Shop Talk Podcast #7 - Ford Harding on Rain-making

rain-mak-er n. a person (as a partner in a law firm) who brings in new business.

On this edition, we talk to Ford Harding, author of "Rain Making: Attract New Clients No Matter What Your Field." Ford's book presents very practical and complete advice on selling professional services. He is president of Harding & Co., a consulting firm that helps companies improve their selling performance.

Among Ford's observations in the podcast is that most professional services people are hired for their native intellgence, critical thinking skills, etc., and not for their sales competence. Which results in an often painful transition when these folks are asked to start selling.

It was a fun chat. I hope you enjoy it. Click here to download.

Tags:
sales, sales improvement, business development, professional services, rainmaking

Why does Hershey need to be global?

I don't envy the executives at The Hershey Company or at the Hershey Trust today. The news that Mars is acquiring Wrigley's (with Warren Buffett's help) has led to the question, "Who's next?" and caused all eyes in the business world to focus on Hershey (along with its oft-mentioned potential partner, Cadbury).

It's easy to understand why the business press focuses on acquisitions. The primary readers of the Wall Street Journal, Forbes, etc., are investors in the public stock markets. And nothing moves a stock like an acquisition (or even rumors of an acquisition). Shareholders of Hershey Foods, downcast because of the 40% slide in the share price since 2005, can't be blamed for looking for a way to claw back some of their losses.

More elusive is the strategic benefit of merging to the companies concerned. "Achieving global scale" is a mantra running through all the Mars-Wrigley coverage. And being primarily focused on the US market does mean that Hershey is more exposed to the swings in the US economy than other, more global producers--like, say, Nestle (headquarters: Vevey, Switzerland).

But the US ain't Switzerland. The US confectionary market is the largest, and arguably the most diverse, in the world. If you're going to be "stuck" in one market, this one isn't so bad. A fascinating article in the Harvard Business Review a few years ago asserted that it's easier to attain competitive advantage--and therefore sustain margins--in tightly-focused regions than globally ("All Strategy Is Local," September 2005 - $$), and points out that Wal-Mart's margins were never higher than when it was a regional player one-third the size of kmart.

And until someone articulates the clear benefits of being global versus being regional, Hershey shouldn't feel they need to rush into a deal with anyone else--no matter what the newspapers say.

Related:
Hershey: the end of an era approaches

Tags:
acquisitions, Hershey, globalism, strategy, regionalism

The beginning of the end of the oil crisis

It may very well be a stupid statement. John Cassidy contended in a recent issue of Conde Nast Portfolio that oil prices would begin to drop as the high price spurred more exploration and production--and that was when oil was a relatively cheap $100 per barrel--not near $120, as it is at this moment.

But there's no doubt that the oil replacement/carbon-reduction innovation machine has swung into high gear. Two articles caught my eye recently. In yesterday's New York Times, reporter Michael Fitzgerald wrote about a new home still that can create ethanol from sugar, reducing carbon emissions (the owners say) by seven-eighths. And in Saturday's Times, Matthew Wald discussed A123 System's power pack that converts the Toyota Prius into a plug-in hybrid.

These projects very well may end in failure. But they are but two of thousands of important initiatives around energy diversification, conservation and carbon reduction. And that's a recipe for dramatic change. As Rosabeth Moss Kanter wrote in Harvard Business Review in November 2006 (link - $$), "an organization is more likely to get bigger ideas if it has a wide funnel into which numerous small ideas can be poured. One of the secrets of success for companies that demonstrate high rates of innovation is that they try more things."

And so it is with industries. More ideas at the top of the funnel means more, bigger successes at the bottom. The energy innovation pyramid is well-stocked, which means, sometime in the future, when petroleum is just another niche chemical, we can say it all started today.

Related:
Kanter's Innovation Pyramid
Chevy Volt: automotive revolution or flavor of the month?
What in hell is the Electron Economy?
Shop Talk Podcast #6 - Todd Mittleman on Honda's Fuel Cell car

Tags:
energy, environment, innovation, technology, automobiles, green technology

Central Penn Business Journal features The Mistake Bank

My hometown business paper, The Central Penn Business Journal, did a story on The Mistake Bank in its current issue. The story, written by David Dagan, was very well done and is worth a read.

There was also a hilarious editorial cartoon about the project by artist Gene Suchma:

Reprinted by permission

tags:
Mistake Bank

WorldBlu 2008 List of Democratic Workplaces released

WorldBlu, the organization headed by friend of this blog Traci Fenton, has unveiled its second annual list of democratic workplaces.

Workplace democracy is still a rare concept, but a growing number of companies are allowing workers a voice in their company, encouraging dissent, and otherwise involving the entire employee base in shaping and running the organization. WorldBlu evaluates companies on these factors:

1. PURPOSE AND VISION
A democratic organization is clear about why it exists (its purpose) and where it is headed and what it hopes to achieve (its vision). These act as its true North, offering guidance and discipline to the organization's direction.

