Don't Waste The Next Ten Years

Ten years ago, it was easier for Sony to become Apple than for Apple.

Ten years ago, it was easier for Blockbuster to become Netflix than for Netflix.

Ten years ago, it was easier for Kodak to become Facebook than for Facebook.

These companies didn't try to become what they are today. Shadows of their former selves. And in the case of Blockbuster and Kodak, bankrupt.

They just didn't try hard enough not to.

Greatness is not about your potential. Or your intentions. Or your carefully written strategy. 

It is about what you do.

And every decision you make, and every one you don't, moves you closer or further away from your dreams.

If you want to be great, know where you're headed and act with purpose.

If your goal is just to stay competitive, plan for the probability that you soon won't be.

Lessons of Lily, Sarah and Grace

You should not be reading this.

And I should not have written it.

Because we should not be here.

In fact, we should not exist. 

And the odds that we do exist are so impossibly small that we can not conceive of a number that infinite.

Smaller than a step in a walk to the far side of the universe. Smaller than a single grain in a world full of sand.

It would take the change of but one mundane act since the beginning of time for either you or I to have never been born. A chance introduction. A door left open. A letter lost in the mail. A train that left on time. Or didn’t. A sliding door. A moment’s hesitation. A glance, a nod, a wink. Any one.

But we are here. And by any definition, mathematical or mystical, we are miracles. Whether we exist for a day, or a hundred years, or less than ten, we are miracles.

Which suddenly makes what we do today a decision of some consequence.

I have known Madonna Badger since 2008. First as a client, and then as a friend. And I have met her husband Matt briefly a few times.

Yesterday, Chris and I attended the funeral of their three daughters: Lily, Sarah and Grace.

For those of you who haven’t heard this unspeakably tragic story, Lily, Sarah and Grace and Madonna's parents, Lomer and Pauline Johnson were killed in a house fire on Christmas morning. As the fire fighters pulled Madonna away from the burning house she screamed to them, “my whole life is in there.”

I can say I have never heard anything of which I was more certain than that. Those five people were her life. She was limitlessly committed to them, her life revolved around them. She would have died for them. For any one of them.

We went to the funeral yesterday, pre-judging her by the expectations we would have of ourselves in those same circumstances. That simply to breathe would no longer be possible. That existence itself would be more than we could bear. We expected to find a broken woman.  

Instead we found a woman whose strength filled a church of well over a thousand people, and who left me with a personal reference point that is unshakeable.

That life is an opportunity. A chance. An unimaginable gift.

And we should treat it that way. Every day. 

In the way that little girls do. Exploring, trying, learning, loving, playing, living.

Because when the last of these is suddenly taken from us, what will be left is what we did. 

Not what we meant to do. Not what we intended to do. Not what we thought about doing.

But what we did.

Lily, Sarah and Grace were prevented from doing more.

But what they did was life-changing.

For their mother, who will be their mother forever, and will use their power to change the world.

And for any of us who use their memory as fuel to fight against assumption.

That tomorrow is the same as today.

That we are in control.

That it will work out in the end.

We should not be here. We should not exist. It is impossible that we do.

After all that, living life with the wonder of a little girl should be a piece of cake

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I have included the text of Madonna’s eulogy below. That she was able to give it in person, is the bravest act I have ever seen.

January 5th, 2012

Thank you all for being here today. 

I want to talk to you about my girls, my three little girls Lily, Sarah, and Grace Badger, and this is going to be really hard. 

Lily Grace and Sarah are not here with us today and they won’t be here tomorrow and I am trying to come to terms with this and I know that Matthew is and I know that all of us are. But I feel very strongly and the reason why I wanted to speak to you today is to let you know who my girls were and that our girls, my little girls are not gone from us entirely because my girls are in my heart they’re right here and this is where they live now and they live in Matthew’s heart and they live in the hearts' of all of you who knew them and even those who didn’t know them. And I want you to remember my girls out loud to fight for them to never be forgotten. This is why I can stand before you today because they were my little girls and they were my little girl tribe and I want you to hear about them from me.

