January 2006 Archives

While I was thinking about the "State of the Union," I fell upon this article - "Decision-Making and Coping by Functionally Illiterate Consumers and Some Implications for Marketing Management" by Madhubalan Viswanathan, Jose Antonio Rosa and James Edwin Harris in the Journal of Marketing .

The article says:

"Over 20% of the US population consists of functionally illiterate consumers, yet we know very little about their thinking and behavior."

The article talks about how we need to market to these consumers to sell products more efficiently. Here are a few examples of what marketers can do to make the retail environment more friendly to illiterate customers (and for many others as well):

Clear, obvious presentation. Clear presentation of bottom-line prices for all items in a consistent color would enhance the information environment for low-literate consumers. The final price should be plainly presented, in addition to the original price and the discount. Moreover, the use of dollars and cents off rather than fraction or percentage off can make the final price concrete and obvious. Retail outlets should also consider simple computational aids for their customers, such as devices attached to shopping carts that scan product labels and keep running totals.

Consumer-friendly store layouts. Easy store layouts that minimize clutter and confusion are important for all consumers. But the layout takes on even greater significance for functionally illiterate consumers. Of particular significance are changes to layout that take away from the experience of shopping in a familiar environment. Prominent store signs should be supplemented with visual representations of product categories. Similarly, shelf and other in-store displays can communicate product information and make comparisons easier. Graphical representations of size, ingredients, and other information needed for comparisons would also be very helpful.

Helpful staffing. In light of the life experiences of low-literate consumers and issues of self-esteem and dependence, friendliness and trustworthiness are vital in building customer relationships. Their customer loyalty seems to follow from friendly encounters that engender trust. Like many of us, they want to feel understood and appreciated. Specialized training for employees should sensitize them to the unique characteristics of low-literate customers. Such an investment may well lead to a sustainable competitive advantage stemming from strong customer loyalty.

The solutions marketers devise for illiterate consumers may well coincide with solutions for a variety of other groups such as novice consumers, time-constrained consumers, consumers in developing countries, and consumers shopping in different environments, such as a foreign country.

Welcome to the Third World, US of A. Don't worry about the poor, let's just make sure we can sell 'em something!

Britton Manasco and I have just launched a new blog on business intelligence, analytics & performance. We've both been toying w/ the idea for some time (over a year, in my case) and the time seems right to go for it.

We've named the blog "Intelligent Economy" because that's what this movement is about.

When I took a sabbatical many years ago to teach Math to highschool kids, I used to think "Mathematics is God's language." Now, increasingly, it is also the language of business.

Britton's done a great job explaining the context in his post "Friends, Romans, Catalysts, Lend Us Your Ears – and Your Minds."

I think it's going to be a fun journey. And if you've got some brilliant analytical research you need to share with the rest of the, drop us a line.

Here we go again. Wired has a story on The Importance of Being Pretty.

They're talking about your website.

Says Wired: "Internet users can give websites a thumbs up or thumbs down in less than the blink of an eye, according to a study by Canadian researchers. In just a brief one-twentieth of a second -- less than half the time it takes to blink -- people make aesthetic judgments that influence the rest of their experience with an internet site."

The study in question comes to us from Dr. Gitte Lindgaard, a psychology professor at Carleton University in Ottawa. She's the "NSERC/Cognos Industrial Research Chair in User-Centred Design" at Carleton.

No one mentions the report title, but I believe it's this one: "Attention web designers: you have 50 milliseconds to make a good first impression", Behaviour & Information Technology, 25, 115-126, Lindgaard, G., Dudek, C., Fernandes, G. & Brown, J., 2005.

In the study, researchers discovered that people could rate the visual appeal of sites after seeing them for just one-twentieth of a second. These judgments were not random, the researchers found -- sites that were flashed up twice were given similar ratings both times.

"Unless the first impression is favorable, visitors will be out of your site before they even know that you might be offering more than your competitors," said Lindegaard.

But the results did not show how to win a positive reaction from users, admitted Lindgaard. "When we looked at the websites that we tested, there is really nothing there that tells us what leads to dislike or to like."

And while further research may offer more clues, she said the vagaries of personal taste would always be a limiting factor. "If design were reducible to a set of principles, wouldn't we find an awful lot of similar houses, gardens, cars, rooms?" said Lindgaard. "You'd have no variety."

This study is just another example of lab-myopia. It's dangerous. And detrimental to real-world business performance. Lindgaard doesn't get it.

The real question is: how many people who come to your website do something you want them to do - buy something, opt-in, download a whitepaper, join a discussion, etc. The question is NOT if you have a pretty site, but: "How effective is your site?"

I'm not the only one turned off by this type of stupidity:

- Gerry McGovern: "It is unquestionably true that people are highly impatient on the Web. However, it is hard to understand how people can get an impression of a website in one twentieth of a second, when most webpages takes several seconds to download. (Laboratory conditions are not the same as real-life conditions.) Function and visual appeal do not have to be in conflict. However, it is clear that the websites that are making the most money are focusing much more on function than visual appeal. What would be the value of asking people to rate the visual appeal of Ryanair.com, Aerlingus.com, eBay.com, or Yahoo? We need to be careful about the questions we ask because they could lead us down the wrong path.

- Jakob Nielsen: It's a dangerous mistake to believe that statistical research is somehow more scientific or credible than insight-based observational research. In fact, most statistical research is less credible than qualitative studies. Design research is not like medical science: ethnography is its closest analogy in traditional fields of science. User interfaces and usability are highly contextual, and their effectiveness depends on a broad understanding of human behavior. Typically, designers must combine and trade-off design guidelines, which requires some understanding of the rationale and principles behind the recommendations. Issues that are so specific that a formula can pinpoint them are usually irrelevant for practical design projects.

Online, form without function is a disaster.

And that's why I get mad at "lab-researchers" like Lindgaard.

From BusinessWeek:

"Over the past decade, Korea's Samsung Electronics has transformed itself from a copycat producer of uninspiring goods into one of the world's top consumer-electronics brands. Much of that transformation is due to a shift in power at the company from engineers to designers. Samsung's rebirth has inspired other Korean companies to place a greater emphasis on design -- in fact, it has energized the country's design community."

An interview with Lee Kun Pyo, director of the Human-Centered Interaction Design Laboratory at the Korea Advanced Institute of Science & Technology on the changes sweeping Korean design >>

What I found interesting:

"Koreans traditionally don't articulate what they're doing beforehand. They're very contextual. Of course they do customer research and product planning and user-centered design and so on. But they quickly arrive at solutions, then look at the solution to find any further problems. Some might say that's unsystematic, but it's really very dynamic. And it works well for products with a short lifecycle, like mobile phones or MP3 players."

and

"Things are changing. In the past, product planning was done by marketing people who would choose product concepts by statistics, and engineers would present the structural requirements. The designers always lost the game. But now the head of Samsung's mobile division asks the designer to make a mockup and throws it to the engineer and says, "Make it." The opportunity has been handed over to the designers."

and

"Korea has 230 design schools -- more than America."

hmmm...

The internet helps maintain people's social networks, and connects them to members of their social network when they need help. 60 million Americans have turned to the internet for help with major life decisions. These are the findings of a new report from the Pew Internet & American Life Project.