2. TRANSPARENCY
Say goodbye to the "secret society" mentality. Democratic organizations are transparent and open with employees about the financial health, strategy, and agenda of the organization.

3. DIALOGUE + LISTENING
Instead of the top-down monologue or dysfunctional silence that characterizes most workplaces, democratic organizations are committed to having conversations that bring out new levels of meaning and connection.

4. FAIRNESS + DIGNITY
Democratic organizations are committed to fairness and dignity, not treating some people like "somebodies" and other people like "nobodies."

5. ACCOUNTABILITY
Democratic organizations point fingers, not in a blaming way but in a liberating way! Democratic organizations are crystal clear about who is accountable and responsible for what.

6. INDIVIDUAL + COLLECTIVE
In democratic organizations, the individual is just as important as the whole, meaning employees are valued for their individual contribution as well as for what they do to help achieve the collective goals of the organization.

7. CHOICE
Democratic organizations thrive on giving employees meaningful choices.

8. INTEGRITY
Integrity is the name of the game, and democratic companies have a lot of it. They understand that freedom takes discipline and also doing whatÕs morally and ethically right.

9. DECENTRALIZATION
Democratic organizations distribute leadership and power across their enterprise.

10. REFLECTION + EVALUATION
Democratic organizations are committed to looking in the mirror and asking, "How can we be better?" -- not just quarterly or annually, but daily.

Notable new names on the list this year include Pandora, the personalized internet radio site; BzzAgent, which creates viral marketing programs; and DaVita--the first Fortune 500 corporation that's made the list. Holdovers include 1-800-GOT-JUNK and Linden Lab (with a brand-new CEO, will they be able to maintain their democratic principles?).

You can check out the whole list here.

Related:
Shop Talk Podcast #3 - Traci Fenton on democratic workplaces
Free information -> lateral networks -> less authoritarianism
The Utopian Company

Tags:
democracy, leadership, management, organization, organizational behavior

Move to Intel chips helped Mac hit the jackpot

When the Mac's move to Intel chips was announced almost three years ago, it seemed like a good, practical move. The PowerPC chip was falling behind Intel, performance-wise, and Apple wanted to leverage Intel's much larger investment in performance and capability. Intel, for its part, wanted the sexiness of being associated with a cooler brand than Dell, Lenovo, etc.

But the full impact of the processor swap is only now becoming apparent. Yesterday Apple stated that its latest quarterly earnings rose 36% over the same period last year, powered by a 51% increase in Mac sales. The Wall Street Journal buried this telling passage into its article on Apple's earnings release:

Apple's computers now also easily run Microsoft Corp.'s Windows operating system, which has helped Apple in a long-running campaign to persuade Windows users to switch to Macs.

Precisely. The Intel processor was a Trojan Horse hiding Windows compatibility--the real value of the switch from PowerPC. Eons ago, people in companies used Macs all the time (it was on my desktop in 1989). Then Windows 3.1 swept through the business world, and Macs retreated to schools, graphic designers and filmmakers.

Now, people who require some Windows programs (because of work or other reasons) can retain that compatibility and get the benefits of OS X and all the interesting applications that run on it.

One of those people is me. The Mac returned to my desktop in August 2007 after a 12-year hiatus. It's good to be back.

technology, personal computers, Apple, strategy, Wall Street Journal

Wall Street Journal is discarding its identity as the business newspaper

I've frequently talked in this blog about things I first read in the Wall Street Journal. [I've subscribed to the Journal since I got a discounted subscription in grad school, twenty years ago or so.] But over the past several months, there has been a noticeable falloff in articles I find useful. It occurred to me last week that I very rarely see anything in the first section of the paper that is interesting to me as a general business reader. There's lots of politics, a fair amount of finance, international affairs... and that's it.

And then, earlier this week, I noticed that they've taken another page out of section one to devote to opinion. This may make some subscribers happy, but to me it's another page to turn past.

The Marketplace section feels unchanged, but that's small comfort. Now there are maybe eight to ten interesting pages in a typical issue of the Journal. And that's not enough.

Finally, the reasons for this are clear. New owner Rupert Murdoch is imprinting his stamp on the paper. Yesterday's news that the managing editor, Marcus Brauchli, was stepping down, was credited to Murdoch wanting his own people making the editing decisions. "Now that the ownership transition has taken place, I have come to believe the new owners should have a managing editor of their choosing," wrote Brauchli to the newspaper staff. [Which begs the question, whatever happened to the "hands-off" agreement that the Bancrofts supposedly negotiated?]

Murdoch apparently wants to build a general-interest newspaper to compete with the New York Times (with political views he likes better). He may reach that goal, but at the cost of losing what was distinctive about the Journal--a high-quality, daily look at business.