So I’m going to tell you just the tiniest of snippets, little stories that are the smallest of drops in a ocean of memories, because there were Christmases and Easters and Thanksgivings and so many days of just being a girl tribe together, and dancing and singing and playing and loving one another.

My Lily. Lily was my angel and my life and she was my first baby, and when Lily was first born I would put her in my baby Bjorn and we would walk around New York City for hours, with diapers in my pocket and my breasts full of milk and it was all we needed. And we’d walk the city. 

Lily sang before she spoke and she made-up songs constantly. She made-up elaborate games with her Nana and all of the little animals that she loved to play with, and these animals all had names, and they all lived in very special kingdoms. Lily loved her Ricky and her Mister Wiggles and Lily loved her Jessica so very much. 

And most of all Lily loved her sisters. They were her best friends and she celebrated all of their unique qualities, and she never changed them and she never harmed them and she always gave them love. Lily was naturally shy and her smile was sometimes hidden, but when she let her smile show it glowed completely.

And Lily was a dancer, a natural born dancer and when Lily danced it was with moves that far outdid Michael Jackson. Lily was calm and confident and full of who Lily was. When she was first met you she wasn’t sure about you, but once she determined that you were okay, you were one hundred percent in with Lily forever.

When Lily and I went to the Met and we saw all the Pietàs because apparently I had made a wrong turn and all the Pietàs were right there, but anyway when she saw the Pietàs at the Met when she was only 5, Lily broke down on the floor and she begged me to tell her when she was going to die. And I told her after a lot of not knowing what to say, that life is a mystery, it’s a total mystery, and we will never know when we will die. And she accepted that. And I did too.

My darling, Sarah. Sarah is spirited love and her greatest joy in this life was to make you feel good and at ease and loved. As many of you know, my parents - their Nana and Papa - were true givers. And one Christmas my dad as his alter-ego Santa, in full regalia, went to the village nursing home, and my mother had made sugar cookies and put them in little bags and everybody walked into the nursing home and it was scary. And Lily was there, and Sarah and Gracie and Matthew, and it was Sarah who grabbed the little cookies and started handing them out to the very sick and very old people, and the entire room changed and it was full of ease and full of light. Sarah later said to my mom, “Nana, now somebody better tell the tooth fairy that this is where she needs to bring all the teeth, cause these people really need them.”

I had a fever once and Sarah came and she sprayed my face with magic mist and she put a toy dog in my hand and she said, “don’t worry Mama these things are going to help you sleep and make you well.”

Sarah had a very, very fragile heart and it was hidden behind a lot of love and lot of smiles and the smallest slight would cost such deep deep damage that I swear you could see the tear right there in her heart.

Sarah liked to lie with me at bed time and hold my hand and tell me how much she loved me. And she was my whipper snapper. One night I asked Sarah to do something, and it was silly - I can’t remember what it was -  and she put her hands firmly on her hips and she said, “no can do, Mommy.”

Once her Nana said, “Sarah Badgers can you hear me?” And Sarah said “Nana I can hear you. I’m just not listening to you.” 

And Doctor Solar said that Sarah was the mayor of Windward, their school. And she knew the names of all of their brothers and all of their sisters, and recently they had to call a special meeting at Windward, Dr. Schwab had to call a meeting with the second grade girls so they could figure out a way of how they were going to take turns being close to Sarah. This was my Sarah, my little Sarah, my little whipper snapper, love and lovable and totally loved.

My Gracie. My best friend Jenny once said that Grace was light in a previous life and I think she was right. Grace was fearless, she was the first one to pick up the most creepiest most grossest bug you could possible find and try to give it to me because I hate creepy crawly things. Gracie was fearless. She was the first one on the trapeze in our last spring vacation and she begged and begged to go on it again and again. Gracie was in love with her sisters and in awe of Lily. And Gracie always used to say, “right Lily, right, isn’t that right?”

Sarah and Grace had a special language and a special bond. For instance they called one another ‘RaRa’ when they were little toddlers and it was the name that they had given one another because it was the ‘Ra’ in both of their names that was only thing that was the same. And it took us a long time to really know if they knew the difference between which one was Grace and which was Sarah.

Grace loved math and she would do problems that were like 10 numbers long and she would add them and subtract them. And then she would make us all check her work, and she was so proud of what she could accomplish with her numbers.

