in 1994, you could buy one gigabyte of data storage for about $3,500. It occupied a hard drive that was appropriately nicknamed a ’brick’. Actually a real brick was smaller and considerably lighter.
Today, that amount of data will fit on a device smaller and less expensive than a lipstick.
The capacity of technology to make our lives different is staggering. But for business owners, using it effectively and wisely is one of today’s biggest challenges. I see many, many example of companies who dramatically under or over invest in technological solutions.
The over-investors are typically given bad advice by an under qualified ‘expert’ they have acquired along the way. The under-investors put cost before any other consideration.
In both cases, the business is damaged. Sometimes irreparably.
When you over invest, rarely can you afford to then immediately replace that piece of technology with another. The result is that you then design the business to the technology in order to justify the investment. Businesses designed to accommodate bad systems usually fail. Customers don’t care about your systems. They care about what you’re doing for them.
When a business owner under invests in technology, a number of things happen. The company is restricted in the ways it can service its customers, or analyze its performance, or communicate, or operate or expand. Or in some cases, all of the above.
Technology should be guided by a philosophy and must support a clear strategy.
Otherwise, whether you want the latest, the greatest or the cheapest, you’ll always be wrong.
Do you have a technology strategy?
Planning The Last Day First / STEP 5: EXIT
A business with four offices spread across 5000 miles doesn’t lend itself naturally to a single company Christmas Party.By the summer of 2003, however, it was feeling increasingly important that we have one. The Whitehouse had coordinated over 1000 employee travel nights that year. As a result a lot of people knew a lot of people. But Chris and I had come to realize that we were the only two that knew everyone in the company. It was time for that to change.If you’re going to throw a party for a group of people aged between 18 and 45, there’s really only one city in the world to choose. Las Vegas.
Planning The Last Day First / STEP 4: INTEGRATION
On 9/11, Chris and I were in a hotel room in Scotland. She was on the phone with our accountant in Chicago about the upcoming deal with the Whitehouse. Suddenly, he told her to turn on CNN. A plane had crashed into the World Trade Center.As soon as the picture resolved I knew it was terrorism. A clear blue sky. The tallest building within several thousand miles. And growing up in London in the Seventies where bombs were part of our daily life. I knew it was possible. It took four days to get back to the States. We were the first plane allowed in to US airspace from Europe. We landed to applause and sobbing. And a new way of life.
Planning The Last Day First / STEP 3: MERGER & ACQUISITION
As a very junior account executive at Ogilvy & Mather, I heard Kelly O’Dea - who went on to become President of three different worldwide ad agencies - describe trying to get to a new business presentation in Miami from a snowbound New York. With every airport in the Tri-state area closed, it was apparent that the Ogilvy team wasn’t going to make it in time. “We’ve tried everything,” Kelly was told. “You can’t get there from here.”Kelly paused and then said, “where can you get there from?”
Planning The Last Day First / STEP 2: EXPANSION
The first year went by in a blur. A few signs of optimism. A lot of anxiety. But through it all we really did act locally and think globally.We had hired David Brixton, a very talented editor from London and convinced him and his wife Jemma of our dream. They moved to Chicago and brought European flair, creative credibility, a work ethic that matched ours and extraordinary social sensibility.
Planning The Last Day First / STEP 1: START-UP
Value 1 Recession 0
A quick thought. I'm struck tonight by dramatic evidence of the value of innovation.
At the conclusion of the worst six month economy any of us are likely to live through, Apple just announced the launch of their new iPhone. It contains 100 new features.
They also launched a new series of laptops with a seven hour battery that will retain its recharging capacity for five years.
We've come to expect these kinds of innovations, wrapped in simple, elegant design. And we find such value in their products that we continue to buy them, even when money is tight.
The result is that Apple just concluded the best non-Holiday sales quarter in their history. $8.2 billion. Their share price which stood at $85.33 in December has gained 85% to $144.67.
Oh, and they did all this while their founder and CEO was on medical leave.
Proof positive that even in economic catastrophe, people will pay for that in which they find value.
How much have your sales increased in the last six months?
Jump In
Breaking news this morning that the unemployment rate is beginning to turn around.
Running a better business means combining empirical information and instinct.
Based on that, I think this is as deep as the talent pool gets. In every industry, incredible people are looking for new opportunities.
If you think there is even a one in one hundred chance you might need to add someone this year, now is the time to go looking.
In our lifetimes, there will never be a better moment.
