Creating the “Best of Times” – Apple, Cisco, Virgin

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Summary:

• Your view of today will be determined by your future success
• Conventional wisdom – often called “best practices” – will lead businesses to cut costs in today’s economy, leading to a vicious cycle of reductions and value destruction.  “Best Practice” application does not improve results
• Winning companies don’t focus on past behavior, but instead seek out new markets where they can grow – Apple, Google, Virgin, etc.

To paraphrase Charles Dickens (A Tale of Two Cities) are these “the best of times” or “the worst of times?”  Few new jobs are being created in the USA, its hard to obtain credit if you’re a borrower, but there’s very little return to saving, the stock market has been sideways for a decade, asset values (in particular real estate) have plummeted while health care costs are skyrocketing.  Look in the rear view mirror at the last decade and you could say it is the worst of times. 

But the answer doesn’t lie in the rear view mirror – the answer lies in the future.  If you succeed in the next 2 years at achieving your goals, you’ll look back and say this was the best of times.

In “Do You Have the Postrecession Blues” at Harvard Business Review blogs the author tells of two shoe salespeople that show up in a remote African village.  The first sends back the message “No one here wears shoes, will return shortly.”  The second sends the message “No one here wears shoes, send inventory!”

The history of business education has been to teach managers, usually by studying historical case experiences, the “best practices” employed by previous managers. But BPlans.com tells us in an article headlined “The Bad News About Best Practices” that this is a lousy way to make decisions. “..most of the time, they won’t work for you or me. They worked for somebody, some time, in some situation, in the past.” 

The New York Times deals with fallacious best practices recommendations in “From Good to Great… to Below Average.”  Best selling Freakonomics author Steven Levitt points out that most business authors try to push somebody else’s Success Formula as the road to success.  However, the most popular of these are really very inapplicable.  Those held up as “the best practice” have most often ended up with quite poor results.  So why should someone else follow them?  Nine of eleven of Collins’ “great” companies did worse than average!

Best practices has led businesses to cut heads, slash costs, sell assets and in general weaken their businesses the last few years.  Most leaders would prefer to believe that they have somehow improved the business by eliminating workers, the skills they bring and the function they perform.  But the result is less marketing, sales, R&D, etc.  How this ever became “best practice” is now a very good question.  What company can you think about that “saved its way to success?”  The cost cutters I think about – Sears, Scott Paper, Fannie Mae Candies, etc. – ended up a lot worse for their efforts. 

These can be the best of times.  Just ask the people at Apple Cisco Systems, Virgin and Google.  These businesses are growing as if there’s no recession.  Instead of “focusing on their core” business with defend & extend efforts to cut costs, they are entering new markets.  They are going to where growth is.  Amidst all the cost-cutting, best practice applying grief these are examples of success. 

So will you continue to operate as if these are the worst of times, are are you willing to make these the best of times?  You can grow if you use scenarios and competitor analysis to find new markets, embrace disruptions to attack Lock-ins that block innovation, and implement White Space teams that learn how to develop new markets for revenue and profit growth.

Postscript – entire Dickens’ quote: It was the best of times, it was the worst of times, it was the age of
wisdom, it was the age of foolishness, it was the epoch of belief, it
was the epoch of incredulity, it was the season of Light, it was the
season of Darkness, it was the spring of hope, it was the winter of
despair, we had everything before us, we had nothing before us, we were
all going direct to heaven, we were all going direct the other way – in
short, the period was so far like the present period, that some of its
noisiest authorities insisted on its being received, for good or for
evil, in the superlative degree of comparison only.

Post-postcript – I am trying a new format for the blog.  Please provide your feedback.  I’m dropping the bold enhancements, and replacing their intent with an introductory summary.  Let me know if you like this better.  And thanks to reader Jon Wolf for his specific recommendations for improvement.