Grace was a fisherman, an adventure and an inventor and her imagination was boundless. And there was nothing Grace Badger couldn’t make with a Band Aid. Band Aids were balls and they were wrapping paper and they were everything. Nobody loved Band Aids more than Grace Badger.

And Gracie wanted to know everything. She wanted a microscope and a telescope and I think she wanted to see the seen and the unseen. And she could have cared less if you liked her or approved of her, she found her own way always and when she loved you she loved you completely. And Grace’s tender kisses were always given when she wanted to give them and her hugs were so full and so loving.

Grace asked me a thousand times, if she was going to die before me and I said, “No Gracie, no, that is never going to happen.”

But it happened. And people, everyone, including me, wonder ''Why? Why did this happen, and why my children, and why my parents and why now?''

But nothing will bring my babies back, or my parents, or the life I had or Matthew’s. And here’s the one thing that I know is not a mystery. That there is no power greater on this Earth than love. And that is what is going to keep Lily and Sarah and Grace with us forever.

In this, in all this incomprehensible loss and chaos, all I can hang on to is that love is everything. And God, as I choose to call my higher power, is love. And so, God is love and God is everything.

I have been asked a million times, ''how can you do this, how are you talking, how are you surviving?'' Because when I used to hear about people losing a child, or if a child got very, very sick, I would say, "I could never survive that. I could never live through that, I could never, ever, ever live through losing my babies.”

But here I am. Here all of us are. Because Lily and Sarah and Grace live in my heart now, as do my parents, Lomer and Pauline. I was a daughter and a mother, and I still intend to be both, so I can make my girls proud and carry them forward in love. This love, I am realizing, is to be my children’s legacies because they left the world at such tender ages that all they left behind was love.

And I think and I pray and I hope that it is all of our great responsibility to spread that love. And for me, God does not call on us just to love because that is too easy. He also calls on us to be of service. Service to our friends, our families to those we know and those we don’t.

So the message I want to share today, on behalf of Lily and Sarah and Grace, is that we can talk all day long about love, but love without service is not enough.

Please keep our little girls in your hearts by showing your love with acts of pure kindness, by loving each other and finding a way to help each other every day for Lily, for Sarah, and for Grace. This is what will keep them alive forever. 

Thank you all for coming today and for all of your words and prayers and support. They have meant the world to me, they have meant the world to my family and to Matthew.

Oh Wow. Oh Wow. Oh Wow.

It snowed this weekend. A lot. Fifteen or sixteen inches where we live. More than twice that not too far from here.

The leaves are still on the trees. Beautiful in some ways. A friend described it as Wintumn. Sad in others. The weight of snow on leaves being more than many branches can bear. A lot like life.

I love trees. More now that I live among so many of them. Watching their growth year after year. Pruning, guiding, lighting them. A lot like people.

I spent Saturday night fighting the blizzard, armed with a leaf blower. A powerful weapon for removing snow from tree branches. Two hours, two tanks of gas, shoulders aching, arms numb, wishing I was stronger, wishing I was taller, wishing I could do more. A lot like me.

Sunday morning broke calm and still and sun filled. We had lost one major branch. Others were at their breaking point. Literally. I ran outside, literally, with my leaf blower and started again. 

One tree at a time. One branch at a time. Working my way up from the bottom. Using a pole to reach the highest points where wind and sun could not.

And as I cleared the snow, the branches rose, like Lazarus, towards the sky. The threat removed, no lingering memory holding them back from their natural state. It happened a hundred times. More. Each one surprising me. A quiet nod, as if of thanks, before they went back to doing what they do. Sheltering, supporting, growing, changing, living, dying. A lot like life. A lot like people. A lot like me.

I came inside at Noon. The sun doing its best work, better now than I could. Encouraging the melt. Shared goals. Different strengths. A partnership in the truest and best sense. 

It was five o’clock before I came outside again. The sun was in the last quadrant of its arc, the sky tinged pink at its edge. I walked around for a few minutes, the dogs running back and forth, from me to each other, all happy to share the last few moments of limitless possibilities, that a squirrel might appear, or a rabbit might emerge, or a deer might saunter by. Their happiness filled the space around me. And behind them, silhouetted by the setting sun, a few trees stood blowing gently in the breeze. 