General Misconception
The bankruptcy filing of General Motors sent a shudder through business owners everywhere, I suspect. “There but for the grace of God, etc:”
God, of course, has nothing to do with it. Complacency, ego, hubris, mistakes (genuine and absurd), self-indulgence, shortsightedness, a complete absence of perspective, a systemic inability to innovate, a belief that the company was simply too big to fail and a terrible economy all played their part.
But the truth is that Monday’s news was finally cast in stone by the delusion that prompted the company’s (now former) CEO to stand up last fall and announce that GM was “positioned to lead for another 100 years.”
The delusion that we needed GM more than GM needed us.
A few years ago I took a strategy class at the University of Chicago’s Graduate School of Business from one of the smartest strategic thinkers on the planet. Jim Schrager. He took us through the case study of a company called Head Ski.
You might have heard of Head. Or you might not . Today they sell a few tennis rackets. But back in the 60s they had an effective monopoly on the ski industry. If you skied professionally, you used Head skis. If you skied recreationally, you used Head skis. Gold medalist or 4 year old beginner, the same technology was on your feet.
Metal technology.
In the mid 60s, Head were better than anyone in the world at making metal skis. So when a year or so earlier, their small and insignificant competition had begun to experiment with fiberglass, Head had ignored them. When their small and insignificant competition had begun to sell a few pairs of fiberglass skis, Head had ignored them. When a few up and coming professionals had won a few minor competitions on fiberglass skis, Head had ignored them.
By the time anyone at Head realized they needed to be in the fiberglass ski business, it was too late. Everyone else knew more and did it better. As history came to prove, nothing they tried thereafter could bridge that gap.
Looking back analytically, it’s simple to see the mistake. They missed the innovation curve in their industry. They’re not alone in that.
But that’s not what’s important. What’s important is that in the epicenter of their success, Head was already a dead company.
We went through the case study for more than a day because none of use could believe this. It was inconceivable that a company at the height of its powers had no ability to control its future. Inconceivable, perhaps. True, unquestionably.
The fact is that when successful companies go out of business, it’s not a seismic event that takes them down but a series of decisions. And most of them happened before today.
In other word's success and failure happen over time. And if you don't have a clear plan you will always believe that where you are today is a true indicator of where you will be tomorrow.
It's not. Where you will be tomorrow depends on how well you understand why your customer is your customer.
In Head’s case they lost sight of the fact that their customers wanted the best skis. Not the best metal skis. They started to believe their brand was the attraction. Not what the brand meant to their customers.
GM did the same. All they saw was their own self-image. Part of the American dream.
Well today, they’re living a nightmare. Because they forgot one thing. You don’t get to decide what’s valuable to your customers. They do.
On the day we left the Whitehouse - the company we built for eleven years and then sold - Chris's penultimate act before turning off the lights and setting the alarm for the last time was to remove from her phone a faded yellow sticky. On it, in her elegant hand, were written four words.
"Stay humble and nervous."
Are you?
United Nations
While reading the CNN.com account of the loss of an Air France jet over the Atlantic yesterday, I was struck by the following paragraph:
"The airline company identified the nationalities of the victims as two Americans, an Argentinean, an Austrian, a Belgian, 58 Brazilians, five British, a Canadian, nine Chinese, a Croatian, a Dane, a Dutch, an Estonian, a Filipino, 61 French, a Gambian, 26 Germans, four Hungarians, three Irish, one Icelandic, nine Italians, five Lebanese, two Moroccans, three Norwegians, two Polish, one Romanian, one Russian, three Slovakian, two Spanish, one Swedish, six Swiss and one Turk."
The lives of 228 people from 32 countries converged yesterday when they all boarded the same plane for a routine overnight flight.
When that plane disappeared, families in 32 countries around the world -- countries we traditionally separate with the usual classifications of ethnicity, geography, language, culture -- all shared the same unfathomable loss.
It was a truly international incident. And it was a singularly human one. One that powerfully affirmed once again that in the ways that matter to the human spirit, we are all the same.
Of Learning, Teaching and Fishing
I just got home from a week in England. A number of things strike me as I look back on a wonderful few days.* There is nothing like true friends. And my friends Tim and Liz are the living embodiment of both ‘True’ and ‘Friend’.* If there’s anything I like more than watching cricket in high definition with any one of the five dogs in my life (my four plus Tim and Liz's dog Becks) curled up beside me on a couch, I haven’t experienced it yet.* Somebody needs to invent a better way to negotiate a house sale. The current system takes too long, creates too little and costs too much.* Negotiation means getting inside the other person’s head and seeing it from their perspective. When you’re certain you’re being dispassionate, and you still have no idea what they’re looking at, it’s time to move on.You’ll never get a deal done you can live with.* Success takes four elements:1. The desire to achieve2. The knowledge to achieve3. The humility to acquire said knowledge4. The perseverance to work at it for long enough that 1, 2 and 3 matter
5 Ways To Tell Your Business is Turning Around
There’s a growing sense that perhaps the economy is stabilizing. But for most company owners, it will be a long time before revenue figures can give any kind of insight into whether their business is still shrinking or on its way back.A client asked me about this last week. Over the last five or six years he had developed a ‘feel’ for whether things were going well or badly based purely on sales numbers. But after the upheaval of the last three quarters, not only have his sales fallen dramatically but the overhead changes he has made are still taking hold.The net result is that the business he used to understand blindfold has now become blurry to him.
