Advice for Business Failure? Part II

In The Ten Commandments for Business Failure the third commandment is: Isolate Yourself. Isolate yourself from your clients and/or your customers. One of the most important suggestions from Francis McInerney of North River Ventures is for a business or enterprise to create and maintain a “Thin” Proprietary Fabric between your business decision makers, and your customers in order to stay in close communication and then be flexible in order to respond to changes in the marketplace quickly:speed to market. In this way you are in close contact or as people say today “wired”. The greater the number of layers between the customers and the decision makers, the greater the isolation the longer the response time. Coke’s formula change occurred when in fact the product and the brand, just like the bottle and the product-became one and the same. The brand loyalty was far superior to the product. Coke, who did not control the POS, needed to be closer to the customer in order to have known the incredible brand loyalty they had created. That means there was too much distance-Isolation-and too many organizational layers between the people making the decisions and the consumers who were buying the soft drink. When a business builds brand superiority like Coke had done before they changed their formula, changing becomes undesirable and in Coca Cola’s case, almost impossible, even though people had not had a Coke in twenty years. Because the product and the brand had become indistinguishable, tampering with either one was sure to spell-“trouble”. The brand identification was embedded in the customer’s head not in the product.
Unlike the actual bottle or the formula-a value which is tangible, the Coca-Cola brand has an intangible value. How does anyone assess that value exchange? As anyone in business today knows, even though they may not admit it, determining book value let alone market value of intangibles is the biggest challenge to GAP and financial analysis.
If you really want to see one of the best examples of brand superiority in action today, walk into an Apple Store-opening somewhere near you while other retail outlets are closing-and witness with your own eyes the relationship/loyalty between the customer and the brand. Another brand that has such a loyal following is Harley-Davidson! No isolation here between decision makers and consumers loyal to the brand.

Advice for Business Failure? Part I

Charlie Rose interviewed Donald Keough last month on PBS. A former executive at Coca Cola, Mr. Keough’s book was released in July. “The Ten Commandments for Business Failure,” a rather provocative title. According to Mr. Keough, the ten things he list-reminds me of the Seven Deadly Sins (Mr. Keough is a Catholic and was on the board of directors of Norte Dame University)-fit right in with what I feel is the problem with the failure to recognize-even talk about-the transition from an industrial to a knowledge economy.

Here is the list: 1. Quit taking risk 2. Be inflexible 3. Isolate yourself 4. Assume infallibility 5. Play game close to foul line 6. Don't take time to think 7. Put faith in consultants 8. Love bureaucracy 9. Send mixed message 10. Be afraid of future 11. Lose passion for work & life. (OK, so he thought of one more at the end of the book.)

I find each and every one of these to be indicative of people with whom I speak-i.e. when they talk-about the transition to the knowledge economy and what that will take. Mr. Keough cites examples from his experience in business to explain the Commandments. He was almost saying; just know what not to do and you will have happiness and longevity in business. He despises the word Success! I suppose Carl Icahn could have written this book just as well.

The one example of failure while at Coca Cola he mentioned was the decision to create a New Coke. All the research and taste groups and years of considering the decision told them people would like the new taste. Wrong! Their revenue did not really suffer, it was the overwhelming opposition expressed by people. They had to hire extra people to handle the phone calls in protest to the change. They were lucky no social networks existed with bloggers at the time. Mr. Keough himself manned phones and took a call from a lady who said she wanted the Real Coke back. He asked her when was the last time she had a Coke and she said, “twenty years ago but that is not the point, you are messing with my childhood” My favorite however, is another example he mentioned to Charlie about going to an out of the way Italian restaurant in Monaco. When he and his party sat down to eat the owner walked over holding a wicker basket covered with a napkin, removed the napkin and told them “we have the real thing-the old Coke”
What a lesson about one of the key elements of the knowledge economy which is grossly ignored-brand superiority-which is really… Valuing Intangibles! (To be continued…)