Summary of findings:

1. The internet helps build social capital.

2. The internet plays socially beneficial roles in a world moving towards “networked individualism.”

3. Email allows people to get help from their social networks and the web lets them gather information and find support and information as they face important decisions.

4. The internet supports social networks.

5. Email is more capable than in-person or phone communication of facilitating regular contact with large networks.

6. Email is a tool of “glocalization.” It connects distant friends and relatives, yet it also connects those who live nearby.

7. Email does not seduce people away from in-person and phone contact.

8. People use the internet to put their social networks into motion when they need help with important issues in their lives.

9. The internet’s role is important in explaining the greater likelihood of online users getting help as compared to non-users.

10. Americans’ use of a range of information technologies smooths their paths to getting help. Those with many significant ties and access to people with a variety of different occupations are more likely to get help from their networks.

11. Internet users have somewhat larger social networks than non-users. The median size of an American’s network of core and significant ties is 35. For internet users, the median network size is 37; for non-users it is 30.

12. About 60 million Americans say the internet has played an important or crucial role in helping them deal with at least one major life decision in the past two years.

13. The number of Americans relying on the internet for major life decisions has increased by one-third since 2002.

14. At major moments, some people say the internet helps them connect with other people and experts who help them make choices. Others say that the web helps them get information and compare options as they face decisions.

Source: Jeffrey Boase, John B. Horrigan, Barry Wellman, Barry, and Lee Rainie. The Strength of Internet Ties. Washington, DC: Pew Internet & American Life Project, January 2006.

Wise companies will look at this report carefully, and figure out ways to use this social power of internetworking.

Bill Gates on Knowledge Work

| No TrackBacks

In his latest column in Newsweek, Bill Gates talks about knowledge as an adjective- as in knowledge economy, knowledge worker, knowledge networks etc.

He mentions Tom Davenport's definition of knowledge: "Knowledge is information combined with experience, context, interpretation, and reflection." .

And here's where he says something interesting: "We've gone a long way toward optimizing how we use information, we haven't yet done the same for knowledge."

Says Gates: "Researchers at Microsoft and elsewhere are developing technology that can unobtrusively "watch" you working, then make suggestions about related subjects or ideas. Interestingly, even if the software makes a bad guess, it can still be valuable in helping spark new ideas. Computer scientists are also making progress against a long-held dream of "intelligent agents" that anticipate your needs and provide just-in-time information that's relevant to the work you're doing. Experimental programs known as reasoning engines can test your ideas against common-sense logic, spotting flaws in hypotheses and acting as "virtual subject experts" to help guide your thinking."

I have an idea for Gates in this regard, but I don't know how to get it to him (maybe I'll ask my buddy Tom Davenport). But the knowledge in a knowledge network resides in the heads of people. Why not connect people to other people? Or better yet, to virtual communities on that topic? I've said too much already.

Laurence Haughton speaks softly, but his message comes through loud and clear:

Fact 1: 1/2 of all a company's strategies and initiatives will fail to make it from the drawing board to the front lines

Fact 2: Because 2/3 of all managers follow through using tactics prone to fail

Fact 3: And only 1 out of 10 companies have the tools to address this critical breakdown

A management consultant, lecturer, and business writer, Haughton's latest book, It’s Not What You Say… It’s What You Do – How Following Through at Every Level Can Make or Break Your Company was published by Doubleday in 2005.

In 2001 Haughton co-authored It’s Not the Big that Eat the Small… It’s the FAST that Eat the Slow– a Wall Street Journal, USA Today, and New York Times bestseller that was translated for sale in 26 countries around the world.

Here's the interview I've been promising to post on the site.

What made you write this book?

I wanted to know why half of all initiatives fail, and what leaders at every level can do about it. Of course, I had preconceived notions of what I thought the problems were, but was surprised to find that almost all of them were dead wrong…

Can you give us an example of that?

The biggest preconceived notion I had was that there wasn't enough accountability in the world, and that why things didn’t get done. I used to think that people didn’t take completing their work seriously or their bosses didn’t make the consequences serious enough.

I have a very high degree of what psychologists would call conscientiousness, which can make me a real pain to be around. So that’s why I thought I got things done, and others didn’t.

So you're the worrywart for everyone...

Also a nag. I used to look to blame people. I've visited companies that work that way, and I'm now convinced that's dead wrong.

So the concept that all the world needs is accountability and more dire consequences, or the opposite view- a motivationalist view that all you need is more attaboys! Whichever side you want to be on, they're both wrong.

The key is that you have to find the line between enough and too much accountability. The line is not that hard to find. I lay out a prescription in the book. But it depends on the type of project you're working on. For example, is it more important that everyone communicates, coordinates and cooperates or is it more important that you know to last scintilla who it is that specifically dropped the ball that caused an interruption. Pinpoint accountability is totally unproductive in certain industries- the airline industry, for example. Research shows us that managers who take accountability too far, especially in businesses where follow through requires rapid responses to unpredictable changes, chip away at each individual’s willingness to look past personal interests and work with others to make sure what's expected gets done.

In the book you're saying that execution is critical. And yet you take Larry Bossidy to task.

It was Linda Lockwood at Charles Schwab who lifted the veil from my eyes about the Larry Bossidy's memo in his book. She's the one who said it was the "same old corporate gobbledygook." Bossidy's memo did not set clear expectations. And Linda wondered aloud: "How could managers tell when they had achieved Bossidy's objectives?"

I can tell you that woke me up.

Then I started exploring the difficulty that people have when directions aren't clear.

My book describes 4 building blocks that were developed after research showed us that 66% of managers use tactics that are prone to fail. And the tactics fall under the 4 building blocks I describe in my book. I use the 4 building blocks to make it plain, to explain step-by-step what to watch out for.

It's so important that you have measurable objectives but even more important, you've got to have clarity. It was Einstein who said that if a scientific theory can't be explained to a child it's probably worthless.

Think of the stuff that you read - the obtuse language, the jargon - in the marketing world and HR world for example.

The team leader's job is to make people understand, not confuse them. Not everyone has to be as smart as the leader as Linda pointed out, but everyone has to understand where we're going as a team.

So let's talk about the 4 building blocks...

The four building blocks are:

1. Having a clear direction so everyone knows exactly where they're headed
2. Matching the right people to each goal
3. Getting the right level of buy-in (you have to outmaneuver the CAVE people)
4. Unlocking the individual initiative in every member of the team

Simple enough. But it's far more complicated than you'd expect.

The first building block is clear direction that says that if you talk to people, more that half the time people can't see a connection between what they’re doing and what the corporate objectives are. Why cant; they. It starts with the fact that as leaders, as managers we're not clear. Sometimes we're trained to say things in a vague and general way instead of doing what Douglas Smith says- make success measurable. Be specific, have some idea about how you measure the results you want and how the accountability gets divided in the team. To begin, just ask yourself- "is what I told them to do measurable, is it specific enough?"

In the book I describe the executive who is told by a 16 year old kid that "sometimes it seems like you're writing to impress yourself."

It's our job to make sure that what we say makes sense and is understood at every level of the company- by both platinum level players and nickel level players, and everyone in between.