In which case, he'll lose at least one long-term subscriber.

management, Wall Street Journal

An almost mistake story about hiring

From The Mistake Bank.

[This story is from Mike Southon, Chairman of Beermat, an online resource for entrepreneurs, and founder of Instruction Set Ltd., a UK computer-services firm sold to Cap Gemini in 1989.]

I remember one story when Instruction Set got to about twenty-five people, and I was running sales. I hadn't really done sales before. I thought, "I'd better hire a grown-up." So I went to a recruitment agency and these CVs arrived--people with fantastic credentials. There was this one particular gentleman, and his motto was "Give me the bullets, and I'll fire them," because he said he'd doubled revenue everywhere he'd been. So I thought he was a good guy. He came in, extended a big handshake, made eye contact, and said, "Yes, give me the bullets; I'll fire them. Michael, I'll double your revenue. That's what I do."

So I asked him to meet everybody. His body language with different people was fun. With all the ladies, he was staring at the cleavage. With other directors, it was the big handshake and "Give me the bullets; I'll fire them." I thought that must be what salesmen are like. Then I took him to lunch, and the waitress made some error--I can't remember what it was--and he tore off a strip of her in front of me, to show how tough he was. I thought, "What an idiot."

I went back to the office and thought, that's what you have to do; you hire people like that. And I decided that no, I was not hiring him; the man's an idiot. People were knocking on my door, asking what I thought of the guy. And I said, "Sorry, I should hire him because he's brilliant and he'd double our revenue, but I didn't like him, so I'm not hiring him." They said, "Thank God for that. We all thought he was an idiot as well."

So instincts were right. I sent him an email saying that I was really sorry, that we were a bit strange at the Instruction Set, that we didn't behave like normal companies, and that he'd probably be brilliant elsewhere, but here he wouldn't be perfect, but best of luck. I got a week of abusive emails from him.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Starting a Business. Copyright (c) 2008 Fifty Lessons Limited; All Rights Reserved.

For more information about the "Lessons Learned" series, including a showcase of 50 Lessons video stories, please follow this link.

narrative, hiring, recruiting, interviewing, sales, reading list, Mistake Bank

"Greater Good": a good, but not great, book on marketing and democracy

"Greater Good: How Good Marketing Makes For Better Democracy" is a book that promises a lot. Inside the front flap it charges that "marketing is more democratic than politics." Its co-author John Quelch is a renowned expert on consumer marketing and professor at Harvard Business School, the author of a thoughtful and incisive blog on marketing. By aiming at dissecting and improving democracy, Quelch and co-author Katherine Jocz seek to elevate marketing to a level currently held by economics--i.e, a discipline that can drive progress of entire nations.

And, while it has many virtues, the book doesn't deliver on that promise. Partially this is because of the very broad topic it takes on. Its scope is the strength and weakness of the book. The book's first part, "Marketing as Democracy" is as good a survey of consumer marketing--its aims, faults and practice--as you could fit into 150 pages. But this means that there's four pages on fairness, six on advertising. As a result, it's a great book if you want to teach people all about marketing at a high level, but not so great if you want to galvanize readers to make their democracies more effective and citizen-focused.

There are sections of the book (for example, the chapter on consumer engagement or the one on marketing government and NGO programs) that could become strong books themselves if they dove more deeply. There are also some important insights, such as this:

...Coke and Pepsi don't sling mud at each other, because if they did, consumer purchases would eventually shift away from both of them to alternative colas and beverages. Both brands want to enlarge the market, not reduce it. However, in politics, market share, and not market size, matters. Negative campaigning may turn off a sizable number of the electorate, but if George Bush sicceeds in making John Kerry marginally less acceptable to the voters who show up on Election Day, Bush comes out ahead. (p.171)

Quelch and Jocz are onto something in terms of using what marketing's good at to improve democracy. While "Greater Good" isn't a home run, I hope they don't give up on the topic. There's more there to study, and, even more interesting, to try out.

If you want a comprehensive introduction to consumer marketing, buy "Greater Good" and read the first 150 pages. If you want to fix what's wrong with democracy, you'll have to wait for another book.

marketing, democracy, reading list

The new media onslaught is making entrepreneurs out of creators

An article from the New York Times earlier this week ("Bridging The Gap, The Sequel") starkly illustrated that venture capitalists from Silicon Valley and creative types from Southern California are having difficulty cooperating to create financial and partnership models for new media.

One of the biggest obstacles, according to the articles, is the Southern Californians' focus on upfront cash rather than long-term equity.

How this situation came to be is easy to understand: when the means of production of creative property were expensive, there was a distinct separation between the "suits," who raised needed capital, and the "talent," who wrote, acted, sang, directed, etc. The suits financed productions and paid the talent, who worked job to job. It was in the talent's interest to get as much of their payment upfront as possible because (1) they didn't know when their next job would come through and (2) the suits could, and wanted to, maintain full ownership of the property.