Of goats and heroes – Sara Lee’s Barnes and Apple’s Jobs

Rumors are flying around Chicago about the health of Sara Lee CEO Brenda Barnes.  Will she stay or leave?  Some investors are wondering as well.  While I join the chorus of voices that wish Ms. Barnes good health, her departure would not be a bad thing for Sara Lee investors, employees, suppliers and customers!  Whether for health or other reasons, a change in the top at Sara Lee is long overdue.

As Crain's Chicago Business reported in "Sara Lee's Secrecy on CEO Barnes' Health Leaves Investors Wondering" in the 5 years Ms. Barnes has been CEO Sara Lee's value has dropped 25%, even as the S&P consumer goods index has risen by 18%!  During her tenure, revenues at Sara Lee have declined 50% – largely due to asset sales from which the cash proceeds have done nothing to improve results.  Currently, Ms. Barnes has a large deal on the table to sell another multi-billion dollar business in her ongoing effort to make Sara Lee a smaller and less competitive company.

There's nothing wrong with selling a business.  But leaders have a responsibility to either pay the proceeds out to investors or re-invest the proceeds into new, growing businesses with high rates of return that will add more value.  In Ms. Barnes case the money has been spent buying up shares of stock (the plan for any future proceeds, by the way).  That has done nothing more than make the pool of shares, like the company assets, smaller.  As already mentioned, these asset sales have not added anything to revenue or profit growth and thus the company value has steadily declined.

Of course, as I vilify Ms. Barnes reality is that it takes the agreement of Sara Lee's Board of Directors for this strategy to be implemented.  And it takes a leadership team which agrees to go along – without offering strong dissent and driving discussion of results and long-term impact. While I make out Ms. Barnes to be a "goat" there is a lot more wrong at Sara Lee these days than simply the CEO. 

Sara Lee has long been without any White Space.  The company has tried to "milk" its aged brands, hoping to get more profits out of products that were much more exciting to customers in 1970 than 2010.  While Jimmy Dean Sausage, Sara Lee frozen desserts and similar products were the stuff of my youth the current generation of young adults have chosen much different fare – in not only food but household and health/beauty products.  Sara Lee's leadership before Ms. Barnes started the route of focusing on past sales and simply trying to give existing customers more.  As a result, there has been 2 decades of insufficient scenario planning, limited competitor analysis – and no Disruptions.  There has been no White Space to do anything new.  

Similarly, we can easily make heroes out of CEOs in companies doing well.  Steve Jobs at Apple is a case in point.  During his 10 year leadership, Apple has gone from near bankruptcy to value greater than Microsoft.  But this was not all Mr. Jobs.  He has pushed his Board of Directors and leadership team to do more scenario planning, obsess about competitors, implement Disruptions and open White Space for doing new things.  As a result, the Apple organization is now entering new markets and launching new products. 

Mr. Jobs has not been without his own health concerns the last few years.  Hopefully, he is doing well and will live many, many more healthy and happy years.  Yet, if he chose to depart Apple for health or other reasons Apple is well positioned to continue doing well.  Because as an organization it is planning correctly and implementing Disruptions and White Space – critical capabilities of Phoenix organizations.

CEOs matter.  They set the tone for their organizations.  Good ones understand the need to build organizations that can enter new markets – like Mr. Jobs. Bad ones spend their energy trying to Defend & Extend past results, often getting trapped in financial machinations as the organization shrinks and value disintegrates – like Ms. Barnes.  But it's not all about the CEO and we shouldn't get too caught up in that single job.  Good organizations have the skills to produce long-term growth and high rates of returns, and that can be built anywhere.  Let's hope Sara Lee's Board wakes up to this and starts making changes in that organization soon.

Crossing the Re-invention Gap – News and Chicago Tribune

Is news dying, or are newspapers dying?  That's a critical question.  Most of us know the demand for news is not dying – and if you needed reinforcement a recent McKinsey & Company study verified that the demand for news has increased (McKinsey Quarterly "A Glimmer of Hope for Newspapers").  And a lot of the increase comes from people under 35 who are escalating their news demands.  Of course, most of this increase is coming from the web and mobile media.