We all need to recognize that we have empathy inside us, and that we can up our ability to empathize. In the book I talk about reading between the lines. Take the world of the high-end restaurant business. A very competitive business, low barriers to entry… so how do you compete? How do you compete with people who are paid $12-15 dollars an hour?

In the book we tell readers about Richard Coraine of the Union Square Hospitality Group in Manhattan. They have created a process of "enlightened hospitality" which I describe as a real-time sixth-sense of their customer's expectations, followed by an effort to exceed those expectations. Coraine tells us the story of how a reservations person noticed the guest whose valise had a broken grip (he held it under his arm so his client wouldn't notice). While the guest entertained his client over lunch (at a quiet table selected by the host), the valise is sent around the block and the strap is reattached. When the guest comes to check out, the host hands him the bag by the grip to show him its fixed, without a word being exchanged. That's "enlightened hospitality."

The key is to "put yourself in someone's shoes." That's what Coraine has created, a recipe for that includes smarts, heart, and courage. There's another story he tells us in the book as well, but you'll have to read it.

You mean the one about "chicken soup and crackers" after midnight?

(Laughs) Yes.

You mention how critical it is to make accurate assessments. How does that work?

Here's something else that keeps coming up: "We tried that and it didn't work, so we tried something else."
How many times do executives try a change program and when it doesn’t work, they simply come up with another change initiative. This is a huge problem.

But some companies have the courage to stay the course. Take the case of SSM Health Care, another company I outline in the book. After 5 years of spending money and seminars and intense work on total quality management, a senior executive gets asked "Are we still doing CQI?" CQI was the continuous-quality-improvement initiative they had introduced five years earlier.

To their credit, they realized they had been "mucking around." So they dug in. Something was missing. And it came out that the problem was that they were not making accurate assessments. They were trying to solve problems before they did a decent stab at the root-cause.

Ask "why" 5 times. The tendency is to try to fix something as soon as you see something wrong. Problem is people try to fix problems quickly, but they don't fix the root cause. Why? Because they didn't ask why enough.

The Five Whys is not new. It comes to us from Taiichi Ohno, the creator of the Toyota Production System. He believed that if managers wanted to start with a clear and accurate assessment of any problem, they had to ask why five times before trying to create a solution.

I also mention the case of Bill Zollars at Yellow Transportation- he wanted the company to start exceeding customer expectations by making sure their clients were very satisfied, not just satisfied, mind you, but very satisfied. He found out that the assessment his VP of Marketing had made of customer satisfaction was way, way off. And he found this out because he delved deeper. He checked the accuracy of their assessments.

Let’s talk about choosing the right people – the second building block…

Sure – I come from a background where you hire for experience. While researching this book, I found out that sometimes it's more important to hire attitude over experience.

There’s another myth out there that says that anyone can accomplish anything if they just put their mind to it. There’s so much junk science out there that I had to really to clear the weeds, to find out what really works.

For example, research tells us those managers who make sure there’s the right fit between people and their goals before they take action double the likelihood of success.

There are people who are perfectly suited for the New York Yankees style of management. Others aren’t.

Sometimes the HR bureaucracy doesn’t give you the time. I talked to a manager who said they had 45 minutes to interview each candidate, which was simply not enough to get to know someone before hiring them.

HR sometimes is its own worst enemy.

Now at IKEA we have something different. Why? Because Pernille Spiers-Lopez, the president of IKEA North America. spent four years as manager of human resources for IKEA North America before being named president. She doesn’t have to put up with the nonsense. They’ve totally reinvented the HR function and it’s a beautiful thing to see. I did not talk about this in the book, but the IKEA hiring process gives them a competitive advantage.

[Note: Working Mother magazine named IKEA North America one of the 100 best companies for working mothers and singled out Spiers-Lopez for its Family Champion Award. The company provides benefits not widely offered retail workers in the U.S: full medical and dental insurance for those who work as little as 20 hours a week, including coverage for domestic partners and children; paid maternity leave; tuition assistance; a 401(k) matching plan and flexible work schedules. Spiers-Lopez was named president in 2001, when sales staff turnover was 76%. The next year these and other policies helped the company slash turnover to 56%.]

HR people are dying to get a seat at the strategy table. They have to be invited to the table because they bring something to the table. Traditional HR does not.

The key again is to connect personal goals to the goals of the organization. And sometimes that doesn’t just happen. As a leader, you have to make it happen. And if HR is going to be relevant, its got to become better at identifying and discovering talent.

And you’re only going to make that happen if you can outmaneuver the CAVE people.

Who are these CAVE people?

Anand Sharma at TBM Consulting Group gave me that acronym.

CAVE stands for Citizens Against Virtually Everything.

Just as our bodies have an immune system that assaults everything new and unfamiliar, organizations have their own auto-immune response that impulsively and instinctively attacks everything new or different- the CAVE people. They work overtly and covertly to undermine the change initiative your company is depending on. In the book I outline the strategy for outmaneuvering them, to give your change initiative a fighting chance of success.

Can you give us a hint how? How do you outmaneuver the CAVE people?

Anand Sharma was very kind to share these insights with our readers. I go into the details in the book, but essentially:

1. Kick off your change initiative with a “wow” event.
2. Blitzkrieg them (follow through so fast the CAVE people don’t have time to organize resistance)
3. Create disciples from the rank and file
4. Take your success story straight to the top

The bottom line is to execute, you simply have to get past the CAVE people.

Why are some people so motivated? And others so unmotivated? And why do incentive plans not work? That’s something I examine in the book as well.

This is all great, actionable knowledge for executives who want to get things done. We should let people buy the book to get the full story. Thanks for all your time.

Thank you.

A must read for everyone from the CEO on down...

John Hagel and John Seely Brown have prepared this paper for the Annual Meeting of the World Economic Forum in Davos, Switzerland January 25 – 30, 2006.

It's called: Connecting Globalization & Innovation: Some Contrarian Perspectives. [registration is required].

In the introduction, they say:

"We are only now beginning to grapple with the full implications of a globalizing economy. Tom Friedman captured our imagination with the powerful metaphor communicated in the title of his new best-selling book - The World Is Flat – but he tells only part of the story. In the process, he may leave many with a misleading impression. The world is not just flattening; it is also creating significant new opportunities to innovate and build strategic advantage. Much has been written about globalization and innovation as distinct topics, but few analysts have focused on exploring the connection between the two. Those who understand this connection – whether they are well established Western enterprises or entrepreneurial companies in emerging economies like China and India - will be able to create economic value on an unprecedented scale.

"Many companies in China and India are developing an innovative set of management techniques specifically focused on exploiting these opportunities. They are pursuing a radical, yet very pragmatic, bootstrapping approach to build capabilities while addressing near-term market opportunities. In a world of intensifying competition and increasing uncertainty, even the very largest companies need to master these bootstrapping techniques to compete successfully.

The three contrarian messages:

1) Bootstrapping is not just for small, entrepreneurial companies.
2) The United States is no longer the global center of innovation in management practices.
3) Product innovation is not the most powerful form of innovation, even though this is what most Western executives focus on when they think about innovation.

Sign up and read the whole thing. It's an eye-opener!