Now production costs can be much smaller, for music, video, text, etc. Prices for distribution are coming down too as new outlets emerge for digital distribution. And media companies are looking to hedge their risk as the old moneymakers (CDs, DVDs) erode.

As a result, an entire new entrepreneurial class has emerged, between the suits and the talent, combining the ability to raise money, cut deals, etc., with songwriting, producing, or acting. Around this "middle class" is a new set of technology and business enablers that are providing key pieces of the production and distribution infrastructure for these creators. (This edition of the radio program "Fresh Air" discusses some of the new models and companies emerging in the music business. Companies like Indieflix provide distribution services for video/film producers.)

Here's an example of the new world order for music: the LinkedIn profile for Fran Ten of the LA band West Indian Girl:

oversee and run all the departments of the west indian girl business - management, marketing, new media, touring, merchandising, promotions, licensing, legal, accounting, art, etc etc.

music is a business and musicians that dont understand this are at a disadvantage.

this job is just as much a blue collar job as the one i had in high school working at a brake factory in grand rapids, mi. sometimes i think it's even dirtier.

Technology advances have made internet video and mobile entertainment accessible to consumers on a wide scale. The business models are lagging behind. The old way--suits and talent--isn't going to be able to work them out. The "middle class" will have to do it.

(Photo: a still from "Fields of Mudan," the all-time best-selling DVD on Indieflix.)

mobile, media, alliances, technology, music, video, business models, New York Times

What is the attraction of the "I" story?

Many years ago I took summer writing workshops in Provincetown, Mass, at the very tip of Cape Cod. The fiction crowd, of which I was one, looked down on the memoir folks, who were packed like sardines in their classroom, all trying to be the next Mary Karr or Kathryn Harrison. "Autobiography is faker than fiction!" I thought. And, given what we've learned about "memoirs" like James Frey's or recently that of Margaret B. Jones, maybe I had a point.

Yet there's a unique power of the first-person story. Without a measurable distance between author and subject, as there is in biography and fiction, memoir seizes your attention and brings you close, as if the author were sitting on the next barstool telling you the story herself. Reading an actual person's recounting of, "I did this," "I made this choice," or "This happened to me" feels terribly intimate and revealing--ironically, even if it isn't true.

Any other thoughts on the subject?

memoir, narrative, fiction, storytelling, startup

Be careful using "other people's money" to make acquisitions

From The Mistake Bank.

[This story is from Ray Anderson, Founder and Chairman of Interface, Inc., a manufacturer of carpeting and fabrics.]

When we began [Interface], I made the initial investment personally. And then friends came in, then a much larger partner joined in, and we eventually financed the company. And, by the way, the day we had our finance all in hand is the day we count as the birthday of Interface. Up to then, everything is conception and gestation, beginning with the gleam in my eye, perhaps the idea; but it’s only when you have your money in hand that you can truly call yourself a company. And that’s the birthday.

Interface, after getting through that treacherous startup, in the teeth of the worst recession since 1929, really hit a home run year after year, 70 percent compound growth. And then ten years later we went public, and for the first time had access to other people’s money. Investors who bought shares in the stock, our expanded capital base of Interface, enabled us to begin to make acquisitions, and we made acquisitions in Canada, in Northern Ireland, and eventually in the United Kingdom and in Holland. And then in 1998, when the company was fifteen years old, we were a global company. Then we made other acquisitions, made subsequent stock offerings to the public, and had people subscribe to the stock and further expand the capital base, which enabled us to do more. We leveraged other people’s money time and again over the years, so much so that it got to be a little too easy to access it.

And then we made a concentrated series of acquisitions to create a downstream distribution system. We made twenty-nine acquisitions, over a very short period of time, of contract dealers, the people who install and maintain their products. We wanted a captive, owned distribution system, and we invested $150 million of other people’s money, basically by selling stock and doing bond offerings. And it was too easy.

If we’d been spending our own money, we would have thought very hard about those acquisitions. In the long run, they turned out to be a mistake, and six, seven years later we began to dismantle this distribution system and liquidate it, selling the businesses back to the owners or back to the employees. And we might not ever have undertaken that unfortunate series of investments if we’d been investing our own money. We would have questioned it.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Starting a Business. Copyright (c) 2008 Fifty Lessons Limited; All Rights Reserved.

For more information about the "Lessons Learned" series, including a showcase of 50 Lessons video stories, please follow this link.

acquisitions, narrative, capital, financing, startup, entrepreneurism, reading list, Mistake Bank

Channel partners are not your direct sales force

There's a nice post over at the Achieve Market Leadership blog talking about why B2B companies struggle to sell through channel partners. In sum, companies treat channel partners as if they were direct sales forces, instead of treating them like retailers.

A direct sales force sells what the company has. It has no option to sell anything else.