See-Through is Sexy
In every company I’ve owned or advised I’ve been an advocate of transparency. Of telling employees as much as you can as soon as you can.In the last few months, transparency has become both a political symbol and federal law. So like it or not, we’re stuck with it for a while.Inevitably, once the government gets its hands on something it becomes fodder for the Sunday talk shows and the extremists. Sooner rather than later it will be consigned to the dust heap of soiled political strategy whose time has come and gone.And that would be a mistake.
Be a Farmer. Not a Builder.
For fifteen years or so I’ve thought ‘building’ a business and ‘growing’ a business were the same thing.Until about a year ago.Then I learned from Sir Ken Robinson that there is a difference. A critical difference. In my view, it’s the kind of difference that determines whether your business succeeds or fails.People and organizations are not mechanisms. And yet we treat them as such. Our education system takes raw material and feeds it down a conveyor belt, shaping and adding until it conforms to a pre-determined set of standards. At the end of the process the product is tested for quality assurance. Individuality is not required.It’s a model built for the Industrial Age, and increasingly it’s producing Industrial Age results.
Lawyers Don't Do Deals. You Do.
A really good friend of mine runs his own very large company in Boston. Six or seven years ago, he gave me a great piece of advice when I was struggling with a potentially devastating situation that was about to get contentious and confrontational.“Whatever you do,” he said. “Don’t get the lawyers involved.”Through trial and error I’ve come to realize he’s right.I know some extraordinarily talented lawyers. And I would never complete a deal without their help. The great ones are brilliant at making sure the agreement complies with the law, provides us with the operational flexibility we need, reflects the spirit and the intent of the deal, and minimizes the tax burden to all the parties. (Many times that has less to do with the number of dollars we give our government agencies and more to do with how simple it is for us to calculate them. You can’t beat Uncle Sam. But you can make joining him less time consuming. A great lawyer will help you with all of that.)
It Depends
People ask me what we do all the time. I generally say something about helping entrepreneurs and privately held companies build better futures. If I was my client I’d tell myself I need a better answer. Physician heal thyself.We work with clients all the time on this issue. Can you define what you do in a single sentence without the use of the word ‘and’?It’s a great discipline. And the truth is that if a short elevator ride is not long enough to explain the value you offer your customers, you’re probably not entirely sure yourself. And that communicates itself in big ways - and small.I’ve been conscious of that. If someone asks me the question today I’d tell them this.“We provide context. Because without context, any decision you make is a guess.”
Just Because You Can...
Entrepreneurs are extraordinary problem solvers. It gives them the confidence to act on ideas. To try things. To see a different future, unafraid of the obstacles that hold back the rest of the world.To an entrepreneur, a problem is not a problem. It is - cliche or not - an opportunity. Problems get them up in the morning and keep them awake at night - for all the right reasons. To take away an entrepreneur’s problem is to cut off their oxygen. It’s their seven percent solution.
Don’t Miss This Window of Opportunity
The problem with most windows of opportunity is that by the time many businesses realize there was one, it’s closed.We’re entering one now. And some companies will use it to irrevocably separate themselves from their competition. Here’s one way you can take advantage while this particular window is still open.
Culture
I used to work for Ogilvy & Mather. An advertising agency.
Actually when I worked for them they were the advertising agency. They had just been voted agency of the year. Advertising icons occupied the seats of power. Their rising stars rose. And became stars. And about twice a year you’d run into David Ogilvy himself in the hallways. It was something.
Ogilvy & Mather taught me how to write. They taught me about Trumpeter Swans and Gentlemen With Brains and the Ogilvy Award, given to the person who most embodied the principles they espoused: honesty; humanity, and an abhorrence of office politics.
They knew what they stood for. And they spent time and serious money training you to become great. These days, the first is rare. The second unheard of.