In the quiet of today’s early morning, I read an article about the life and death of a man that I greatly admire. It talked about enormous achievements and personal passions. It talked about big things and small. It talked about beginnings. And it talked about the end.

What is better because we have been here?

What do we leave behind that makes a difference? 

How have we changed the world? 

Oh wow. Oh wow. Oh wow.

Think Different - Say No

Like many people I mourned the news of Steve Jobs’ death with tears in my eyes, and that feeling in your chest that arrives only when the world becomes a little less.

Less magical. In this particular case.

Millions of words will be written about Steve Jobs in the coming weeks. Appropriate consideration for a man who sits alongside Franklin, Edison and Ford when measuring his impact on the world.

To say that he understood us better than we do ourselves is only the slightest hyperbole. 

To point out that he imagined not only possibilities but the ways to make them come true is to recognize the man’s true genius. For without the capacity to make the complex simple, and to then do so by the millions, he would have been a man on a stage in a black turtleneck talking to an empty room. 

It is no accident that for the last several years Apple has been recognized as having the best supply chain in the world. “Amateurs talk about strategy. Professionals talk about logistics.” And in hiring Tim Cook to build the world’s best supply chain, Steve Jobs proved he was not only a visionary. But a professional.

Of all the things I have thought and read and heard so far about Steve Jobs, however, one thing stands out to me as the foundation to Apple’s success.

In 1997, on his return to the company he had founded, he met with a group of developers and began to explain how he was going to re-design Apple. 

For too long, he explained, Apple had been less than the sum of its parts. And rather than trying to make Apple be more, he was first going to make it be less. 

He was going to force Apple to focus. To decide where it was going. To decide how it was going to be great.

And to focus, Apple was going to have to say ‘no’. A lot. To everything that didn’t bring it closer to being the company he envisioned.

This was part of his creed. To simplify. To focus. And to relentlessly say no. "Because only then can you concentrate on the things that are really important."

Of all the many lessons we will be studying for years to come, this is the one that rings most deeply to me.

Whether you call it your Purpose or your Mission or your “Why”, no business succeeds without knowing what it intends to be.

It is a journey that begins not with a yes. But with a great many ‘no's’.

And ends when you have changed the world.

Making Change Happen - Starting Monday

Today we put together a panel for Advertising Week that discussed the challenges of making ideas come to life.

We focused on creating practical steps that people could start to take immediately.

So much content came from the conversation that we decided to capture it and put in in a White Paper.

We've included the Introduction to the White Paper here.

You can download the entire White Paper Here.

Introduction

We’ve been involved in change from a lot of angles. 

Multi-national networks, entrepreneurial partnerships, guiding the early years of Oprah, and taking our own international business through the entire business cycle. In the process we’ve seen what works and what doesn’t.

This paper combines some of our experiences with those of four business leaders who recently joined us to discuss how they make change happen in their company.

From Graham Barkus of Cathay Pacific comes the challenge of bringing about change in a 25,000 person airline and the need to take into account the human factor.

From Lori Senecal of kbs+, the insights of how a change agent has quickly and successfully shaken up an established business, by doing things that matter.

From Toni Hess of Rosetta, the ability of a creative leader to add art to her company’s’ pragmatic foundations by helping to purpose the passion of her staff.

And from Johnny Vulkan of Anomaly, the willingness to throw away the model and start again by answering the real questions.

To these we’ve added some additional insights based on our own work as consultants, coaches, organizational architects and entrepreneurs.

Change is hard. 

Change is risky. 

Change in inevitable.

Making it happen on your terms is the key to success for any business.

You can download the entire White Paper Here.

A Decade of Recklessness

I started to write this a couple of weeks ago. But a variety of things have been in the way of my blog this month. So let me uncork the bottle again and begin with this.

If we have learned anything from 9/11, we have learned that with actions there are consequences.

And change comes regardless of whether we want it to or not.

Ten years on, we live in a world that satisfies so few. One we seek to change in so many ways.