Too often, however, we don't see our business growing.  Instead, Lock-in to old definitions make us think our business is shrinking when it is actually doing the opposite!  And that's the Re-invention Gap.  Manufacturers of small printing presses said demand was declining in the 1970s, when in fact demand for copies was exploding.  Only the explosion was from xerography instead of presses.  So A.B. Dick and Multigraphics, small offset press manufacturers, went out of business when demand for the output of their product was exploding!  The market shifted, but it kept growing, and they missed the shift.

Today we see this behavior in most news publishers.  Those who print newspapers and magazines are talking about how horrible business is.  Only the demand for news is growing more quickly than ever.  It's just not demand for print, which arrives too late for many customers.  And because print is too slow a distribution method for these customers, advertisers are abandoning print as well.  But only if you're Locked-in to printing do you say the market is horrible.  Because with demand for news growing, if you reposition yourself to serve the growing part of the market you should say business is great! 

Tribune Corporation, owner of The Chicago Tribune newspaper is still in bankruptcy.  And its future relies entirely on how well it will serve the needs of on-line news readers.  According to Crain's Chicago Business, in "Former Sports Editor Bill Adee Steers Chicago Tribune's On-line Strategy" print advertising revenues fell by 9% versus last year in the most recent quarter.  And according to a quoted investment banker, nobody would have much interest in the value of a print newspaper.  That business is destined to keep declining.

But simultaneously the volume of on-line ads tripled!  And that's what a business has to do to cross its Re-invention Gap.  It has to move from the old business into the new business – from the declining elements of its business into the growth elements.

What most businesses do wrong is try to apply their old business model to the new business.  The old Success Formula has Lock-ins to metrics, schedules, processes, frequent decisions, decision-makers, strategic plans, etc. which the leadership tries to apply to the new business.  For example, most newspapers are used to selling ads for several thousand dollars, based upon the number of subscribers.  These are pretty large price points.  But on-line, ads are sold per page view or per click.  Now we're talking pennies sometimes.  And to make money, you have to get a lot of views. Likewise, newspapers work on a 24 hour cycle of news accumulation and publishing, whereas the internet is 24×7 with the opportunity to change headlines and what's reported continuously.  If a newspaper tries to apply the old Success Formulas related to sales, pricing and editorial process they fail.

And that's why crossing the re-invention gap requires a big Disruption.  You have to get the organization to understand that while you are managing the old business, it is destined to eventually go under.  So you have to be prepared to Disrupt the Lock-ins, to discover a new way to do the business.  And that can only happen if there is a White Space team dedicated to building a business the way the new marketplace will pay for it.  Totally separated from the old business.  And exactly the opposite of what Tribune is doing by placing the team in the middle of the old newsroom!

At Tribune, one of the big problems is not only the ad pricing model and news scheduling, but the fact that the leadership is still trying to drive content like they did at the newspaper.  Over a decade ago Tribune took a direction of accumulating less news on its own, and as a result it republished lots of content.  But now on the internet republishing (or content aggregation as it is called on-line) is far less valuable because readers can go to the source.  There are thousands and thousands of aggregators – making competition intense and profits negligible.  Why page view a Chicago Tribune web page that's feeding info from the New York Times or Marketwatch or MSNBC when you can go directly to the New York Times or Marketwatch or MSNBC and get it yourself – possibly with other interesting sidebars?  Succeeding in the new market requires developing an entirely new Success Formula – which Tribune Company has not done.  It's still trying to find that magical "leverage" which will allow it to preserve its "history" (its old Success Formula) while tiptoeing into the new marketplace.

I don't know any newspaper or magazine publisher that has really attacked its Lock-ins, really Disrupted, or set up a true White Space team to explore how to make money in the growing new news market.  News Corp. had the chance when it bought MySpace.com, but failed as it destroyed the MySpace business by "helping" its leadership.  This market requires understanding how to get the news and report it cheaply and very fast, to computer and mobile device users.  That is necessary to obtain the traffic which would be valuable to advertisers.  And simultaneously the new team must package ad sales so as to maximize revenues from page views.  Most are far too reliant on single ad sales, and not effectively linking the right ads to the right pages to generate more click-throughs as well as views.

