Develop industry-specific campaigns promoting the community - including offline events, publications, and more.
- Build a members-only community of practice around the gurus and leading implementors

The site would include blogs as well, from industry experts and TI subject-matter experts.

Of course the cost of something like that is far higher than funding a blog or two, but its impact on the marketspace is far more potent.

By building a thought-leadership hub on RFID, TI establishes itself as "the one to learn from" and as I like to say: moves from "mind share" to "wallet share"

Blogs on the other hand are better suited to the voice of an individual. So if TI doesn't have the resources to build the "big" site I mention, they can still play by allowing one or more of their subject matter experts to start blogging on the ins-and-outs of RFID.

Of course, great care must be taken to make sure that the expert actually does have something to say, and is not the mouthpiece for a veiled PR initiative. Scoble at Microsoft and Schwartz at Sun come to mind instantly, right?

Not enough? Here's a slightly longer explanation of Double Loop Marketing.

Let's compare some workplace statistics, as reported by the companies...

Employees covered by company health insurance
Costco 82%
Wal-Mart 48%

Insurance-enrollment waiting periods (for part-time workers)
Costco 6 months
Wal-Mart 2 years

Portion of health-care premium paid by company
Costco 92%
Wal-Mart 66%

Annual worker turnover rate
Costco 24%
Wal-Mart 50%

Read more about this here.

The Wal-Mart people need to go read Doug Smith's On Value and Values.

Why does Wal-Mart want this? This is not a PR problem, Wal-Mart. It's a values problem. Again, read Doug Smith.

Farewell, American Idol.

The Amazon "Pages program" would "unbundle" books, by allowing customers to purchase and view the pages they want or need.

Amazon "Upgrade" will give customers the option to purchase a physical book and perpetual online access to the book. [I do like this idea- now I won't have lug all my books around the world.]

When will this happen? Sometime next year... read about it here.

How does this compare with Google's "Print Library"?

Here's what the bloggers are saying:

"Suddenly the reason why publishers and authors are so pissed off at Google becomes a little bit clearer. They think that they're going to be able to slice and dice their books, selling little pieces of the book as people want them. They're taking a page from the entertainment industry -- and, like that industry, they're going to discover this plan won't work very well. They've just added friction in the form of additional transaction costs, both mental and monetary to finding information."
--Techdirt

"Ultimately, it's a very Long Tail idea, isn't it? Allow people to buy stuff the way they want to, so that you can wring every last cent out of your content, by earning $1 from someone who isn't willing to spend $10 for the entire book."
--Yellow Handman

"It's figured out a way to please authors and publishers, spread around the money for everyone, and do the right thing for readers. Google should sit up and take notice."
--Konnecke.com

"It sounds intriguing - especially to folks who conduct research or who cite information. For example, I might want to cite a book in a blog post or an article or something, but not wait for the entire book (or even buy it). But to pay a nominal amount for access to a few pages - well, that might well be worth the cost."
--Walloworld

I'm kidding, but hey- now you can read Jane Austen and click on Google Ads at the same time!

Here's the official line: "One of our goals for Google Print is to change that, and today we've taken an exciting step toward meeting it: making available a number of public domain books that were never subject to copyright or whose copyright has expired. We can show every page because these books are in the public domain." more>>

I like it. They thought of it before Bill Gates.

Is this the "democratization of knowledge" Larry Prusak talks about?

"Brands have become increasingly fragile and difficult to sustain. Failure to invest in the right mix of activities at the right time risks eroding the brand. On the other hand, those companies that anticipate and avoid the common investment traps can reap superior growth in brand value over a long period of time."

This from Andrew Pierce and Adrian Slywotzky in MMJ. Download here.

So what are the traps, you ask?

1. Failure to invest over time
2. Wrong investment mix
3. Wrong sequence
4. Myopic focus
5. Wrong touchpoints
6. Wrong positioning
7. Failure to adapt
8. Spending too little on too many brands
9. Overstretching the master brand
10. Dilution
11. Wrong metrics
12. Trying to turn around a dead brand
13. Failure to follow through

I'll add #14: Executive-Ego-driven branding!

I just dug this up from the archives:

Reminds me of paper television.

Forrester's Chris Charron notes:

"Now that two-thirds of North American households are online, and broadband has reached 72.5 million US households, value has begun to shift from the business of connecting pipelines and selling products to the market for content. Home networks and cheap devices free media content from the shackles of space and time, opening up distribution, and creating the opportunity for new business models. Fasten your seat belts: The content explosion is only beginning.

Charron predicts:

"As video content breaks free from the constraints of space and time, executives should take some lessons from the music industry. Content executives who are looking at the risks and opportunities of online video distribution should take note:

- TV networks, movie studios, and cable and satellite operators will need to jettison the notion that revenue should derive from a single source, and embrace alternative ways of thinking about making money from video.

- To make alternative video distribution profitable, content producers should begin to focus on the small(er) screen and the creation of unique content that consumers will pay for to use on their mobile phones or iPods.

- Internet video -- with its ad-supported model -- will increase in quantity and improve in quality. Some of the currently free content will make the leap to fee-based offerings as the video iPod and similar devices prove their worth to content owners and consumers.