If, ten years from now, we are not going to be disappointed again, we need to be mindful of how we want the world to be better. And what we are going to do differently this time to make that happen.

That starts with those corners that we can influence. None more so than the business we choose to work at every day, and whose potential rests in our hands.

For anyone reading this blog, their business is their life. And making it count is measured in a hundred ways. Measurements that are hard to track in real-time. But which will stop and take our breath away when we least expect it.

There are many events we can not control along the way. Including how it ends.

Making sure that when it does we have done what we could, is a measurement for no-one else to judge.

And an opportunity of limitless potential.

Three Things Any Business Can Learn From Steve Jobs and Warren Buffett

It’s hard to know which piece of news of the last 18 hours will have the greatest impact over the long-term. Steve Jobs’ announcement that he is stepping down as Apple’s CEO, or Warren Buffett’s decision to invest $5 billion in Bank of America.

Earlier this year I wrote about the only real failing one could realistically pin on Mr Jobs - the lack of a clear succession plan for when this day finally came. Whether August 24th, 2011 comes to be seen as the day that marked Apple’s zenith, or just another milestone in a company history littered with milestones, remains to be seen of course. Personally, I hope fervently it is the latter.

If this is as good as it gets for Apple, we shall all notice the loss of innovation and inspiration and personal freedom and expression and competitive challenge that he brought. Whether you like or use Apple products or not, he raised the bar to staggering heights for everyone. The long-term implications of that are enormous. 

Warren Buffett’s announcement, however, may in fact be the piece of news with the more far reaching impact on our lives. Stabilizing a financial system that some are saying is showing all the signs of the 2008 crash but with consequences this time that would be far, far greater - there being no money left with which to bail anyone out. 

Which, of course, is what happens when you leave it to committees to solve giant problems. Today, the banks are even bigger, while still operating on foundations designed to support a different economy.

Out of all this uncertainty, however, come three truths that any business leader can learn from. Follow these and you are learning from the best:

1. Do What You Love.  These men built their success on following their passion, and allowed their natural talents to solve problems they cared about solving. This is not a small thing. Notice how your own creativity emerges, unbidden and unforced to solve problems that really matter to you, and how you then apply those experiences to push yourself further. The trick to doing what you love is getting paid for it. But if you aren’t doing what you love somewhere in your life, there’s no chance that will ever happen. 
2. Invest in What You Believe. Both people and companies are guilty of showing too little commitment to their beliefs. If you believe in something, put yourself at risk. A least enough to feel the consequences if it doesn’t work the way you expect. If it turns out well, you gain confidence and capital (financial or intellectual) to invest again. If it doesn’t, you have something perhaps even more valuable in the short-term. Knowledge.
3. Believe in the Power of the Individual. It is argued by many economists that Warren Buffett prevented the collapse of the global economy by choosing to invest in Goldman Sachs at the height of the crisis. If Goldman had gone under, there was no-one - before or since - who could see where the bottom would have ended up. His actions this morning, have sent a wave of relief through the banking industry, and as we all know to our cost, most of the modern economy is driven by confidence.

Steve Jobs’ announcement has raised a central question amongst the millions of words already and still to be written about him. Is it really possible in today’s technological, information driven society that the world’s most valuable company can really be dependent on one man?

The answer, of course, remains to be seen. The fact that it can even be posed is a reminder to all of us that we are capable of more than we know, and restricted only by the magnificence of our dreams.

Creativity Thrives on Facts

Creative thought is powerful fuel with which to convince others of your argument.

It also tends to create companies that are built on narrow foundations. The ability of their owners and managers to convince themselves first, and then everyone else of their particular view of the world often results in a one-sided argument in which the facts are tilted.

This is usually not a conscious or malevolent act. But one borne equally from passion and insecurity.

Which is ironic. Because when building or re-structuring a business, the truth - while sometimes uncomfortable to begin with - will ultimately set you free.

I came across this info graphic from the talented people at Elefint Designs which presents in unambiguous and clear narrative, the history of U.S. government debt as a percentage of GDP.

Two things strike me about this as it applies to creative businesses:

1. It's harder to sustain narrow arguments when someone takes the time to gather the information and present it holistically.
2. Complex problems have multiple elements. We are more likely to solve them when we expect ourselves to search equally for evidence that opposes our preferred point-of-view as that which supports it.

