Balance of Power

 

The balance of power shifted for the manufacturer to the retailer.  The retailer dominates the marketplace.   Today, the tsunami of retailer brands,  dollars, consumer access and shelf control dwarfs manufacturing weapons.  The manufacturer must create virtual worlds shifiting the physical world into a virtual world.   Virtual worlds and hyperlinking them to emotions, experiences and the real world.   Technologies are the way to shift the balance and level the playing field.  

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Harvard: “20 Logos We Love,” by Andrew Shea, April 13, 2013

Harvard: “20 Logos We Love,” by Andrew Shea, April 13, 2013

I recently read “20 Logos We Love – What Makes A Great Logo” was logo-light.  It needed further explanation and clarification.

My turn.

Logos are symbols and are just that – symbols.  Some of them are incredibly powerful and others are just so much window dressing.  The best of them become enfolded in the consumer’s image of the brand and enrich the brand image.  The worst of them chip away at the image of the brand and weaken the hold it has in the consumer’s mind.

It is important to remember the brand imagine is formed as soon as the consumer becomes conscious of a brand.  The ideal time to introduce logos therefore, is when the brand itself is introduced.  That doesn’t mean the brand can’t be re-introduced with new or additional symbols at a later date – Marlboro is a great example of that – but it is easier to do it right the first time.

Update of Instructions Manual

I have been asked to update the Disregard Previous Instruction Manual for Business Leaders.  If you are going to succeed in this rapidly changing world, we face two challenges: make sense of the world around us and Disregard Previous Instructions.

Update Leadership

Most leaders see things the same way everyone else sees them because they look for ideas in the same place everyone else looks for them

Spread Sheets

If all you’ve got is a spreadsheet filled with red ink, it is easy to be paralyzed by fear. But if you can summon some leadership, nerve, then hard times can be great time to separate yourself and build advantages for years to come.

Rediscovering and Reinterpreting

Originality matters. But history matters too. The very act of rediscovering and reinterpreting the past creates the confidence necessary to craft a distinctive game plan for the future.

Re-Imagining What is Possible

Looking for ideas in unfamiliar fields is not just about relocating what works from one industry to another. It is also about re-imagining what’s possible in an industry.

Experimentation

When it comes to thriving in an age of rapid-fire change, the only thing than too much experimentation maybe too little experimentation. If you do things the same way everyone else does things, why would you expect to do anything better.

The Road to Nowhere

It’s not good enough to be ‘pretty good” at everything. You have to be the most of something: the most elegant, the most colorful, the most strategic and the most focused. In the New World of business the middle of the road has become a road to nowhere.

Caring More

Even the most creative leaders recognize that success is not about thinking differently. It is also about caring more. The question isn’t about what separates you from the competition in the marketplace. It is what holds you together in the workplace.

New Sources of Growth

Defense is no longer sufficient.  Scalable efficiency is no longer sufficient.  Margins will continue to deteriorate and economic value will be destroyed until leaders of today, big corporations and institutions begin to pursue new sources of growth.

I plan to continue updating Disregard Previous Instructions when I have something useful to say.

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“Practically Radical” by William C. Taylor

“Practically Radical” is a must read for anyone who wants to disregard previous instructions. The ideas are fresh; the book is chock full of instantly applicable ideas.

The book challenges conventional wisdom. It is almost but not quite as radical as my book.  Sorry for the plug.

If you’re interested in reinventing your company and ways to do it—with the least amount of
pain buy a copy of the book.

 

“Predictably Irrational” by Dan Ariely

“Predictably Irrational” by Dan Ariely – If you have ever wondered how consumers make decisions this is a must read.  There are several examples–Starbucks, Coke, Duke basketball tickets, healthcare–all focus in on decision drivers that will turn your world upside down.

I fell into that category. Consumer relationships and treatment is top-of-mind. His observation; “You can’t treat your consumers like family then treat them impersonally.” McDonald’s is a case in point. They have thousands of relationship programs. So much the better–as long we don’t go into their stores or drive-thru’s. The consumer becomes  a commodity. In the drive-thru’s it even worse.  I realize that speed and accuracy are the most important attributes in the drive-thru channel. That fights against the relationship idea. There are several ways to demonstrate that they care about their customers.  I am sure they would dispute this–it is easy to dismiss out of hand.  That doesn’t surprise me.

“This is Service Design Thinking” Marc Stickdorn, Jakob Schneider.

I recommend this book for anyone interested in design thinking and its applications.   There are several useful models and definitions.   The more models the less clarity.  I  found myself trying to distinquish between models and circumstances.   You can pick and choose among the definition of service design thinking in the book.    Why am I recommending a book that I am finding fault with?   Without knowing the fundamentals of design thinking you will be left behind and be at the mercy of design thinkers.