Re-invention Gaps emerge because we let Lock-in blind us to growth opportunities.  We define the business around the Lock-ins (such as printing a newspaper) rather than defining it around what the market wants (news.)  Then when revenues stumble, starting a growth stall, the energy goes into preserving the old Success Formula (and its Lock-ins) first with cost cuts, and later with efforts to "synergize" or "leverage" the old Success Formula into the new market.  And this never works.  The growing part of the market is entirely different, and requires developing an entirely new Success Formula.  That's why even in growing markets businesses fail, unless they commit to Dis
rupting the Lock-in and using White Space to move back into the growth Rapids.

Disrupt to avoid failure – Blockbuster

Blockbuster Video is in big trouble.  Most analysts think the company is going to file bankruptcy – unlikely to survive – with a mere $.30 stock price today.  Most of us remember when the weekly (or more frequent) trip to Blockbuster was part of every day life.  Like too many companies, Blockbuster was in the Rapids of growth when people wanted VHS tapes, then DVDs, to rent – and CDs to purchase.  We happily paid up several dollars for rentals and purchases.  Blockbuster grew quickly, and developed a powerful Success Formula that aided its growth.

As it is failing, I was startled by a Forbes.com article "What Blockbuster Video Can Teach Us About Economics." The author contends that this failure is a good thing, because it will release poorly used resources to new application.  Like most economists, his idea has good theory.  But I doubt the employees (who lose pay and benefits), shareholders, debt holders, bankers, landlords and suppliers – as well as the remaining customers, appreciate his point of view.  Theory won't help them deal with lost cash flow and expensive transition costs.

As the market shifted to mail order and on-line downloads, Blockbuster could have changed its Success Formula.  But instead the company remained Locked-in to doing what it has always done.  It will fail not because some force of nature willed its demise.  Rather, management made the bad decision to try Defending & Extending an out of date business model – rather than exploring market shifts, studying the competition intensely then using Disruptions and White Space to attack both Netflix and the on-line players.  Blockbuster's demise was not a given.  Rather, it was a result of following out of date management practices that now have serious costs to the businesses and people who are part of the Blockbuster eco-system.  I struggle to see how that is a good thing.

Fortunately, ManagementExcellence.com has a great article about ideas for attacking a threatened Success Formula in order to avoid becoming a Blockbuster entitled "Leadership Caffeine: 7 Odd Ideas to Help You Get Unstuck."  The author specifically takes aim at the comfort of Lock-in, and describes how managers can start to make Disruption part of everyday life:

1. Fight the tyranny of Recurring Meetings
2. Rotate Leadership
3. Break the back of bad-habit brainstorming
4. Do something completely off-task with your group
5. Introduce your team to thought leaders and innovators
6. Play games
7. Change up your routine

Described in detail in the article, these are simple things anybody can do that begin to reveal how deeply we Lock-in, and expose the power of how we could behave differently.  If Blockbuster management had applied these ideas, the company would have been a lot more likely to return positively to society – rather than become another bankruptcy statistic.

Do you Facebook?

Let's see, would you rather spend $4million to reach 100 million people once – say via a Super Bowl ad – or spend almost nothing to reach 400million people every day?  Seems obvious economics.  Yet, how good is your Facebook presence?  Because that is the route to all those people who are on-line daily.

Most of today's business leaders grew up in the world of one-way advertising.  They watched TV, listened to the radio, read magazines and newspapers.  They were taught that to get a message into potential buyer heads, unfiltered by journalists, you had to advertise.  And for a long time, that was pretty true.  So they Locked-in on advertising and traditional PR as the route to name awareness and brand image.  But that was before the market shift which is dampening enthusiasm for traditional media while social media (broadly – including YouTube) is exploding.