Creativity requires judgement and instinct. 

Which is not the same as guessing.

Cause and Effect

The news is rarely as simple as the media would have us believe. Their job, after all, is to sell our eyes and ears to the highest bidders. A job made endlessly harder for them by the limitless solicitations for our attention. Both commercial and personal.

In response to this ongoing assault, we have honed our editorial instincts, refining our capacity to decide what information to entertain and what to reject. 

For most, this capacity has become refined indeed. In the world of online advertising for instance, our ability to edit out the areas on websites that contain advertising has become so sophisticated that it has its own term - “banner blindness”. Little wonder that the industry norm on banner ad click-throughs is 0.09%. And even less wonder that the Super Bowl sold its advertising inventory at record prices last year. 

When met with resistance, or worse disinterest, one of the most typical responses of the messenger is to simplify the problem and raise the risk to the audience of ignoring the information. This creates direct linkages between apparent threat and proposed cause. Riot - poverty. Debt - spending. Stock market - U.S. economy. 

The result of which is we live in a world that encourages snap judgements. 

The problem with which is that the truth almost always requires context. And exploration.

We just got back from two weeks away to discover the old lady of our pack - Maya - in really bad shape. Maya is 16, and though she’s become known as the Energizer Bunny in our house, when a dog reaches that kind of age, you’re conscious that the end could come any day.

In Maya’s case her deterioration had come rapidly, a sudden lethargy, followed by an inability to stand for more than a few seconds. By the time we got home, she was all but comatose, lying on her side in the den, unwilling or unable to even lift her head.

We waited a few hours and called our friend in Chicago, the vet savant Barbara Royal, who has known Maya for most of her life.

“We think this is the end,” we said. “It’s happened so quickly, and we know there’s nothing you can do, but we just want to make sure we’ve thought of everything.”

Expertise and disassociation is a wonderful thing. Particularly when attached to an inquisitive mind.

“It probably is her time,” Barb agreed. There was a pause. “Is she on any meds?”

“Just Tramadol, for her arthritis. You’d mentioned it in the past and our local vet prescribed it for her to help her sleep. She’s been on it about a month and she’s been fine. It can’t be that.”

“Have you increased the dosage recently?”

“Slightly. A few days ago. We asked our dog sitter to give her a little in the morning with breakfast.”

“I’d take her off it. It’s a morphine derivative, and in a tiny percentage of cases, older dogs lose the ability to tolerate it. I don’t think it’s likely it’s that. But it’s not impossible. You’ll know in a couple of days.”

Three days ago I would have best the farm I would been writing a memoriam to Maya by today. But after two days of little change, yesterday she suddenly broke through the fog and started trotting around again unassisted. By last night she was back to barking with the best of them. For how long, who knows - she's about 91 in human years. But we know what not to do to prolong her life. And we learned the obvious answer is not always the answer.

Sometimes, however, context requires looking a little further back. 

In the mid 1990s, managed care homes for older people across Britain started experiencing reduced demand. After decades of growth, both the government and the managers of the care homes were struggling for answers. Was it quality of health care, improved diet, a shift in society’s willingness to take care of older people at home?

In the end, they realized the answer required a broader context. About eighty years of context. 

Because the reason that fewer older people were moving into care homes in the 1990s was because there were suddenly fewer older people. 

Which is what happens when eighty years earlier a war is responsible for the death of one million of your young people. 

As we struggle to build businesses that sell the subjective in times of uncertainty, the urge is to edit the obvious and narrow the focus.

But all decisions have consequences, regardless of how quickly or haphazardly they are made. 

Reason to make sure we know what we think we know. 

And that we take the time to judge results both by what happened, and by what we thought would happen.

Which is the essence of learning. 

Cause and effect in action.

Every Business Needs An API

Service companies in every area of the economy are urgently searching for new markets, while simultaneously struggling to find ways to become more valuable to their existing customers. 

The answer, I believe, is for them to take a leaf out of the world of software application development and build themselves the equivalent of an Application Programmer’s Interface - an API.