The Picasso Brand

“The first artist as a brand was Picasso,” (The Art Newspaper, December 2012). Picasso controlled the relationship between production and distribution.  Picasso excited demand with a continuous stream of new styles. Collectors dutifully moved on from the Blue Period to Cubism just as consumers later moved on from a ’57 Chevy Bel Air to a ’58 Chevy Impala.

Picasso limited edition prints opened up new markets.  Picasso understood the media and social networking.  He cultivated relationships.  Picasso brand commanded higher prices.  He was way ahead of us in the art and science of brand building.

2013 – Seeing What is Next

Introduction

Seeing differently means questioning how we are doing things, whether we are working on new solutions to old problems, or creating new ways of doing things that have never been done or even thought about before.

1.  Disruption is the New Normal.  Management performance should not be measured by how much disruption it can eliminate and how much disruption it can tolerate.  It is reactive not proactive. Be the disrupter, not the disrupted.

2.  Seek the obvious, but do everything in your power to ridicule it.  Jack Welch was the epitome of the modern celebrity CEO.  However, during his tenure he de-emphasized manufacturing, grew financial services, outsourced American jobs, jettisoned research.  The huge bet on financial services almost brought GE to its knees.

3.  Every rule that made for success in the past has to be rethought because it unreflective application will lead to failures. As a consequence, the rules of doing business have changed so radically that entirely new ways of thinking are needed.

4.  There is not a single constraint under which any business now operates that should be taken as inviolable for all time.  Constraints are to be treated with discourtesy.

5.  Barriers to entry are rarely sustainable.  Disrupters will find a way to destroy them or circumvent them.  (Apple disrupted the music industry.)

6.  In business originality is not enough, an idea must be translated into a product or service that has economic value.  Volkswagen Battle Super Bowl ad was a sales failure.  January and February sales dropped 7%.  While the market grew 26%.  It may be that the ad’s exercising dog was more memorable than the car.

7.  The policies which we make decisions upon, should depend far more on the range of possible outcomes; not a single event.  This increases the chances that an enterprise can adapt to change.

8.  We will start harvesting ideas that promise to help people become more resilient when facing large-scale disasters.  (Hurricane Sandy)

9.  “Hyper-competitive markets … a war of rapid and disruptive moves replaces a war of defending strongholds.” (Hyper-Competition, Richard D’Aveni) The flexible and unpredictable competitor has the advantage over the inflexible and committed competitor.

10.  Intellectual capital exceeds the value of financial and physical capital.  The value of what we know, the intangible value of what we have created may exceed the physical value of what surrounds us.  The most important corporate resource over the next 20 years will be talent.  It is also the resource in shortest supply.  Enterprise will fight for their share.

11.  Social responsibility is no longer discretionary; it is essential for business survival and profitability.  The link between corporate social responsibility and profits has never been greater.

12.  Once a sustainable advantage has been equalized, it is no longer an advantage but a cost of doing business.  It is critical that an enterprise has a continuous stream of disruptive advantages increasing the distance between you and your competitor and extending the time frames.

13.  An enterprise will lead from a place in time that assumes they are already there and that is determined even though it hasn’t happened yet.

14.  Trust is more than a bonus.  It is an intangible asset creating shareholder value.  “Trust” cannot be achieved without deeply internalized needs and concern for it as part of everyone connected with the enterprise.

15.  Act as if everything you do is going to be instantaneously available on the internet … because it is.

16.  We are no longer in the business of generating content. Rather we will be in the business of creating experiences, which allow the user to evaluate content of their own choosing.

17.  “Intersectional innovation … unleashes an explosion of ideas among multiple fields generating ideas that leap in new directions.” Enterprise will gather designers, technologists, innovators, scientists and storytellers. (The Medici Effect, Frans Johansson)

18.  Know the critical assumptions from which you operate and monitor the experiment carefully for signals that indicate that those assumptions maybe either be reversing themselves or collapsing.  (For example, the military assumption that there were weapons of mass destruction in Iraq.)

19.  Consumers needs will be harder to anticipate, as consumers have become more technologically savvy, more connected and more mobile.

20.  The unfinished quality of most lives encourages experimentation, discovery and identity.  The knowledge that other people are doing the same leads toward authenticity.

21.  Every enterprise needs multiple crisis portfolios, the first is to prepare for the worst, the second is to take preventative action, and the third is to be opportunistic.

22.  Change will require insights, innovation, creativity and common sense.  It requires a willingness to disregard preferences and practices that are no longer productive and replace them with ones that are.