Now your customers, and potential customers, are most likely using Twitter, Facebook, Linked-In and other social media every day.  And when they search on your products, they get Google responses from social media.  If you aren't putting some effort into the media, your image and message could be far removed from your goal! 

I remember talking to the CEO of Rolex in 1997.  Rolex did not have a web site.  His point of view was that as a luxury good, the internet was "below" his company's standards for communicating.  If there was to be a web site, he thought Tourneau – the world's largest retailer of luxury watches – would build it.  In 10 minutes I demonstrated to him how a simple search on "Rolex" turned up gobs of used dealers, unauthorized dealers, unauthorized repair shops, and outright fakes!  Several near the top of the list!  He was shocked.  His brand was rapidly being marginalized via a channel he had never even considered.  His worst fears about how the brand would be stolen, manipulated and value minimized were happening – and he was blithely ignorant.  Of course, Rolex got involved quickly to protect its brand.

So when was the last time you reviewed your brand, or image, or message across social media channels?  Are you possibly, blithely letting someone else manipulate your image?

At MediaPost.com in "Ensuring A Successful Corporate Facebook Presence" the authors outline a 4 step approach for doing a good job.  My biggest fear is that Lock-in to old approaches to sales and marketing mean too few companies are paying even a shred of interest in social media.  Over and over I hear marketers of large, established companies saying that social media access is blocked at work – and nothing is being done to leverage the channel!  In some instances, I've heard of Chief Marketing Officers making a "command decision" to avoid social media, because they can't "control" it. 

Secondly, the competition that is going to ruin your day just might do it via social media!  An existing company may have an image, advertising and effective PR.  So how would a Disruptive new competitor go after you?  Why, using the very low cost channel of social media.  We've all heard about disgruntled customers that have used songs, videos and other clever tools to spread extremely negative information like wildfire through a customer base.  Yet, by ignoring the channel – by ignoring the opportunity to develop a strong and effective presence that ties to customers – we encourage competitors to use this channel to our detriment.

Don't let Lock-in cause you to ignore this powerful, and shockingly low cost, communication tool.  Realize that social media is here to stay, and incorporate it into your future scenarios.  Additionally, social media is where your competition – especially fringe competitors – are likely to target you.  Why not study them, learn from them, and use the tool to grow instead of being a target?  And when it's time to implement, Disrupt your old decision-making and spending patterns so you allocate some resources to build out your social media campaign.  Then put together a White Space team with Permission to really go for success using the resources you've now dedicated to the project.

Applying the Phoenix Principle can result in a rapid improvement in social media marketing – and it just might save you a huge amount of spending on your traditional marketing communications plans.  While bringing in new customers and markets!

Disrupt to Succeed – Forbes

"From the day we start kindergarten we fear the teacher's call to our
parents saying, "Hello Mr. and Mrs. Smith. I'm sorry to tell you that
Mary has been disruptive in class." We are taught, trained and
indoctrinated to go along and get along, to not disrupt. In fact we're
constantly told to seek harmony. But in business that can destroy your
entire value."

That's the first paragraph from my Forbes.com column, posted today, "To Succeed You Must Seriously Disrupt."  Companies that don't Disrupt remain Locked-in to Success Formulas with declining value until all hope is lost – just look at Sun Microsystems. Although Chairman Scott McNealy was famous for his Disruptive corporate behavior – he was unwilling to tolerate disruptions from his own organization to the company business model.  In 10 years Sun went from $200B market cap to out of business. 

Now Toyota is struggling because it wouldn't Disrupt.  Meanwhile Honda is doing much better than most, because it is willing to Disrupt.  Listen to the 40 second video on Disruptions, and read the article so you can see the need for Disruption and adopt in your business!

Be Flexible, and Forward Thinking – Office Depot, Apple

"Strategic Plans Lose Favor" is a recent Wall Street Journal headline.  Seems like some big companies, and big consulting firms like Accenture, McKinsey and the Boston Consulting Group are rapidly learning what this blog has been pushing for a few years.  That flexibility trumps traditional approaches to strategic planning.