More about the Digital Divide

Jonathan Adelstein appeared on C-Span recently. He was Brain Lamb's guest on The Communicators. Mr. Adelstein is an FCC Commissioner. Listening to him reminded me that there is still so much to do and talk about for those of us who worry about the digital divide both nationally and internationally. According to the latest installment of the organization’s semiannual report, Mr. Adelstein mentioned the US is ranked 15th in the world among the 30 OECD countries in a survey of broadband subscribers. That’s down from 4th in 2001. Unfortunately, for obvious political reasons which are evident if you read the full report, he did not mention the four suggestions made to help boost the US ranking. He mentioned we needed to set goals and create public and private partnerships to expand access to more people in the US. He said we are losing high tech jobs because of this. He said we need a commitment from the White House to assure more rural areas access to broadband and for a lower cost. The high cost in rural areas (when you can get it) is a hindrance because it curtails commercial activity and things like distance learning, which is critical especially given the high cost of fuel. I enjoyed his passion and advocacy for widespread and affordable broadband access. While the rate of adoption is a useful metric, it is an insufficient measure of a nation’s broadband performance. A more accurate metric also accounts for cost and speed”.

Internationally, I follow closely what is happening in Mexico. Alberto Morales wrote that Mexico is living in the Stone Age when it comes to Internet access. (You can read it in Spanish just click article of June 8th of this year, Alberto Morales El Universal) I will summarize it by saying Mexicans pay the highest taxes for broadband access in the world, US$5 to $8 per 1MB while Japan pays US$0.30 per 1MB. Mexico's highest access speed is 1MB where in Japan you can get up to 61MB according to the article. Señor Morales cites a book by Raul Trejo Delabre, “La Nueva Alfombra Mágica” (The New Magic Carpet) Senor Trejo Delabre states that in Mexico the Internet continues to be “a privilege for the few who can afford it because taxes on the use are some of the highest in the world”. Like here in the US, Mexican President Felipe Calderón has promised a new initiative for extending broadband access to more citizens but to date there has been no cohesive plan brought forward. Here and internationally the digital divide is with us. The impediment has more to do with cost than anything else. We need to understand that success depends on becoming more competitive and productive in a global business environment that is predicated on broadband access for rapid access to information and for maintaining value creating networks. “Countries who are technological leaders become economic winners countries that are technological laggards become economic losers” wrote Lester Thurow in his book "Head to Head" in 1993.

It frustrates me when the less fortunate here and in Mexico do not have access to the Internet. We in the United States need to take a more active part in promoting access and at a more reasonable cost.

Digital Natives/Digital Immigrants Part II

The title for the first (Part I) posting came from an article by Marc Prensky. Since then there was an excellent article: The Millennial Generation – A New Breed of Employees by Lorraine Cregar May 5th, 2008 International Association of Business Communicators. She calls Digital Natives, The Millennial Generation.
I actually like Millennials just as well. What’s in a name! They are just as digital either way. I have examined this topic even further to try and get to suggestions on how to deal with these digital natives when they hit the workforce with a college undergraduate or graduate degree and face mid- to upper management who may be set in an Industrial Age mentality or enterprise logic rather than the Knowledge Economy.

The title I have chosen for my talk where I explore this and other aspects is: “The Knowledge Worker in Today’s Economy” offered with this speaker service. I have dealt with this subject, first hand, for over thirty years and we not only have to recognize this issue of digital separation but do something quickly to correct this in order to maintain our competitive edge in a global economy.

This is a diversity issue that slips under the radar because it does not involve, ethnicity, race, language, religion, culture or national origin. I would argue it is not only a bigger issue but also more critical in many ways. In this case, all of us born before 1983 are the “immigrants”. As Ms Cregar suggests, there needs to be a wholesale restructuring of how knowledge workers are organized and asked to participate in value-creation with any business organization or enterprise. And, there needs to be greater sensitivity to the diversity represented by the Millennials or digital natives. Their mental as well as their emotional intelligence needs to be considered when value-creation depends on federated or distributed networks based on knowledge sharing for value-creation. Additional, we need to have an extensive discussion on the ever elusive intangible value exchange that no one wants to address.