23.  The future is a realm for actors rather than spectators.  It’s the difference between being passive and being active.  The risks are there regardless, but the active participant has some possibility of control. Neither nations, nor companies, nor individuals can properly identify with the future by sitting and waiting to see which way the wind blows.

Wall Street “Wizards” Just Presided Over the Biggest Money Drain in History – And They Are Getting Off Scot Free

Executive Memorandum

CONFIDENTIAL

To: The New CEO

From: The Previous CEO

Date: November, 2012

Re: Wall Street “Wizards” Just Presided Over the Biggest Money Drain in History – And They Are Getting Off Scot Free

I imagine you are as furious as I am at the way Wall Street’s minions managed their global bloodletting.  They brought the financial system to its knees.  Today, they are presuming to go on calling the shots just as though God meant them to.

Now that those folks on Wall Street have succeeded in making the whole world crazy, perhaps we ought to think twice about letting them tell us what to do.  They certainly messed up the lives of millions of people in their last go round.  So far they have blamed everybody but themselves and their own power hunger.

Wall Street influence on the stock price is known to be substantial.  Thus, they determine the amount of financial resources, available to a firm.  However their impact goes further than that because of the power to determine a company’s financial needs.  They also have influence on the short-term strategy to be pursued.

Who is kidding whom?

I want to talk about our relationships to brokers and investment bankers and especially to the analysts who continue to pontificate about our future – in spite of having demonstrated, quite recently, that they are nearly always wrong about everything.

The stock markets have yo-yoed themselves back up from the depths and has recovered.  The response of most corporate managers however has been to touch their forelocks once more to the Wall Street analysts and get right back into the dangerous game of trying to match or beat their quarterly expectations.  We’re still listening to that old siren song.

Shame on us!

The analysts, for their part, are right back at the old stand, pontificating as always, and warning of others’ failings while never bothering to admit their own.

So now we have a frenzy of new firings from company after company in a desperate attempt to cut costs and, by implication, raise profits.  These latest downsizings may, indeed, be necessary, but the applause they get on Wall Street is hardly warranted.  Dumping a substantial portion of the work force will not turn companies around and it will certainly not improve what must already be pretty poor morale.  It sure as hell will not lead to the next round of growth – but it will affect the lives of a lot of innocent bystanders.

Isn’t it time we got it though our heads that Wall street analysts can’t tell us how to run our companies?  They give the same advice to everybody and everybody in every industry tries to follow it.  It can’t be equally right for everybody, but it could easily be equally wrong.  Hell, they can’t even manage their own firms, much less tell us how to manage natural gas line firms in Tehran, chip makers in Silicon Valley or biotech firms wherever they are.

The issue is quite simply: who is to control our companies?

I think it is past time for us – and for that matter, every other company management – to take our future into our own hands and stop taking signals from the devil over our shoulder.  Either we know what we are doing or we don’t.  Checking with the hecklers every day, like some poll-driven politician, is hardly demonstrating leadership.

Let’s just do the things we have to do to keep our companies alive and healthy and let the critics do what they have to do.  It can’t work out any worse for us than the old way of trying constantly to please the Street, or courting those financial talking heads who operate on a 24-hour news cycle.  They have to make news whether there’s news or not.  They have to make waves regardless of whom they hurt.

I’ve suggested before that we need to go our own way and not let a bunch of outside analysts jerk us around.

Now I’m going a step beyond.  I think we ought to call the analysts to account.

The almost universal acceptance of long term versus short-term earnings stifles innovation and growth.

If there was ever a time to go into the marketplace of ideas, now is the time.  Let’s take the analysts to the court of public opinion.

I think we should serve notice on the analysts that, just as they have a right to expect transparency from us, we have a right to expect responsibility from them.

I think we should remind them periodically how lousy their track record is and make it clear to them that we will be both the authors and the executors of our business strategy and that nobody knows better than we what is best for us.

That doesn’t mean that we can’t be questioned, nor does it mean that we won’t be open to suggestions.  It does mean that operating the company is our responsibility and theirs is reporting about what we are doing -–not trying to do it for us.  Not creating news where there is none.  Not hyping our stock on a whim.  Not talking up some scientific breakthrough they know nothing about and we are still pursuing.  Not – especially – predicting global markets, which is plainly impossible because of all the uncertainties and discontinuities there are and all the unforeseen events that can take place.

At the same time, let’s acknowledge that we – like other company managements, have been to eager to please them and too quick to use their doubts as directives.

If our stock prices are to suffer, let it be because of what we do (or fail to do) rather than what they tell us to do or not to do.  When we do what they want us to do, that is the surefire recipe for irrational exuberance and losing 50% of our market capitalization.