• When Office Depot's strategic plan was leading to revenue struggles, the company set up a situation room to track key indicators and adjust to market shifts much quicker.
• "Strategy as we know it is dead" according to Walt Shill, head of strategic planning at Accenture. "increased flexibility and accelerated decision making are much more
  important than simply predicting the future."  (Do you think he's been reading this blog and my book?)
• "business leaders will start to rely less on static five-year strategic
  plans and more on rough "adaptive" strategies that consider multiple
  scenarios"  according to Martin Reeves, Senior Partner at BCG.  (Where'd he read that – on this site?)
• ""The rate of change and width of volatility is much wider and faster
  than what we would have assumed coming into this," Jeff Fettig, CEO at Whirlpool
• McKkinsey has opened a "Center for Managing Uncertainty."  Really.

As this recession has come on, and lingered, businesses are clearly starting to realize that market shifts happen fast, and businesses cannot be slow to change.  Adaptability is one of the most important capabilities to compete in the post-2000 business world.

And the real market leaders are incorporating this kind of thinking into their organizations.  While the earlier quotes show how, caught on the defensive, organizations are finding new ways to react, the best performing organizations are taking market leadership by being Disruptive.  Like Apple.  In a Harvard Business Review blog Roberto Verganti, professor at Politecnico di Milano tells us "Apple's Secret:  It tells us what we should love." 

The good professor of design and management points out that Apple does not ask customers what they want.  Instead the company designs products which take customers to new levels of performance beyond what they imagined.  Instead of being reactive, Apple uses scenario planning to understand future market needs and create shifts with its products.  This approach leads to breakthrough performance, such as the success of Nintendo and its Wii product line.

To be successful businesses can no longer try to Defend & Extend their old strategies.  They have to be market focused, and flexible to manage through market shifts.  And to earn superior rates of return they have to be market leaders that use scenario planning and White Space to launch new solutions meeting emerging needs which attract customers and grow sales.

The problem with lists and awards – and best practices

We all love awards and lists.  Who doesn't like being rewarded for their accomplishments.  At the same time, we have acquired a strong taste for lists "The best…"  Another verification of success. But both can be harbingers of potential problems – and even destruction.

Ben Bernanke became Time magazine's "Man of the Year" and now he's at some risk of losing his job (see 24/7WallStreet.com "In Not Bernanke, Who?"  Think about the list of Great Companies that appear in books, like Good to Great, only to end up in big trouble – like Circuit City and Fannie Mae.  Why does it seem those who top awards and lists end up shortly struggling?

Too often businesses, and business people, "win" by doing more of the same.  They work hard to optimize their Success Formula.  They get really committed to practicing what they do (remember Outliers by Malcolm Glaldwell and his recommendation to practice, practice, practice?)  They get better and better.  And in fields like sports and music, where the rules are well understood and the approach is clear, this often works. And as long as they keep practicing top athletes and musicians often remain near the top of competitors.

But we have to recognize that most of the time those "at the top" in business have emerged within a given market.  Then they are knocked off by a shift.  Like Ed Zander of Motorola being named #1 CEO in 2004, only to be fired within 2 years as RAZR sales toppled.  Like Sun Microsystems perfecting Unix servers for an emerging client/server technology market that became saturated and shifted to PC servers.  Like Michael Dell (and Dell Corporation) which emerged when lower cost made supply chain efficiencies critical for PCs, before the PC market became saturated and iPhones plus Blackberries started dominating the landscape.  Or WalMart which also used a new supply chain to grow the emerging discount retailing sector, only now it is laying off 10,000 employees as it shuts Sam's stores across the country.  These companies created a Success Formula and honed it quarter after quarter to maximize performance in a high growth environment.  But the market shifted.