Digital Natives/Digital Immigrants Part I

Last month I spoke to a group of students at a local university. They are business students interested in the global economy. There were about 30 of them all between the ages of 19 and 22.
I began my talk entitled, "Competing in the Age of Information", by telling them my talk would be about the Information Age and the Knowledge Economy. There were total blank stares from every student when I said that!
I adjusted my talk to better explain what I meant but it was painfully obvious to me that I was speaking a language with which the students were unfamiliar. I struggled with this and only got half-way through the presentation and ran out of time. I felt like a failure because it was my responsibility to connect with the audience, after all I am with Conexciones. Everyone enjoyed the information but what they wanted to know was: What kind of job or career could they persue to find stability in their working life? I told them to just get that out of their heads! In today's world and in the future, things change at "warp speed". The days where you went to work at a company, stayed there for 10 years or so, were promoted up the ladder and retired with a gold watch after 35 years are a thing of the past. To be sure, it may have been a myth anyway. I also told them in the next 5 to 10 years there would be jobs and carrers we have not even imagined today-that is how fast things change.
I spoke to the sponsoring professor afterwards and she told me something astonishing. She said to remember these students grew up in the electronic world. What we may consider as novel to them is ordinary. She was absolutely right! No less then one week later I learned about Marc Prensky and his differentiation of those students born after 1983 and the rest of us born before that year. This appears in an article entitled: Digital Natives/Digital Immigrants. I should have known this. Both our children are Digital Natives one born in 1983 and the other 1986. I on the other hand am a Digital Immigrant. I should have recognize that-which I have-now. (more about this in my next posting...)

Moore’s Law and Measuring the Falling Price of Information

In 1994 I bought a computer which cost me $2,700.00. I was so proud because the sales person told me it could process 10 million instructions per second (10MIPS). However, the Sony Play Station at that time could process 100MIPS for only $299.00. This is what Negroponte meant when he said he kept up with thecnological inovations by watching the entertainment side of the industry.
1MIPS is at the core for measuring the impact of the falling price of information. Just like Guttenberg’s printing press was the criterion for the falling price of information in the middle of the 15th Century or the telegraph in the middle 19th Century. How far has the price of information fallen? If we use the cost of 1MIPS as the yard stick, in the 1960's 1MIPS cost about $10 Million with Mainframes. Only the largest corporations could afford such prices. Today, the cost is about $.80 (if not lower) for 1MIPS. Any business-large or small can afford that and needs to start immediately. Why? Well think about this.
Dr. Gordon Moore, a cofounder of Intel, said in the 1960’s microprocessor speed would double every eighteen months and the price would be cut in half. Francis McInereny coined the term “Moore Time”. He wrote in his fascinating book, FutureWealth: “To compete in a world where price-performance changes so dramatically, decisions have to be made at warp speed. Otherwise, products are obsolete long before they can be brought to market”. Whether they know it or not businesses are operating in “Moore Time”. It's about communicating and making decisions at "Warp Speed". There is not much time to waste.
These are the topics which interest me. This is about what I will comment on this blog and this is about what I will speak in my presentaions. The relationship betwwen the plummeting price of information and the phenomenal rise in the speed of computing, the internet and how al three impact business and society.

“A Little Bitty Tear Let Them Down”

We should not be surprised about the speed or the impact of information. Francis McInerney's main point is about how the falling price of information has us all operating at, to use a Star Trek term, “warp speed”.
Coupled with Moore’s Law about how the processing speed of computers doubles every 18 months and the price drops in half, you have so many implications related to how we function in today’s electronic world and do not even realize what is happening. Even if we have access to the most sophisticate information infrastructure-like the media does-people and emotions can still fool the experts at their own game.
Take the New Hampshire Primary. All the experts had predicted, based on all the polls and the average of all the polls, Hilary Clinton would lose by double digits. Even a seasoned expert like Bob Woodward of Watergate fame admitted he wrote talking points in advance of his appearance with Larry King as a commentator on CNN which he discarded after the results came in from the actual voting. His former companion Carl Bernstein and the less than objective Lou Dobbs, earlier in the coverage admitted how they were fooled by the polls. Even Diane Rehm this morning on her NPR Show and the experts still didn't get it. They did mention "alligator tears" but that only questioned Senator Clinton's sincerity.
I would suggest they were fooled by the speed of information and the technology which on the one hand, allowed for the coffeehouse tear to appear on the evening news everywhere, especially New Hampshire. And by doing so, projected an emotional moment precipitated by a question from a female in the group (who incidentally did not even vote for Clinton the next day) to be one of the best examples of how technology can impact us all with an emotion. The tear dominated the moment which the polls were unable to measure fast enough. When I heard the audio from the coffeehouse on my way home from work on Monday night, I knew something had changed in that race. Not the news flash on the Internet, but the actual voice and later the video created the impact no pollster could measure. The only question was how the New Hampshire voters and the rest of the primaries would be impacted.
Ah, if Burl Ives were alive today! He would see how a little tear let the media and the pundits down.