MWW's Michael Kempner tells us:

"When I hear his [Walter Cronkite's] comments today, it strikes me that there is no better example of how materially the media has changed since the 1960's. Today, no one person and no single television network newscast own the hearts and minds of the American public. Cronkite's words and the parallels to the power of his 1968 comments clearly illustrate how diffused and muddled the media has become since that time. Today, it's more likely that public opinion will be shaped by a group of unknown bloggers, Internet coverage, and 24 Hour Cable News than a talking head on ABC, NBC or CBS. While network news still has an important place in informing and influencing opinion, they are now but one piece of the puzzle. Today, public opinion is more likely to be shaped by a person's favorite ideologically attuned media outlet or by "group reporting," where scores of media chase each others' stories, than by a singular and powerful voice."

Kempner's comment made me think- aside from the fragmentation of media, people don't listen anymore. They are closed to voices outside their comfort zone. Not only is there no conversation, there is no attempt at dialogue. Either/Or. For us or against us. And this explains why people who listen to Pat Robertson won't hear any other voices, period.

I'm guilty too. I listen to the voices I want to hear, and discount others. I'm not saying everyone should have equal time. But it helps to have different perspectives. Edge perspectives.

Is there anything or anyone that unites us? Events, perhaps, like Katrina or the World Cup. But even with Katrina, we saw the bifurcation of reality based on politics.

Chris Charron defines a digital experience as products and services integrated end-to-end under the control of a single application. Digital experiences have three parts: 1) available content and services; 2) personal control devices; and 3) portable players and peripherals. All of these parts come together under one application in a single business model.

This is a good start, but it is a "business-view" of experience. Digital experiences are not restricted to on application or a single business model. That's why businesses are having such trouble dealing with digital experiences.

Digital experiences are transcendent experiences, and go beyond content and services. The part Chris Charron leaves out is interaction. And digital interactions span applications, devices, and most importantly, business models.

Human beings are not business models.

Ask Walker Percy about that! [Hat-tip to William Dunk]

Trust: Mad Cows & Japan

| No TrackBacks

I don't blame the Japanese at all. At least they're trying to protect their citizens. From Marketwatch:

"Japan said it will halt U.S. beef imports until Washington clarifies how the parts got into the shipment. Japan lifted a ban on U.S. beef just a month ago.

"U.S. agriculture authorities are investigating how a shipment of animal parts at risk for mad-cow disease wound up in Japan despite a pledge not to export those parts, the government said Friday."

Here's what shocked me in the article:

"The incident comes on the heels of a two-year ban on U.S. beef imports into Japan that Tokyo imposed after discovering a case of the disease in December 2003."

Hello!

I gave up eating beef a few years ago; can't say I miss it at all. Does anyone trust the government anymore?

Oh, mercy mercy me
Oh, things ain't what they used to be
No, no
Where did all the blue sky go?
Poison is the wind that blows
From the north, east, south, and sea
Oh, mercy mercy me
Oh, things ain't what they used to be
No, no
Oil wasted on the oceans and upon our seas
Fish full of mercury
Oh, mercy mercy me
Oh, things ain't what they used to be
No, no
Radiation in the ground and in the sky
Animals and birds who live nearby are dying
Oh, mercy mercy me
Oh, things ain't what they used to be
What about this overcrowded land?
How much more abuse from man can you stand?
My sweet Lord
My sweet Lord
My sweet Lord

Again, from the Economist:

"...PR is surprisingly effective, at least according to a recent study by Procter & Gamble, the world's biggest consumer-products group. P&G is a firm that marketers pay a lot of attention to, not least because of its advertising budget of some $4 billion. It has always been at the cutting-edge of marketing—P&G is credited with inventing the television soap opera as a new way to sell goods. But with fewer people watching television and the circulation of many papers and magazines declining, the firm has become pickier about where it spends its advertising budget. Increasingly, it wants a measurable return on investment from its campaigns."

Read it in the news >>

My point- at least PR is trying to tell a story.

So how does advertising fight back? With knowledge and entertainment, and yes, branded-experiences. Problem is most agencies are too stupid. Maybe it's the stupidity of the clients.

Both PR and Ad agencies are inauthentic. Why do you want to hear propaganda and lies all day long? Give us truth, knowledge, insight, and a little bit of humor. Talk, don't preach. Get a conversation going. And don't talk about your products unless I ask you a question.

Of course, I'm talking about double loop marketing.

Asks the Economist:

"IN A letter about pay-rises to staff at the Sun last year, Britain's biggest-selling newspaper, Rebekah Wade, its editor, remarked that in future the paper's success would probably depend more on free CDs and DVDs than on its journalists. British newspapers are frenziedly giving things away, and in Germany, France, Italy, Poland and throughout Latin America papers are also increasingly relying on freebies to try to attract new readers. In Britain the circulation of national newspapers fell by 3% in 2005, following a 2% decline in 2004. The same pattern of falling circulation is being repeated across Europe and the United States. So are all the free gifts a sign of desperation from newspapers, or an entirely sensible new marketing strategy?"

My "hero" Rupert Murdoch, owner of the Sun and the Times, said last November that he dislikes it because “people grab the paper, tear the DVD off and throw away the paper”. He's right.

This is the same kind of stupidity that software companies engage in when they give away free T-shirts. They don't attract the target audience, but end up with droves of kids wearing ".NET" T-shirts. A friend of mine used to give away free T-shirts to the homeless, until his boss found out. Hurts the brand, you know.

Bet you 85% of the people grabbing the CDs and DVDs don't read the paper at all.

This is what I call GM-style management.

Read all about it!

Don't Cry for Hollywood

| No TrackBacks

From the Economist:

" Hollywood took 7% less at the box office in 2005 than in 2004 and growth in sales of DVDs has slowed. Internet video threatens the satellite and cable systems of companies such as News Corporation and Time Warner. Dozens of advertisers are shifting budgets from television to such places as the internet and billboards. Brand-owners hate it that people are using digital video recorders to avoid their pitches. And if media firms move on to the internet themselves, they risk losing their films and television programmes to pirates.

and

"Any media business has two products to sell: its content (to readers and viewers); and its audience (to advertisers). The task for old media is first to protect its advertising revenues by amassing audiences online and, second, to offset their viewers' intolerance of mass-advertising by making them pay more for content—which they are increasingly willing to do. It will not be easy, but then saving the heroine never was. "

Read the article >>

Hollywood has lost its imagination. The irony of it all - Michael Eisner gets his own show on creativity and innovation while the very company he helped destroy [Disney] is negotiating vigorously to acquire Pixar.

Cartoon: The Hollow Men

| No TrackBacks

Who wants to be the knowledge repository for all mankind?

The race is on:

- Encyclopædia Britannica: the free stuff is weak! [rank= 2,839]
- Wikipedia: a controversy on quality [rank = 31]
- Digital Universe: slow going in building out the "portals" [rank = 150,326]
- Squidoo: too quirky? [rank = 6,290]

and of course there's Google...

I'm betting on two things: "free" and "ease-of-use" - and the winner (today) is Wikipedia.

"I expect that we may not see CES in Las Vegas that much longer. Any bets on when it will move to Shanghai?"

The global innovation landscape is changing. And Hagel's got his finger on the pulse.