Retailers pick and choose which products they stock, decide where to place them, and simply remove those that don't sell enough. Companies selling through retail realize they need to entice their retailers, either with incentives, great product, or pull-through marketing.

Channel partners often don't have issues with shelf space, but they still decide which products to recommend to customers. If you treat them like a captive sales force, you will be blind to their priorities and issues. As a result, your program won't fit what they need, and they won't push your product.

There's a lot more in the post. It's well worth reading in full.

sales, channels, alliances, indirect sales, B2b

Yoda as a business role model

I've written before about my young kids' obsession with "Star Wars." But now that I've watched all six episodes multiple times, I'm finally getting a grip on the story and how it fits together.

The most interesting character to me is Yoda. Through nearly all the episodes he sits placidly, strokes his chin, and speaks wisdom in his inverted grammar. He thinks, he meditates, he guides. He is the Jedi-est of the Jedis, winning through not fighting.

But at the end of Episode Two: Attack of the Clones, Yoda gets moving. He flies to Geonosis and commands the Clone Army in its battle against Count Dooku's troops. And, finally, with Obi-Wan and Anakin injured and at risk of dying at Dooku's hands, he uses the Force to prevent them being crushed by falling debris and whips out the light saber to battle Dooku, eventually forcing his retreat.

A Jedi needs to think, to prepare. But eventually he has to fight. So it is with leaders of businesses here on Earth. Strategizing, planning, directing are all important. But eventually you've got to roll up the sleeves and get to work side-by-side with your team, whether that's making an important sale, managing a crisis or closing that round of funding.

leadership, strategy, management

Can mobile phones eradicate poverty?

This past winter I had the opportunity to spend a night working at a local homeless shelter. It was an unforgettable night for many reasons, including the memory of huddling around a radio with four other guys after lights out listening to the Giants beat the Packers to go to the Super Bowl. Among everything I experienced, one thing that surprised me was the share of people staying at the shelter that night carrying cell phones. By my reckoning, it was roughly half.

As I thought about it, though, the idea of a homeless mobile-phone subscriber seemed less peculiar. Without a fixed address, the phone provided a means of connecting to the world. Employers could call if there was work available. Family and caregivers could check in. For most of us, the ability to be connected while mobile still seems an extravagance, a luxury. For these guys, it was a lifeline.

An article in today's New York Times magazine brought this back to mind. "Can the Cellphone Help End Global Poverty?" by Sara Corbett trails mobile "user anthropologist" Jan Chipchase of Nokia as he studies how people use cellphones in developing countries and thinks aloud about whether mobile phones could provide a key ingredient in reducing poverty.

Corbett writes:

There are a growing number of economists who maintain that cellphones can restructure developing countries [similar to how just-in-time techniques changed manuracturing]. Cellphones, after all, have an economizing effect. My “just in time” meeting with Chipchase required little in the way of advance planning and was more efficient than the oft-imperfect practice of designating a specific time and a place to rendezvous. He didn’t have to leave his work until he knew I was in the vicinity. Knowing that he wasn’t waiting for me, I didn’t fret about the extra 15 minutes my taxi driver sat blaring his horn in Accra’s unpredictable traffic. And now, on foot, if I moved in the wrong direction, it could be quickly corrected. Using mobile phones, we were able to coordinate incrementally. “Do you see the footbridge?” Chipchase was saying over the phone. “No? O.K., do you see the giant green sign that says ‘Believe in God’? Yes? I’m down to the left of that.”

To someone who has spent years using a mobile phone, these moments are common enough to feel banal, but for people living in a shantytown like Nima[, Ghana] — and by extension in similar places across Africa and beyond — the possibilities afforded by a proliferation of cellphones are potentially revolutionary. Today, there are more than 3.3 billion mobile-phone subscriptions worldwide, which means that there are at least three billion people who don’t own cellphones, the bulk of them to be found in Africa and Asia. Even the smallest improvements in efficiency, amplified across those additional three billion people, could reshape the global economy in ways that we are just beginning to understand.

Corbett writes, "In an increasingly transitory world, the cellphone is becoming the one fixed piece of our identity." Based on my experience at the shelter, I'd have to agree.

Related:
The cure to poverty is connectivity...
Another inspiring thought from Dr. Yunus

[Photo: the Nokia 1200, designed for emerging markets]

mobile, wireless, poverty, New York Times

Follow-up gets results

If you follow this space, you know I talk about books occasionally. Some PR folks have noticed, and now they send me books from time to time which they would like me to talk about. This has led to the happy/sad situation that I have more books in my pile than I can possibly read.

On a couple of occasions, an action has caused me to pull a book from the middle of the pile and read it next. That action was a simple follow-up. "Did you get the book we sent? Will you get a chance to read it soon?"