In business the rules are not "set".  There is no written music to
perform.  Instead, the market is highly dynamic.  New competitors
emerge, new ways of competing emerge, new technologies emerge and new
solutions emerge.  The market keeps changing. Suddenly, what worked last year isn't successful any more.  When the market shifts, the previous winner becomes the new goat.  That optimized business starts to look like the world's best wrestler, only to be obsolete when a flood occurs making swimming the new, necessary skill.  Being last year's best is impossible to repeat because the market shift makes the old approach less valuable – possibly obsolete.

"Best practices" are usually little more than copying last year's list topper.  In the 1990s everyone wanted to copy product development practices at Sun, and supply chain practices at Dell.  But both led to horrible returns when demand for servers and PCs diminished.  Best practices are almost guaranteed to be a solution developed to late, and applied even later, to solve previous years' problems.  They aren't forward looking, and not designed to meet the needs 2 years into the future.

Business success isn't about topping a list.  And, to a great degree, the Outlier approach (as is a hedgehog concept) is very risky.  If you spend 10,000 hours doing something, only to see the value for that something go away, what good was it?  Remember when Cobol writers were in demand?  Being the world's best at something in business can cause you to be optimized on the past and inflexible to market change.

Business success requires adaptability. And that requires a focus on future markets.  It requires the ability to constantly Disrupt your approach, to build capability in many different areas and markets.  It requires skill at establishing and operating White Space projects to learn about new markets and shifts – the ability to know how to test and then understand the results of those tests.  In business adaptability trumps optimization, because you can be sure that things will change – markets will shift – and the highly optimized find themselves behind the shift and struggling.

Swim with the current – Newspapers, Facebook, YouTube

Over the last week everyone has heard stories about how Facebook, and Twitter, became primary communication conduits for people with connections in Haiti.  Telephone and slower communication vehicles simply have not been able to connect family and friends in this crisis like Facebook.  When shift happens, it accelerates as new uses come to the forefront quickly.  For everyone trying to connect with employment candidates, suppliers and customers this shift has immediate and important impact on behavior.

 

Source:  Silicon Alley Insider

For advertisers, the impact is significant.  Where should ad dollars be placed?  On a traditional home page and search site – like Yahoo! – or on Facebook?

And it's not just the sites themselves, but how long people are on these sites.  From an advertising point of view, you can start to think about Facebook – and YouTube – almost like a "channel" from early television days.  Where the audience comes back again and again – offering you not only a large audience, but more opportunities to reach them more often.  Facebook and YouTube are beginning to dominate the "user views."

Source:  Silicon Alley Insider

Source:  Silicon Alley Insider

Of course, the impact isn't just regarding the web, but how any business would use media to reach a target audience.  Most advertising agencies, and ad people, are still focused on traditional media.  But, as we can see, that WILL shift — even more than it traditionally has.

Source:  Silicon Alley Insider

Anybody investing in newspapers, expecting a resurgence in value, is pretty foolish.  Newspapers are going to lose ad dollars – not gain.  Relatively, newspapers already are getting too much of the ad spend.  Talk radio has growth.  And clearly the web.  Since we can expect that newspaper and magazine readership will continue recent downward trends, and television is fragmenting as well as stalling, the big growth is on the internet.

The market shift is really pretty clear.  We aren't speculating about the market direction with this data.  The question becomes, will you be an early adopter of these new media channels or not?  Given that the web and mobile have the lowest ad rates of all media, why wouldn't you?  Over the last 2 months Pepsi has decided to NOT advertise on the Super Bowl, instead putting the money into social media.  And after introducing the Granite Concept car at the Detroit auto show, even behind-the-times GM is now considering a launch of this vehicle, intended for buyers under 35, using only web advertising.

So what are your plans?  Do you have scenarios where Facebook and YouTube are integral to your marketing?  Do you have pages, groups and channels on these sites?  Do you post content? Are you using them to interact with potential customers, vendors and employees?  If not – what are you waiting on?  Do you need a Disruption to create some White Space and get started?  If so – isn't it time to get going?