Doug Smith lets the IRS have it:

"Ought the people at the IRS care about and seek to reduce cheating? Of course. But, when employees at IRS go home at night and tell their family about 'what their shared values stand for', do they seek to say, 'we believe so strongly in catching cheaters that we accept and indeed defend the need to make poor, innocent and law abiding people even poorer.' "

Strong stuff >>

I'm amazed at Doug Smith's constant and unrelenting fight to set things straight. Take a look at www.douglasksmith.com. See what I mean?

The nerds at McKinsey are at it again with their sweeping generalities and "big-picture" historical perspectives.

The article - Ten trends to watch in 2006 - is rather underwhelming:

"Those who say that business success is all about execution are wrong. [what?!!] The right product markets, technology, and geography are critical components of long-term economic performance. Bad industries usually trump good management, however: in sectors such as banking, telecommunications, and technology, almost two-thirds of the organic growth of listed Western companies can be attributed to being in the right markets and geographies. Companies that ride the currents succeed; those that swim against them usually struggle. Identifying these currents and developing strategies to navigate them are vital to corporate success.

"What are the currents that will make the world of 2015 a very different place to do business from the world of today? Predicting short-term changes or shocks is often a fool's errand. But forecasting long-term directional change is possible by identifying trends through an analysis of deep history rather than of the shallow past. Even the Internet took more than 30 years to become an overnight phenomenon."

Here are the trends they've identified. Wow, I'm speechless.

Macroeconomic trends
1. Centers of economic activity will shift profoundly, not just globally, but also regionally.
2. Public-sector activities will balloon, making productivity gains essential.
3. The consumer landscape will change and expand significantly.

Social and environmental trends
4. Technological connectivity will transform the way people live and interact.
5. The battlefield for talent will shift.
6. The role and behavior of big business will come under increasingly sharp scrutiny.
7. Demand for natural resources will grow, as will the strain on the environment.

Business and industry trends
8. New global industry structures are emerging.
9. Management will go from art to science.
10. Ubiquitous access to information is changing the economics of knowledge.

Advice to CEOs - if this is the advice you're paying McKinsey for, save your money! Just read your Economist and the Global Province every week and you'll come out ahead!

Poor show, Mr. Davis. If you're listening, Fred Gluck - it's time to get back in and take names and kick some ...

Jobs in a Newsweek interview:

Your new iLife software has a blogging application. When will you start your own blog?
(Laughs.) "After I get a few days of rest."

He'll never get a few days of rest. So the answer is no, the man will not be blogging!

P.S. - Here's a great commencement speech by Jobs. >>

Here's a great interview with Professor Christensen in BusinessWeek:

Apple is doing phenomenally well these days. It seems it's doing a textbook job of maintaining huge market share in digital music players, long after most experts thought that share would erode. And it's doing so with the same proprietary strategy that many thought would never stand up to an onslaught from the likes of Microsoft (MSFT), Wal-Mart (WMT), and Yahoo! (YHOO). Can Apple keep it up?
I don't think so. Look at any industry -- not just computers and MP3 players. You also see it in aircrafts and software, and medical devices, and over and over. During the early stages of an industry, when the functionality and reliability of a product isn't yet adequate to meet customer's needs, a proprietary solution is almost always the right solution -- because it allows you to knit all the pieces together in an optimized way.

But once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.

In the modular PC world, that meant Microsoft and Intel (INTC), and the same thing will happen in the iPod world as well. Apple may think the proprietary iPod is their competitive advantage, but it's temporary. In the future, what will matter will be the software inside that lets users find exactly the kind of music they want to listen to, when and where they want to, with minimal effort.

But Apple has that software. It can be the one to provide that to everyone else, if it chose to, right?
I'm concerned that they'll miss it. It's the fork in the road -- and it's comparable to the fork they faced when they chose not to open up the Mac in the 1980s, when they let Microsoft become Microsoft.

How long will Apple have to make this change?
I'd be very surprised if three years from now, the proprietary architecture is as dominant as it is now. Think about the PC. Apple dominated the market in 1983, but by 1987, the industry-standard companies, such as IBM (IBM) and Compaq, had begun to take over.

Christensen also says something interesting about hedge funds: don't even think about them as shareholders!

Read the BW article >>

See also my post: Clayton Christensen: The Innovator's Battle Plan and my interview with Clayton Christensen >>

China’s 5 Surprises + 1

| 1 TrackBack

From S+B:

Five facets of business in China may surprise most outsiders:

1. Local entrepreneurs are interested in producing global brands, not just low-cost commodities
2. China has become a hotbed for rapid innovation
3. Executives from around the world are moving to China for the long haul
4. Good management and transparency are starting to count more than patronage, at least in some sectors
5. China is becoming a catalyst for growth in emerging markets throughout the developing world.

Let's add another surprise:

6: China is becoming a market for high-end luxury items once thought to be "exclusive" for the western elite and Middle-East oil-barons.

Also:

"Because they are in such a hurry to make a place for themselves, and because it is still early in the life cycle of their ambition, Chinese entrepreneurs tend to give the impression that they don’t care much about quality. However, that is not universally true. Many of them recognize the trade-offs among cost, quality, and time that exist for any startup, and they have explicitly chosen designs and processes that sacrifice quality for the sake of speed and cost savings.

"But this doesn’t mean that China will always be a nation of commodity enterprises; indeed, many Chinese businesspeople know the price of a Motorola phone in Chicago or a pair of Nike sneakers in Manhattan. They ask themselves, “If I can make these things, why can’t I sell them for higher prices?” Some of them are already laying the groundwork for the evolution of their industries from low-cost producers of shoes, handsets, and components to branded enterprises."

Read the entire article here.

This will come back to bite almost all of our western "outsourcers." See "Innovation Blowback" by JSB and JH3 >>

Here's how Singapore is dealing with the bird flu:

1) they have a website: http://www.flu.gov.sg/

2) they have a Bird-Flu Brochure available in English, Chinese, Malay, and Tamil

3) they have a Powerpoint presentation

If you think this is funny, consider that they're ahead of the US. Why? See below >>

4) they have a stockpile of Tamiflu [The US doesn't...]

Who Speaks for the Earth?

| No TrackBacks

Time for a rant...

From the Guardian:

"It is on climate change that Labour has chalked up its worst record since it came to power. Tony Blair may have been good on the rhetoric in the run-up to the G8 last year (though his wobbles on Kyoto did huge damage) but the domestic front has been an abysmal failure of broken promises and backtracking. "Betrayal" doesn't quite convey the intensity of the environmental movement's shock at how, despite all the evidence of the urgency of tackling climate change piled up by scientists over 2005, the government has succeeded in doing very little other than reigniting an old (and many can reasonably argue, irrelevant) debate about the nuclear option.

"But the anger and frustration is only intensified by the fact that, frankly, outside a few well-informed environmental activists, nobody is much bothered. The environment was virtually invisible in the 2005 election. Even more galling, environmentalists saw the hundreds of thousands of development campaigners pouring on to the streets of Edinburgh and the millions who watched Live8 and asked themselves: why can't we match that?