At that point I felt a little obligation to get to the book quickly. I didn't rearrange my schedule or drop other important things to do it. I just made a note to get to this one as soon as I had a chance. As Bazerman and Malhotra wrote in Negotiation Genius, "Humans tend to reciprocate behavior."

Frequently, I'm asking people to do things on my behalf. I need to remember that respectful follow-up is not hassling people, and it won't make people do things they don't want to do. It does, however, raise your request, even for a moment, to the top of the pile.


follow-up, psychology, public relations

"The Breakthrough Company"--wise advice for the emerging entity

I was prepared to dislike "The Breakthrough Company." The dust jacket is a garish silver. The author photograph reminded me of Svengali, and the first line of his bio read, "At the age of twenty-six, Keith R. McFarland was named associate dean of one of the nation's leading business schools." And continued, "He and his family live just downhill from the ski lifts at Snowbird, Utah."

This was a cover that screamed at you: THIS IS IMPORTANT, VITAL, DON'T MISS IT. (I mean, how could you not listen to someone who lives just downhill from the ski lifts at Snowbird?)

But you can't judge a book by its cover, nor its author bio, and "The Breakthrough Company" is a serious, substantial and useful effort. McFarland and his colleagues at McFarland Strategy Partners set out to give the "Good to Great" treatment to a different segment of companies--those that graduated from entrepreneurial status (around $10 million in revenue) to substantial size ($250 million to upwards of $1 billion).

They surveyed 1500 companies and from those picked the nine best performers, then reverse-engineered these companies to settle on six characteristics that stood out. And while I've posted before on the limitations of this type of "best practice" approach, it's to McFarland's credit that he also plays down the value of copying the template: "This is not intended to be a recipe book."

Also, the companies he is aiming at helping are still in their formative stages. A company with 250 people can still be shaped. One with 5,000 is much harder to reorient.

And with that, the characteristics McFarland highlights--e.g., "crowning the company," or putting the company's needs and priorities above the founder's--are important, and rare in companies big and small.

My favorite chapter is titled, "Enlisting Insultants," in which McFarland discusses how vital it is for growing companies to have people who can give voice to the minority opinion--either critiquing the conventional wisdom or championing an unpopular initiative. This view echoes those of Gary Hamel in "The Future of Management" as well as Traci Fenton's efforts to promote organizational democracy.

As might be apparent, McFarland can also turn a phrase. The book is well-written, with lots of great stories from the companies' leaders. And from its prominent position in my local Barnes & Noble's business section, it's probably selling a few copies.

In sum, there's a lot to learn from on an important subject. And don't let the cover bug you--the dust jacket is easily removed.

Related:
On Gary Hamel's "The Future of Management"
Shop Talk Podcast #3 - Traci Fenton on democratic workplaces

democracy, leadership, management, entrepreneurism, growth, reading list

Google's groundwork for its innovation machine is years old

Google is the company to emulate these days, and who can argue? The company does things on its own terms, earns enviable profits, and oh, that stock price.

But as smart as Google's engineers are today, they benefit greatly from decisions and investments made in the company's early days. That's one of the messages from "Reverse Engineering Google's Innovation Machine" (link) in the April Harvard Business Review.

The authors, Bala Iyer and Thomas Davenport of Babson College, point out many reasons for Google success at innovation (culture of experimentation, the 20% rule, etc.). But one reason stuck out for me.

Because of Google's highly-scalable, worldwide information platform, new products can be tested and rolled out extremely cheaply. The authors write:

Google’s infrastructure is well suited to executing an entire product-development life cycle rapidly and efficiently. Google engineers prototype new applications on the platform; if any of these begin to get users’ attention, developers can launch beta versions to see whether the company’s vast captive customer base responds enthusiastically. If one of the applications becomes a hit, Google’s enormous “cloud” of computing capability can make room for it.

Google's platform as a distinctive capability is not new. I vividly recall three things about first using Google in the late 1990's. First, the relevance of the results (searching on "Ford" got you Ford's website, instead of some other site); second, the simplicity of the interface. And, third, the speed of the results.

In the original interface, before text ads, Google prominently displayed how quickly search results came up--in some fraction of a second. Back then, it was some feat. Even now, with most screens coming up with banner ads and other content loading from distant servers, most websites take some seconds to display completely. Google remains blindingly fast in comparison.

And one nice side effect of that early focus on speed--now it's easy and cheap to roll out new applications.


innovation, Google, infrastructure, Harvard Business Review

Is your marketing department confused about web2.0? Read this

The one nearly universal feeling of companies dealing with the changes that web2.0 has made to marketing is utter bewilderment. I participated in a project to assess corporate blogs last year and I wouldn’t give any company I looked at better than a “C.” In fact, most of them would get incompletes: they had no blogs at all.

Never mind wikis, Facebook, Second Life, YouTube, Twitter, Digg, etc., etc.