They did brilliant work. And they made sure we had a hell of lot of fun doing it. On my first Christmas they walked the entire office, over 1000 people, through Manhattan wearing our newly presented red and white Ogilvy scarves to Broadway where they had rented out A Chorus Line. It had just won the Tony. I may have been more proud of being part of something at some other point in my life. But it’s not obvious to me when.
They let me move through four different departments before I found my calling as a television producer because they saw something in me before I did. I frequently found myself comparing that to the Chicago agency behemoth which kicked me out of my interview ninety seconds after they heard my GPA. Ninety seconds. I wouldn’t have minded but they’d just offered me a job. Apparently my GPA was a better judge of my talent than my interviewer.
I was reminded last week of my Ogilvy experience by an article written by Ken Roman. Ken, who became Chairman and CEO of Ogilvy, describes the culture of the company from the perspective of someone who helped to refine and implement the Purpose David Ogilvy’s had for his company.
A Purpose. It was nothing less than that. And it guided the company on a daily basis for a long time. And thousands of us were the beneficiaries. So was his business. And his clients.
I believe profoundly in the culture of a company. Not in some esoteric, instinctive definition. But in a specific, confident and practiced definition. One to live by. And be guided by. In good times and bad.
Without one you’re just here for the money. And so are your employees.
Without one you’re on borrowed time. With your customers and your staff.
With one you can change the world.
Literally.
The Best Business Is In The Eye of the Beholder
I don’t read USA Today.
Its bite-sized editorial style limits the depth of its reporting. There are better ways to get in-depth analysis on the stories they cover. And faster ways to get the box scores. In the real world it suffers from being inconvenient and a limited experience.
Chris, my wife and partner, does.
But only when she flies. And then from cover to cover. Because in that environment it is convenient, and its broad approach to news gathering becomes a vibrant alternative to anything else you might do. And inevitably she teaches me something when she’s finished.
Back in 2006 she taught me about fidelity and convenience. An article in that day’s edition by Kevin Maney introduced the concept to us for the first time. We were fascinated then and I’ve kept it in the back of my head until now.
Kevin’s thesis is that when consuming media, we instinctively evaluate the fidelity of an experience in the context its convenience. Watching a live U2 concert is high fidelity but low convenience. Transistor radios are low fidelity and moderate convenience. The theory goes that iPods took off because they filled a gap. Better fidelity than other portable alternatives. Incredible convenience.
And the same applies to movies. The initial introduction of television in the 1950s decimated movie box office sales. In 1950, three billion movie tickets were sold in the U.S. Ten years later that number had halved. By 1970, it was down to a billion. The movie industry’s response was to use emerging technology to create special effects blockbusters and big-scale productions that television couldn’t provide. You may have seen Star Wars.
By 2003, movie sales were back up to 2 billion a year, - despite the fact that everything on tv was now in colour, there were hundreds of channels and portable sets would fit in your jacket pocket. The TV manufacturers responded by improving home viewing systems so that movie night at home was a higher fidelity experience and then let convenience tilt the equation back in their favour.
The movie industry’s response? 3D iMax. Fidelity. Pre-assigned seating and in-seat waitress service. Convenience.
Anyone in the advertising and creativity on demand business instinctively recognizes the ying and yang of this. Traditional advertising is moderate to low fidelity. But convenient. Excessively so, in that we can get as much of it as we want whenever we want. In that industry the challenge is to improve the quality of the user’s experience while making advertising more convenient to the recipient - on their terms. After all, advertising is most convenient when we’re in the market for that which is being advertised. Or in the mood to be wooed. Good luck to whomever is working on that algorithm.
But I think the fidelity and convenience equation has an even more powerful role to play in designing better businesses. Which is one of the things I care about most.
Think about your business for a second. Do your customers have a high fidelity experience when they work with you? Or do you provide convenience?
Not sure? Or worse, do you think it’s both? Whatever your answer, your customers do not use use you because you are both the best and the most convenient.
In which case, you have a big opportunity.
If you provide a service, I believe it’s important to aspire to be the best. Those standards keep you moving forward. Keep you looking to improve.
But if you sacrifice the opportunity to be more convenient to your customer in the quest of being the best you will ultimately lose. Because someone will come along who is as good, or nearly as good, and more convenient. And that combination wins 9 times out of 10.
The only way you win by being the best is if your pricing premium is high enough to offset the 9 opportunities you are losing. In this economy, that won’t work.
So look at all the ways in which you can become more convenient to your customers. Think about your business from their eyes. What would make their lives easier - the ultimate definition of convenience.
Provide that without lowering your standards. And you might just create that 3D iMax in my living room experience that I’m waiting for.