"Looked at objectively it makes no sense. Climate change will dwarf the damage the common agricultural policy subsidies wreak on African farmers; it is already costing at least 150,000 lives a year as warmer temperatures encourage disease, and erratic rainfall will starve millions in coming years. Here is an issue that makes all the aid and debt deals of 2005 look like an afternoon parlour game. Yet such was the momentum of the Make Poverty History campaign that climate change slipped off the public radar and environmental groups felt they couldn't compete."

So who speaks for the Earth? Certainly not Exxon. Not Bush or Blair.

Well, the Earth speaks for herself. And we just are beginning to feel her anger:

- The prairie burns, children.
- The ice-caps are melting.
- The frogs are dying.
- Goodbye polar bears.

It doesn't matter if you're red or blue, get ready for three or four Katrinas a year.

We may be teaching sustainability to a few kids here and there, but our business leaders are too blind and our political leaders too corrupt.

Will the mainstream media ever cover this?

Grizzly-shooting, anyone?

This is the kind of sensationalized news release for "research" that states the obvious: don't operate heavy machinery immediately after waking up.

A person's thinking ability may be better after being awake for 24 hours or being drunk than it is following a good night's sleep, a study suggests.

A University of Colorado team found understanding and short-term memory were worse in the minutes after waking.

No duh.

"Nobody should be doing anything really important for 15 to 30 minutes after they wake up." says Dr Neil Stanley, of the British Sleep Society.

There, case closed.

I wonder if anyone is doing research to find out if mental skills are better or worse immediately after watching FOX news, or for that matter, 6 hours on the X-box...

In the coming year India will enjoy greater international prestige than at any time since independence in 1947. With an economy that could grow at more than 7% for the fourth year in succession, that prestige is based in part on sheer clout. Over the next half-century India will emerge as one of the world’s biggest economies and great powers...

Listen to or download this podcast discussion on India's emerging market with Simon Long, South Asia bureau chief, The Economist.

"There's no substitute for personal experience, and both O'Connor and Ginsburg suffered sex discrimination in trying to get an education and a decent job practicing law afterward. O'Connor was offered only legal secretary positions after getting her law degree. Ginsburg was asked by the law school dean what it felt like to occupy a place that could have gone to a deserving man, and she was refused even an interview for law clerk after graduating. The stated reason? Her gender. Those kind of experiences undoubtedly played a role in Ginsburg's consistently pro-woman rulings and O'Connor's upholding of principles underlying women's rights in the workplace."

With Alito, there are justified fears that women (and minorities) will continue to be given the seats in the back of the bus- by business, government, and society.

Read the article from Alternet >>

Meanwhile, Gloria Steinem says:

"In a general way, women become more radical as they get older. The pattern is that women are conservative when they're young. That's when there's the most pressure on us to conform, when we're potential child bearers and sex objects. And we lose power when we get older. Which is a very radicalizing experience." Men are the opposite, she said -- rebels when they're young, uptight when they're grown-ups."

I sort of agree with her.

The sad thing is that for business in the US, women are the key differentiators. Look at Japan - where women (for the most part) aren't even allowed on the bus.

Treating women as second-class workers is just bad for business.

From Peter Drucker:

"Knowledge gives choice. It also explains why we suddenly have women in the same jobs as men. Historically, men and women have always had equal participation in the labor force -- the idea of the idle housewife is a 19th-century delusion. Men and women simply did different jobs. There's no civilization in which the two genders did the same work. However, knowledge work knows no gender; men and women do the same jobs. This, too, is a major change in the human condition."

and

"The greatest competitive advantage of the United States is that it attracts top knowledge workers from around the world -- not just because they earn more money but because they are treated as colleagues, not as subordinates. Knowledge workers don't believe they are paid to work 9 to 5; they believe they're paid to be effective. Organizations that understand this -- and strip away everything that gets in their knowledge workers' way -- will be able to attract, hold, and motivate the best performers. That will be the single biggest factor for competitive advantage in the next 25 years."

Too bad we're turning our backs on this as a nation.

See also: Advice to Women who would be CEOs: "Stay away from HR"

Emory's Peter Topping has just started blogging at EmoryLeadership.org.

His blog is about leadership and it discontents... Here's his POV:

"I work with managerial leaders every day. My emphasis is on helping them find ways to enhance their leadership effectiveness incrementally – based upon their current leadership context.

"My purpose in offering this blog is to engage in dialog about how to do that at the highest possible level – what are the optimal ways to enable individuals to be better managerial leaders?"

Another blurb in Fortune caught my eye:

Why aren't there more female CEOs? Interestingly, that question (Nov. 14) inspired many more comments from men than from women, and plenty of them echoed this one, from Henrik S.: "When a man in a high position fails, the reason people give is never 'because he's a man.' Imagine, for example, how different the press coverage would have been if Michael Eisner had been Michelle Eisner." Most correspondents passed along advice for young female go-getters. The consensus: More women need to major in the sciences and engineering, go to business school, and, as one reader put it, "stay away from jobs in soft support-staff areas like HR, which don't usually lead to the top no matter who (male or female) is doing them."

It is a sad fact that women are just not getting to the top.

The culprit in my view is cultural inertia coupled with myopic vision in the boardroom.

See also: "Leadership in Your Midst: Tapping the Hidden Strengths of Minority Executives" by Sylvia Ann Hewlett, Carolyn Buck Luce, and Cornel West (yes, that Cornel West).

Here's the article abstract:

All companies value leadership--some of them enough to invest dearly in cultivating it. But few management teams seem to value one engine of leadership development that is right under their noses, churning out the kind of talent they need most. It's the complicated, overburdened but very rich lives of their minority managers. Minority professionals--particularly women of color--are called upon inordinately to lend their skills and guidance to activities outside their jobs. Sylvia Ann Hewlett, who heads the Center for Work-Life Policy, and her co-authors, Carolyn Buck Luce of Ernst & Young and Cornel West of Princeton, present new research on the extent to which minority professionals take on community service and other responsibilities outside the workplace and more than their share of recruiting, mentoring, and committee work within the workplace. These invisible lives, argue the authors, can be a source of competitive strength if companies can learn to recognize and further cultivate the cultural capital they represent. But it's hard to convince minority professionals that their employer respects and values their off-hours responsibilities. A lack of trust keeps many people from revealing much about their personal lives. The authors outline four ways companies can leverage hidden skills: Develop a new level of awareness of minority professionals' invisible lives; appreciate the outsize burdens these professionals carry and try to lighten them; build trust by putting teeth into diversity goals; and, to finish the job of leadership development, help minorities reflect on their off-hours experiences, extract and generalize the lessons, and apply what's been learned in other settings.

Frankly, it's even worse than this. Most companies (not just in the US) are still run by paternalistic, chauvinistic and yes, racist, management. I'll blog about this soon.

In the meantime, stay away from HR, PR, and Accounting- if you want to get to the top, that is.

Harvard's Richard Tedlow tells us the Andy Grove story in Fortune:

"At Intel he (Andy) fostered a culture in which "knowledge power" would trump "position power." Anyone could challenge anyone else's idea, so long as it was about the idea and not the person--and so long as you were ready for the demand "Prove it." That required data. Without data, an idea was only a story--a representation of reality and thus subject to distortion."