- Consumers will begin their own video explosion of video podcasts that will let them be seen AND heard, some with hopes of recognition that would mirror the mainstream success of Internet-goofball-turned-MTV-star Andy Milonakis.

- Traditional TV advertisers will be forced to find new ways to market their wares in portable video: Look out for sponsorships, product-placement, and long form showcase-style ads to become more prevalent."

The results of an OECD survey on Knowledge Management practices in Canada, Germany, Denmark and more. Interesting, but not earth-shattering.

What they state as findings:

● KM practices have spread across the economy, just as technology diffuses;
● KM practices are implemented to deal with a great variety of objectives
(static efficiency, innovation, co-ordination);
● Size matters: firms manage their knowledge resources differently,
depending upon their size, and with little regard to industrial classification;
● KM practices matter for innovation and productivity performance;
● Cluster of practices: although this is a bit premature to make this kind of
statement, cluster of practices makes it possible to see the two main
strategies: codification and personalisation;
● Survey respondents showed a high level of interest, which in fact increases
as the size of the firm grows.

PDF download here.

I've always thought that different cultures view knowledge differently. Some cultures value knowledge more than others. In India, for example, I classify people into two groups- the devotees of Lakshmi and the devotees of Saraswati.

Lakshmi reminds me of Aphrodite. She's the goddess of beauty, fortune and prosperity. Gold coins fall from her hands. Two white elephants, symbols of luck, accompany her everywhere. During Diwali, the festival of lights, people light up their houses with candles (or electric lights) so Lakshmi will find her way to their house.

And Saraswati reminds me of Athena. She's the the goddess of wisdom, the arts, and eloquent speech. She's seen as the mother of the Veda, creator of the Sanskrit language and Devanagari letters. The protector of fine-arts and sciences. In her hands are a Vina (a musical instrument symbolising the arts) and a lotus (or a parchment - symbolising learning) and a rosary . Her Vahana (vehicle) is a swan (or sometimes a peacock).

My dad used to worship Saraswati once a year (on her "feast" day) in a very modest ceremony. His wealthy friends used to worship Lakshmi in much more elaborate (and expensive) rituals.

To me this works across cultures- either you worship money, or you worship the truth. The numbers of Saraswati followers are dwindling fast.

The Pew Internet & American Life Project finds that over half of all teens have their own blog or have contributed photos, text or artwork to a blog or other Web site.

"American teenagers today are utilizing the interactive capabilities of the internet as they create and share their own media creations. Fully half of all teens and 57% of teens who use the internet could be considered Content Creators. They have created a blog or webpage, posted original artwork, photography, stories or videos online or remixed online content into their own new creations.

"Teens are often much more enthusiastic authors and readers of blogs than their adult counterparts. Teen bloggers, led by older girls, are a major part of this tech-savvy cohort. Teen bloggers are more fervent internet users than non-bloggers and have more experience with almost every online activity in the survey.

"Teens continue to actively download music and video from the internet and have used multiple sources to get their files. Those who get music files online believe it is unrealistic to expect people to self-regulate and avoid free downloading and file-sharing altogether.

Download the PDF here.

Kathy Sierra's blog post should make you think twice.

Even someone as mainstream as Sergio Zyman says: "The problem in marketing today is that we spend 95% of our time and money on advertising and 5% on the rest of the stuff. What I propose to you today is to flip it around: Spend 5% of your time and money on advertising and 95% on everything else. If you do that, you'll sell a lot more to your customers."

I agree. That's how I discovered Double Loop Marketing.

Interesting post on Tom Davenport's blog- "The Importance of Knowledge Workers in a Global Economy".

Davenport asks (and answers) the question: "Why did Drucker - and why should we - believe that knowledge workers and their productivity were so important to the world economy?"

Apparently "employee discount pricing" isn't exactly helping GM, Ford, and DaimlerChrysler.

Forbes reports that "the ultimate result of the promotion was the widening of an already-existing gap in perceived quality between Detroit's Big Three and their Japanese counterparts."

"After spiking during the summer, sales at the Big Three tumbled in September. Also falling were consumer scores for brand image, quality, credibility and perceived resale value, among other attributes, according to Brandimensions. GM and Ford, in particular, saw sales growth lag behind Toyota, Nissan and Honda by an even greater margin than they did in the spring, before employee pricing was implemented. Sales at both automakers dropped more than 20% from their September 2004 levels, while the three Japanese carmakers increased their sales at double-digit rates."

Note: The promotion hurt GM the most as the leader in starting the program... ouch!

John Hagel talks about the auto industry on his blog: Delphi, Detroit and Dead-Ends.

Good news for Toyota and Honda. Hybrids, anyone?

Paper Television

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Siemens has announced a new color display screen so thin and flexible it can be printed on to paper or foil, and so cheap it can be used on throw-away packaging.

Prediction: ads on toilet paper... aargh, what are we coming to?

Well, here it is. I'm blogging again. The old christiansarkar.com site is still available here.

One thing about blogging: once you start, truly start, it's hard to stop. I took over a year off, but I'm glad to be back in the blogosphere.

The danger with blogging is, of course, that you might take yourself too seriously.

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