Use Disruptions, not Goals, to Succeed – GM

Many people think the best way to grow is by setting big goals – even Big Audacious Hairy Goals (BHAGs).  But increasingly we're learning that goal setting is not correlated with success.  At AmericanPublicRadio.org there's a partial text, and MP3 download, of a recent interview between General Motors leaders and a University of Arizona Professor titled "It's not always good to create goals." 

The story relates how about a decade a go, with market share hovering at 25%, GM set the goal of moving back to 29%.  It became a huge, multi-year campaign.  Lapel pins with "29" were made and all kinds of motivational programs were put in place.  The GM organization had its goal, and it was highly aligned to the goal.  But it didn't happen.  Despite the goal, and all the energy and talent put into focusing on the goal, GM continued to struggle, lose share – and eventually file bankruptcy.  The goal made no difference.

Worse, the interview goes on to discuss how goals often lead to decidedly undesirable, sometimes unethical – even illegal – behavior.  Instances are cited where goal obsession led company employees to falsify documents, even  ship bricks in place of products to meet sales targets.  No executive wants this, but goals and goal obsession – especially when there is a lot of reinforcement socially and monetarily on the goal – can become a serious problem.

Results are exactly that.  Results.  They are an outcome. They are the way we track our behaviors and activities – our decisions.  When we focus on goals – usually some sort of result – we lose track of what is important.  We have to focus on what we do.  And for most organizations a big goal merely leads people to try working harder, faster,better, cheaper.  But when the Success Formula is mis-aligned with the market – even when the whole organization is aligned on maximizing the Success Formula results will still struggle – even falter.  Goals don't help you fix a Success Formula returning poor results.  Just look at GM.

In fact, it can make matters worse.  In "White Bears and Other Unwanted Thoughts" (available on Amazon.com) the authors point out that when you try to turn a negative (a problem) into a positive (a challenge, or goal), you often achieve a rebound effect making people obsess about the problem.  Tell somebody not to think about a white bear – and it's all they think about.  When your company has a problem and you try to tell employees "hey, don't think about the problem.  Go do your job.  Work harder, increase your focus, and all will work out.  Sure share is down, but don't think about lost share, instead think about the goal of higher market share" frequently the employees will start to become obsessive about the problem.  It will reinforce doing more of the same – perhaps manicly.  Instead of becoming innovative and doing something new, obsessive devotion to trying to make the old methods produce better results becomes the norm.  Goals don't produce innovation – they produce repetition.

So what should you do when facing a problem?  Disruptions.  GM didn't need a big goal.  GM needed to Disrupt its broken Success Formula.  GM needed to attack a Lock-in (or two).  GM leaders needed to admit the market had shifted, and that competitors were changing the game.  GM needed to recognize, admit and encourage employees to engage in attacking old assumptions – and recognize that market share would continue eroding if they didn't do things differently.  Setting a big goal reinforced the old Lock-ins and even an aligned organization – working it's metaphorical tail off – couldn't make the outdated Success Formula produce positive results. 

Only a Disruption would have helped save GM.  After attacking some Lock-ins, like the desire to move all customers to bigger and more expensive cars, or the desire to focus on long production runs, GM should have set up White Space teams to discover new Success Formulas.  Instead of putting all its management energy and money into growing volume at Chevrolet, Cadillac, Buick and GM nameplates, General Motors leadership should have revitalized the innovative Saturn and Saab to do new things – to develop new approaches that would be more competitive.  Instead of pushing Hummer to have 3 identical cars in 3 sizes, GM leadership should have unleashed Hummer to explore the market for truly unique, limited production vehicles. GM should have allowed Pontiac to really take advantage of the design breakthroughs happening at the Australian design studio – to change the nameplate into a performance car segment leader.  By attacking Lock-ins, Disrupting, and using White Space GM really could have turned around.  Instead, by creating a BHAG GM reinforced its focus on its Hedgehog concept – and drove the company into bankruptcy.

You can see a 40 second video about the value and importance of Disruptions on YouTube here.

A 75 second video on White Space effectiveness on YouTube here.

Read free ebook on "The Fall of GM:  What Went Wrong and How To Avoid Its Mistakes"