An example? How Grove managed his prostrate cancer treatment:

"...when he was diagnosed with prostate cancer in 1995, Grove found himself in the position of most patients: frightened, disoriented, and entirely reliant on the advice of doctors. Their advice was straightforward: Surgery was the best option, and that was pretty much all there was to it.

"Was it, though? It took very little to discover that there was much, much more to it. There were alternatives to surgery. No surgeon advised him to take them seriously. But the expert opinions, Grove soon determined, were just that--opinions, based on little if any hard data. Data did exist. What Grove found most shocking is that no one had done the hard work of pulling it together. Plainly, Grove would have to do it himself.

"The patient, in effect, became his own doctor."

and-

"What Grove found most appalling, in the end, was the utter fixity of belief among doctors who failed to separate knowledge from conventional wisdom. Even the doctor who carried out Grove's procedure was captive to it. "If you had what I have, what would you do?" Grove asked him at one point. The doctor said he'd probably have surgery. Confounded, Grove later asked why. The doctor thought about it. "You know," Grove remembers him saying, "all through medical training, they drummed into us that the gold standard for prostate cancer is surgery. I guess that still shapes my thinking."

On technology and strategy:

"His (Grove's) speech was a strong statement about strategy. Understanding comes from action. So "be quick and dirty," he said. "Engage and then plan. And get it better. Revolutions in our industry in our lifetime have taken place using exactly this formula. The best example is the IBM PC"--created on the fly by a team in Boca Raton."

There's more... Read the article >>

Here's a great post from Guy Kawasaki on the lies entrepreneurs tell, and sometimes actually believe:

I get pitched dozens of times every year, and every pitch contains at least three or four of these lies. I provide them not because I believe I can increase the level of honesty of entrepreneurs as much as to help entrepreneurs come up with new lies. At least new lies indicate a modicum of creativity!

1. “Our projections are conservative.”
2. “Gartner says our market will be $50 billion in 2010.”
3. “Boeing is going to sign our purchase order next week.”
4. “Key employees are set to join us as soon as we get funded.”
5. “No one is doing what we're doing.”
6. “No one can do what we're doing.”
7. “Hurry because several other venture capital firms are interested.”
8. “Oracle is too big/dumb/slow to be a threat.”
9. “We have a proven management team.”
10. “Patents make our product defensible.”
11. “All we have to do is get 1% of the market.”

Read the full post here >>

Disclosure: I have to say I'm guilty of #8 :-)

If you're interested in values and business sustainability, you should check out this double book deal on Amazon.com. For the rest of this month, you can buy On Value and Values by Doug Smith together with Our Endangered Values by Jimmy Carter and save $20.76...

See the details on Doug Smith's site >>

Soccer is the global attention magnet.

Don't believe it? Check out Google Video: one of the most popular clips is this one. I've watched it twice already. Henry, Roberto Carlos, Beckham, Ronaldinho, Ronaldo, Ziddane - you name 'em!

See this clip as well (it ends with Maradona's infamous "hand-of-God" goal against England)... and this, and this!

Google - you have a winner!

Usability guru Jakob Nielsen says: "search engines extract too much of the Web's value, leaving too little for the websites that actually create the content."

And: "In the long run, every time companies increase the value of their online businesses, they end up handing over all that added value to the search engines. Any gain is temporary; once competing sites improve their profit-per-visitor enough to increase their search bids, they'll drive up everybody's cost of traffic."

According to Nielsen, "liberation from search dependency is a strategic imperative for both websites and software vendors."

What does he mean? He means that companies need to focus on search engines for initial acquisition, but then bring them directly to the site- i.e. keep 'em coming back for more.

Again, his words: "The question is: How can websites devote more of their budgets to keeping customers, rather than simply advertising for new visitors?"

Nielsen offers the following suggestions:

- Email newsletters
- Request marketing
- Affiliate programs
- Newsfeeds
- Stick your URL onto any physical product you sell
- A hardware component that's hardwired to connect to your site's service
- Mobile features

I have a powerful answer: 'tis double loop marketing!

Read Nielesen's post >>

Bonus: an interview I did with Jakob Nielsen years ago now...

This one is so wierd, it could be true. Andy Abramson says that Bill Clinton will replace Ballmer, or perhaps get on the board. I believe it'll be the latter.

Why? Because Bill Clinton can't focus on just one thing. After all, he's gotta fight AIDS, help with the Tsunami+Katrina recovery, build a sustainable energy strategy for the US, get Hilary ready to run for President, his Global Initiative, and his Small Business Initiative... and that's just in the a.m.

See what I mean? No way he's going to waste his time as president of Microsoft.

That said, he'll do great on the board. He can go up against Al Gore who's on the board at Apple. Frankly, I see Bechtel hiring him as an advisor before Microsoft. Now would that be ironic.

Besides, look for Google to hire him away from Microsoft! :-)

"The biggest company in the computer industry by far is IBM. They have the four times the employees that I have, way more revenues than I have. IBM has always been our biggest competitor. The press just doesn't like to write about IBM," said Gates in an interview on Wednesday ahead of his keynote speech at the Consumer Electronics Show in Las Vegas...

Wait till the Google-Desktop takes over MS-Office.

What's Google-Desktop? It's how Google will take over your PC via the web. Fits in nicely with a $100 PC don't you think?

What does a web-based desktop look like? Take a look at this.

OK, I admit it has a ways to go, but I know Google will do this right. They're going to add an "open-office" component to the web-desktop. You'll be able to do your word-processing, your spreadsheets, your presentations, your email, your calendar, your RSS subscriptions, your blog, your IM, your VOIP, your video-conferencing, your downloading, your podcasts, your news, your search, and your shopping all at Google.com. That's going to be the real Google Pack!

And that's why AOL went with Google, not Microsoft.

Microsoft will become a B2B software company, and yes, IBM will be the biggest competitor in that space.

Few studies have studied adoption of IS innovations by IS development (ISD) organizations. I just found a study that does.

Apparently researchers observed ten factors explaining radical innovation.

Seven factors were internal or organizational factors of which four characterize a configuration of capabilities that promote radical innovation within the firm. These four are: 1) Depth of Knowledge Resources; 2) Specialists; 3) Diversity of Knowledge; 4) Related Assets. The remaining three internal factors relate to features of processes where these capabilities are mobilized in ways that promote radical innovation. These three are: 5) Intra-firm Structural Linkages; 6) Experimentation; and 7) Technological Opportunism.

In addition to the seven organizational (internal) factors, three additional environmental (external) factors predict radical innovation within ISD organizations: 8) Environmental Dynamism; 9) Unit Autonomy; and 10) Adopters’ IT Strategic Congruence.

Read the report >>

During the 1990s, Americans found a way to do what seemed no longer possible — grow the economy, create jobs, and increase the standard of living, without driving up inflation. Much of the credit goes to the nation’s ability to develop and commercialize new technology. The result: one of the most robust periods of economic expansion and prosperity of the past century.

Today, the nation is experiencing an economic downturn. While fiscal and monetary policies pump dollars into the economy to boost the level of activity, innovation infuses the economy with growth-incubating new ideas, new products, services, and technologies. National policies and national investment choices have much to do with the growth and capacity of the American economy. For innovation, however, the real locus of innovation is at the regional level. The vitality of the U.S. economy then depends on creating innovation and competitiveness at the regional level.