This kind of stance has its risks, but we’ve already tried the other way and it certainly did nothing to help our stock price.  It seems to me that, apart from going private, there is only one way to keep Wall Street from bleeding value from our company and from our stockholders.

That is to take firm control of our destiny and to keep the public informed at all times about where we are going and how we intend to get there.  How we intend to create value – not just disposable numbers or a tape running across their screens.  My doctor friends have told me that there have been a lot of strained necks recently from people trying to follow those tapes.

It doesn’t seem either sensible or practical to keep lowering earnings estimates two or three times a quarter so we can finally beat our lowest estimate.  That’s what we’ve suckered ourselves into to keep Wall Street happy.  If we keep it up we’re going to put ourselves into legal hot water.  We can’t keep pulling the wool over our stockholder’s eyes without incurring serious liability.  An earnings estimate is not just an earnings estimate – it is a promissory note to our stockholders, management’s best guess of performance.  If we keep revising it downward, stockholders have a right to ask if we are competent to do our jobs and if we are properly representing their interests.

The alternative, to set a bold course and publish it to the world, to stick to it and make it work, seems far wiser and far more economical.  And far more honest.  Make consumers part of our plans, make them stakeholders as well as stockholders.

This is, I’m afraid, a good deal harder than I may have made it sound so far.  The degree of transparency necessary to serve as a counterbalance to what analysts might be tempted to invent or embroider to fit their own theories – is not easy for a company to achieve or to live with.

When we say we are going to do something, we will have to do it – no ifs, ands, or buts.  When we make a move – any kind of a move, we will have to justify it in terms anybody can understand.  That can be done easily where the choices involved are rational and quantifiable.  Not so easily where choices are emotional, subjective, based on qualities that may seem intangible.  Nevertheless, we will have to try to justify both kinds of choices – because both kinds of choices are involved in running a business.  Both kinds of choices, are in the end, what separate growth companies from non-growth companies.

This degree of transparency will require a great deal of honesty on our part at all levels of the company and a great deal of skill in communications.  That means we will have to do a lot of soul-searching and we will have to go out of our way to explain ourselves in all our deals and all our decision-making.  We will have to explain, not just the things we do, but the things we decide not to do as well.

In paying the price of transparency managers would gain a clear view of what goes on in the rest of the company – including the executive suite – a better than fair trade.

Of course, that means transparency in the workings of the board, too.  Board members would also have to change their ways.  Things we used to keep close to the vest would become common knowledge and our more than occasional tendency to act arbitrarily would have to go.  That doesn’t mean that proprietary information must become public, but it does mean that we’d better be careful to distinguish what is truly proprietary from what is merely inconvenient to disclose.

The key to running a transparent company is having a clear direction and a well-defined and well-understood strategy for getting where you want to go.  That direction, that strategy, and that understanding must be integral to every division of the company, every department, and every individual.  If our people know clearly what is expected of them I think we can count on them to deliver.  I think they’ll even be proud to have what they do be visible to the public.

I admit to having rewritten this memo several times.  In earlier versions I began by biting my tongue – trying not to give vent to my anger at Wall Street for siphoning so many dollars out of people’s pockets and for causing so much hardship to so many stockholders and so many companies.  On reflection, the anger seem justified and a necessary precursor to contemplating what we can do to fight back.

I’d like to think that they have learned a lesson, but I fear they haven’t.  They’ll keep doing what they’ve always done, and I am not sure that there is any way to force them to act more responsibly.

What we can do is try to counter their influence.

The time to start that is now.

If we do not we will lose control of our business, lose control of the rhetorical climate that surrounds it, lose control of our share prices, and let down our shareholders.  These shareholders invested in our company, not in a bunch of Wall Street types who have neither created nor managed a Fortune 500 company; not in some media flacks who seem to care more about eyeballs than they do about reporting, as opposed to making the news.

There is a better way and we ought to take it.

Let me know what you think.  I’m available, as always to talk about this at your convenience.

Good luck and God bless.

Tapscott vs Shirky: TEDGlobal.

Don Tapscott,  “Big Data, business intelligence, and next generation analytics can help deliver more effective targeted communications to customers.  And with detailed individual knowledge we can deliver better, personalized value (products and services) to them.  But in many ways this is just fine tuning of the old paradigm in marketing where companies deliver message and value-one-way-to passive recipients.  It is just and extension of the broadcasting models of marketing: Customers are inert and the goal is, transaction and not a relationship.”

A much bigger opportunity is to engage with them: from customer centricity to customer co-creation: from focusing on the consumer to co-creating with them to innovating with them and establishing a relationship with them.  Customers will get tired of being bombared with one way messaging.  They are likely to punish the company who sends them.