So it’s very timely that Charlene Li and Josh Bernoff of Forrester Research have written “Groundswell,” a book that illuminates what web2.0 means to everyday businesses. In straightforward language, and buttressed by primary research into how various groups participate in web2.0, Li and Bernoff define the most important web2.0 technologies, show how consumers use them, and lay out how companies can encourage and participate in the conversations about themselves and their products.

At the outset, Li and Bernoff define six overlapping types of web2.0 users & nonusers (creators, critics, collectors, joiners, spectators, inactives) and show their representation in various segments. For example, Democrats have more web2.0 users across the board than Republicans. Japanese Fujitsu PC owners are far more likely to be collectors (e.g., content taggers or subscribers to RSS feeds) than NEC’s PC customers.

Through these examples, the authors crisply demonstrate that companies need to understand the web2.0 profiles of their customers, so as to understand, ultimately, how to engage them in productive conversation.

Case studies appear throughout the book, both success stories (Blendtec’s “Will It Blend” videos) and failures (the short-lived blog of Unica’s Chief Marketing Officer). To satisfy old-line executives (especially CFOs), they include pro forma business cases for several web2.0 projects—including laying out the upfront and ongoing costs of these initiatives.

Over and over, Li and Bernoff emphasize the need, when using these technologies, to listen, and not to shout. To be transparent, and to be authentic. Whether this is possible with traditional companies, in which desiring to control the message is deeply ingrained, remains to be seen.

---------------------------------

Examples of web2.0 user types defined in “Groundswell”:
Creators – blog writers, amateur YouTube videographers
Critics – blog commenters, Amazon product reviewers
Collectors – del.icio.us taggers
Joiners – myspace and Facebook users
Spectators – blog readers, forum readers

Related:
Groundswell blog
Corporate IT maximum-security is damaging innovation
How enterprise 2.0 adds value to the connections between workers

social networking, information technology, web2.0, marketing, blogging, virtual communities, reading list

Bosses, choose your words carefully

From The Mistake Bank.

[The Mistake Bank has received permission to publish excerpts from the Harvard Business School Press/50Lessons series "Lessons Learned: Straight Talk from the World's Top Business Leaders," The books are full of great stories, including some very useful mistake stories. Our first is from Paul Anderson, Chairman of Spectra Energy]

As I progressed in my career and got into increasingly more responsible or powerful roles, …it was almost like my words took on the power of the position, and things that were casual before were no longer casual. I had my first example of this when I was a manager. It was fairly early in my career, and a woman named Sarah had come in. I was running a planning organization, and Sarah came in to me and said, “Look, I don’t have any background in planning—I’m from the IT group—but I would love to join your organization. I’ll work hard to learn what I need to learn to do a good job. I will strive to do anything you need done. Just give me a chance.”

I said, “Well, that sounds fair to me. Why don’t you join the organization? I’ll give you a year. At the end of the year you will either be a planner and contributing; or, if it’s not working out, you can go back to the IT group, and we’ll assume that it was a nice try but it didn’t work out.”

So she joined the organization and she was outstanding; she was the best new employee we had that year. She took on everything; she learned. She became the “go-to” person—everybody came to her with their issues. She was a star, there was just no question; she was doing an outstanding job.

And I thought, “Well, this has to be one of the best moves that I’ve ever participated in,” and I was quite comfortable that things were working out nicely. But at the end of a year, she came into my office, and she was in tears. I said, “Sarah, what’s wrong?” And she said, “Well, I don’t understand why it’s not working out. At the end of a year, you said you’d tell me if it was working out and you haven’t told me that, so I must assume that it’s not working out and I’m going to have to go back to IT.” I was flabbergasted, and of course I told her, “Hey, you’re doing a great job!”

But it struck me that I’d made a casual comment: “…in a year we’ll know.” She had gone back to her office and marked her calendar, and, by God, at the end of a year she expected me to walk into her office with a decision. That casual comment was very powerful to her, and so insignificant to me, that it really struck me that I had to be very careful in making comments as I went along.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Managing Your Career. Copyright (c) 2007 Fifty Lessons Limited; All Rights Reserved.

For more information about the "Lessons Learned" series, including a showcase of 50 Lessons video stories, please follow this link.


management, narrative, leadership, communications, oral communications, organizational behavior, Mistake Bank

Choreographer Twyla Tharp on the usefulness of failure

In this month's Harvard Business Review, editor Diane Coutu interviews choreographer Twyla Tharp (free link), creator of avant-garde dances as well as the Broadway show "Movin' Out." Tharp mentions some important thoughts on failure.

If you do only what you know and do it very, very well, chances are you won't fail. You'll just stagnate, and your work will get less and less interesting, and that's failure by erosion. True failure is a mark of accomplishment in the sense that something new & different was tried. Ideally, the best way to fail is in private.... I have also sometimes failed in public, and that's very painful. But failing, even in this way, is not useless. It can force you to get yourself together and to produce something new.