In healthy regions, competitiveness and innovation are concentrated in clusters, or interrelated industries, in which the region specializes. The nation’s ability to produce high-value products and services that support high wage jobs depends on the creation and strengthening of these regional hubs of competitiveness and innovation.

Led by our buddy Michael Porter, the "Clusters of Innovation Initiative" examined five regions around the country: Atlanta, Pittsburgh, the Research Triangle, San Diego and Wichita.

One key point: "Growth is not the same as prosperity. Growth is only desirable if the standard of living of citizens rises. High growth per se often leads to a rising cost of living that erodes prosperity and degrades natural resources and physical infrastructure that support quality of life."

My question: are there virtual innovation clusters out there as well? Clusters tied by purpose, but not geography? Is there a way to create and strengthen a virtual innovation cluster?

Read the report, and let's talk >>

Let's see, what is Google's innovation rate? One new service per month, per week?

Today we'll see Google-Video and Google-Wallet. CBS is in on the deal with Google. So is the NBA.

Will Google go after the World Cup? If they do, it's goodbye, Yahoo!

Another interesting day in Googlespace...

We believe the stock will hold its multiple a year from now for the following reasons:

• Given the company's performance, market share gain, and the pipeline of new
products, we believe outperformance is still very likely;
• We expect the global search market to grow by 41% in 2006 and maintain a
CAGR of 37% over the next five years;
• We expect Google to continue to gain market share in 2006. In 2005, the
company gained an additional 5% market share in the U.S. alone;
• Google's brand continued to gain strength as the release of new innovative
products such as Google Maps and Gmail enhanced the consumer's Internet
experience;
• Google's innovations are fueling an impressive pipeline of new initiatives
particularly Google's Ad Network and Google Base, which should become
notable revenue generators by the end of 2006;
• Expectations for Google most likely remain conservative – we note that we have
raised our forward estimates every quarter of 2005 from our 2006 net revenue
estimate of $4.7B before Google's Q1 reporting to our current estimate of $8.8B,
an increase of more than 87% since April;
• Despite being the most talked about stock of 2005, GOOG remains significantly
less widely owned than other key technology names and has yet to be added to
the S&P 500.

While the stock may have its ups and downs throughout the year, we believe it will
reach $600 by the end of 2006 and we prefer to have one 12-month price target
rather than raise it every quarter.

The above factors are leading us to raise our one-year price target to $600, sharply higher than our previous $445 target, but based on fundamentally the same reasoning taken one year further out. Our previous target of $445, which GOOG exceeded briefly in intra-day trading in mid-December, was based on 50x our proforma 2006 EPS estimate. Our new price target, which we feel is attainable by GOOG 12 months from now, is based on 50x our 2007 proforma EPS estimate. Although such a high multiple may seem aggressive, we believe that given Google's dominant position in an already large yet still rapidly growing market, its phenomenal brand power, and its status as a technology leader justifies such a valuation. Also, importantly, it's likely 2007 estimates will come up throughout the year, as we have seen this pattern for 2006 estimates play out in 2005. As such, we believe the ending multiple will be well below 50x.

We believe Google is an iconic company that, like Microsoft and eBay before it, has defined a new and vital industry. Such market leading technology companies have traditionally traded with peak valuations in the 50x-60x range. EBAY, for example, has traded between 38x and 158x its one-year forward earnings estimate since 2000 with an average forward multiple of 70x. Even excluding the bubble years of pre-2001, eBay had maintained a multiple generally above 55x. Currently the other leading Internet companies, Yahoo, eBay, and Amazon trade at an average of 45x 2006 proforma EPS estimates, with Google only slightly higher than average at 47x (and notably below Amazon's multiple of 52x). We believe that over the next year as Google's lead in search and online advertising becomes even more apparent and its growth far exceeds its closest comparables (we predict GOOG will grow revenue by 52% in 2006 while YHOO, EBAY, and AMZN will only grow by 27%, 34%, and 19%, respectively), investors, who may be inclined to take some profit now given GOOG's gains in 2005, will increase their holdings of Google.

Read the full report on Battelle's site >>

Do you believe this:

Goldman Sachs believes that a healthy environment is necessary for the well-being of
society, our people and our business, and is the foundation for a sustainable and strong
economy.

Goldman Sachs recognizes that diverse, healthy natural resources - fresh water, oceans,
air, forests, grasslands, and agro-systems - are a critical component of social and
sustainable economic development. Forests are particularly important for the
environment and biodiversity. They are vital to water and air quality, and help regulate
climates. Forests are home to thousands of wildlife species, and, at the same time,
represent a natural source of timber. The key challenge for society is to manage the
competing human demands on land, soil and vegetation without undermining crucial
ecosystem functions.

We take seriously our responsibility for environmental stewardship and believe that as a
leading global financial institution we should play a constructive role in helping to
address the challenges facing the environment. To that end, we will work to ensure that
our people, capital and ideas are used to help find effective market-based solutions to
address climate change, ecosystem degradation and other critical environmental issues,
and we will seek to create new business opportunities that benefit the environment. We
will work to identify policy measures that are creative, meaningful and provide real
solutions to environmental problems while recognizing the importance of economic
growth in contributing to the alleviation of poverty. In pursuing these objectives we will
not stray from our central business objective of creating long-term value for our
shareholders and serving the long-term interests of our clients.

Go GS! Make sure you practice what you preach...

Read the full text here >>

I just read a Brian Eisenberg article in which he says:

"Depending on whom you ask, average conversion rates are between 2 and 4 percent. By today’s standards, you get bragging rights and the full dose of hero treatment if you can maintain a conversion rate of 5 percent or above. You have deity-like status if your conversion rate approaches double digits. the world’s finest players sport double-digit conversion rates of somewhere around 12-14 percent.

"Of course, I’m referencing top-line conversion: Tthe number of visitors who take the macro action you want them to divided by the total number of site visitors.Aa double-digit conversion rate seems unimaginable to some, but experience demonstrates it’s certainly possible. We’ve seen it happen time and again."

The funny thing is I have a client, who for some reason, is unimpressed by a 44% conversion rate I've gotten for them over the past year. Some months it went down to 39%, in other months it was up as high as 53%. I'm not kidding. And the client still doesn't understand how amazing this is.

What's amazing about Double Loop Marketing is just how effective it can be. For instance, my record-breaking conversion rate was 98% for an offer on a landing page from John Hagel and JSB. Now granted, JH3 and JSB are smart people, and when they give away something for free, it's not difficult to see that they'd have a great conversion rate. That said, 98%?!! I'm still in shock over that one.

This year I've resolved to publish a book on the power of Double Loop Marketing, with a few, real-life case studies comparing traditional online marketing approaches with Double Loop Marketing tactics. God and the devil are both in the details, as they say. John Hagel's has committed to writing the foreword for the book, so I think that itself will make the book worth reading :-)

About this Archive

This page is an archive of entries from January 2006 listed from newest to oldest.

December 2005 is the previous archive.

February 2006 is the next archive.

Find recent content on the main index or look in the archives to find all content.