From The Mistake Bank

art, creativity, learning, failure, Mistake Bank, Harvard Business Review

CTIA Day 2 - a look back

broadband, technology, wireless, mobile, CTIA, Wireless 2008, Las Vegas

Most interesting discoveries of CTIA Wireless 2008

As I wait in the Las Vegas airport for my flight home, here are the most interesting discoveries I made at this year's show.

Chargebox - they sell a neat vending machine to recharge cellphones.

Wildwave - a Canadian company that creates and distributes mobile digital content.

Jygy - an SMS-based social network tool (disclosure: I know some of the leadership of Jygy, though this week was my first look at the system)

dial2do - one of several voice-to-text companies at the show, their software is focused on processing oral commands, such as composing and posting Twitter updates completely by voice.

broadband, content, technology, wireless, mobile, CTIA, Wireless 2008, Las Vegas

Free, unsolicited product management advice for Verizon Wireless

As I mentioned yesterday, I am using EV-DO to connect to the internet here in Vegas for CTIA. It's more economical and reliable than the hotels' and convention center's WiFi hotspots. What I didn't say is that the way I contract for this service is convoluted and actually, on my analysis, loses money for Verizon. Details to follow.

It's got me feeling a bit guilty, so I would like to offer them some free advice. If they implement my ideas and wish to share perhaps 10% of their incremental profits on the change, I'd be happy to accept. [VZW, you can email me at inquiry (at) caddellinsightgroup (dot) com for my PayPal info.]

Here's the situation with EV-DO. I have a Blackberry, using a 10MB per month plan costing $24.95 per month on top of my voice subscription. This is fine for emailing and web browsing through the Blackberry, but not enough to support what I'm doing this week--blogging, video uploading, etc.

For that application, VZW requires I buy unlimited data access for $49.95 per month, and on top of that buy tethered modem service (that allows me to use the Bberry as a modem for my computer) for an additional $15 per month.

As a result, it would cost me $39.95 extra per month to subscribe to this EV-DO service. Except for the fact that I need it for perhaps 15 days per year. The rest of the time, cheap or free WiFi hotspots do the job. So I can't justify an ongoing subscription for this service.

But here's the thing: VZW allows me to sign up for the service, then, when I don't need it anymore, I call them back to cancel. The billing is ugly and almost incomprehensible, but at the end of the day I only get billed for the days I use EV-DO, at the rate of about $1.33 per day. A bargain for me.

But not for VZW. Here's a litany of costs they incur, each time I set up the service:

Calls to tech support: 2 @ $10 (one call to activate, one call to deactivate)
Letters informing me of a change in service: 2 @ $2.50
Incremental billing costs for changes, prorates, etc.: unknown

Total: at least $25

For this trip, I will use the service for four days. Meaning VZW will get incremental revenue of $5.33, but spend $25, for a marginal contribution margin of ($19.67). Ugh.

Here's my idea. VZW should offer a daily plan. [Virtually every other wireless ISP offers such a plan.] I would pay $5 per day for that plan. Have the signup be online rather than through tech support, meaning the incremental cost should be near zero. Have me sign up for exactly the number of days I need, and have deactivation be done automatically by the ordering system.







Related post: "Worst Practices in Product Management"

product management, mobile, wireless, customer service, packaging, pricing, technical support, Verizon Wireless

CTIA Day 1 - It's Vegas, baby

As Dan Meyer pointed out in RCR today, CTIA is just more fun this year. Is it the Vegas factor?



broadband, technology, wireless, mobile, CTIA, Wireless 2008, Las Vegas

EV-DO is a bit of a miracle

I'm in Las Vegas for CTIA, and so it's appropriate that I'm connecting on the web via Verizon's EV-DO service. (WiFi coverage in the hotels is lousy, plus it costs $12.99 per day.)

My first CTIA was New Orleans in 1992, and if I recall correctly, McCaw Cellular began developing the CDPD (cellular digital packet data) service around that time. That service didn't do much of anything, but now, sixteen years later, mobile broadband is a fixture.

broadband, technology, wireless, mobile, CTIA,
Wireless 2008

An excellent web customer service practice

I got this email from the Wall Street Journal today:

Dear Subscriber,

We see that delivery of your Wall Street Journal was scheduled
to resume today after a temporary suspension, and are
following up to check that it did.

If you received your paper today -- great! No need to respond.

If you did not receive your Journal, please report your missed
delivery by clicking here:

https://services.wsj.com/Gryphon/resolveDeliveryProblem.dj

We will investigate to make sure you don't miss another day of
The Wall Street Journal.

Thank you for using Services.wsj.com to manage your Wall
Street Journal account.

I was so happy they followed up with me. There was no delivery problem, but if there had been, Dow Jones had made it so much easier to manage.


customer service, ecommerce