In layman’s terms, they should give customers a set of keys. At least to a few of the company's doors.

Peter Drucker, perhaps the world’s best-known consultant, once said that the purpose of every business is to create a customer. Not get, or find or satisfy. But, create.

Which means not being satisfied with responding to customer wants, but fulfilling needs customers haven't yet identified. After all, as Henry Ford famously observed, “If I had asked my customers what they wanted, they would have said ‘a faster horse.’”    

The best contemporary example of this is, of course, Apple, whose capacity for developing products we didn’t know we couldn’t live without was perfectly summed up by a New York Times reporter, who said of Steve Jobs, “First he creates black holes. Then he fills them with stars.” 

But Apple is a rare exception, and most service businesses still focus only on meeting needs as defined by their customers. 

The problem with which is that a customer defines what they want of your business based on their view of what you sell. Which is defined by your view of what they want. And so we go round.

The result is that most service companies continue to be built on narrowly defined customer interactions that typically contain four elements: 

• Sales
• Customer service
• The scope of a project or a relationship
• A pricing template 

This is usually a streamlined process for both company and customer, and provides a reassuring set of parameters that reduce the likelihood of an unsatisfactory outcome for either party. The customer gets the work they want, and the company gets paid a price they had some say in negotiating.

The problem with which is that it also narrows the point of connection between company and customer to the tip of an extra-fine needle. 

The price isn’t right, the timing isn’t right, the offer isn’t right, the quality to cost ratio isn’t right, the level of service isn’t right; all will make the company or its customer unwilling or unable to work together. 

Miss that needle-thin point of connection and the company has no way of working with the people it was built to serve.

The result is a general stagnation in many service business sectors. The results? Working harder for lower margins while struggling to distinguish yourself from your competition. Sound familiar?

Instead, we need a way to let customers explore how else they might use your company’s capabilities to satisfy their needs, without being filtered by your pre-conceived ideas of how they should see you. After all, a customer that finds you is historically worth 30 percent more than a customer you have found.

The answer is the service company equivalent of an API.

Today, Google is a household verb. A decade ago it was a misspelling. 

The space between those two was filled in part by the genius of Google engineers producing endlessly innovative additions to Google’s core functionality. 

But the rest of that space was filled by ideas and suggestions driven by Google’s own customer community. A community created by the company’s willingness to do one simple, but very brave thing.

Share.

Instead of locking the code and all of its capacity into tightly defined, Google-designed pre-packaged boxes, Google gave the community access. 

At first, this was a largely philosophical decision, driven by writing the code for capabilities like Google Maps on platforms that they knew could be reverse engineered. 

But sooner rather than later, Google adopted a formal protocol that created easier and more reliable ways for developers to adapt Google to their own needs. 

This protocol is called an Application Programmer’s Interface, or an API.

When a software owner publishes an API, it gives developers both permission and the ability to incorporate the essential value of the software into other applications. Thus, content created in one place can be dynamically posted and updated anywhere across the web. When you open Google Maps for instance on your smart phone, it’s the API that provides your app with the ability to show Google’s most current map data.

The value of an API, however, is not simply that it provides a one-to-many relationship for real-time data, but that it gives the community the ability to invent new ways to use the data in the first place. Ways that are driven by the community’s collective insight and experimentation into how the data could be more valuably used. 

If, as a service business you simply substitute ‘expertise’ or ‘service’ for ‘data’, then the possibilities for building an ‘API’ for your company start to loom large.

If, for a few moments, you took away, the sales, account management and pricing matrix under which your company operates ever day, and asked instead how you could give potential clients access to your core services within an ‘open source’ framework, what would that look like?

Would you publish a step by step ‘how to’ in exchange only for a credit and notification of when it was used?

Would you offer a bank of hours of your expertise in exchange for public acknowledgement of what powered the idea?

Would you give away for free everything you do for a limited time in the belief that you would establish new, loyal customers whose interests you could cater to, and only charge them once a mutually beneficial relationship had been established?

Would you create an open marketplace in which you worked on the two most innovative ideas submitted to you each month in exchange for an ownership interest?

There are examples of this kind of thinking beginning to emerge in various places. 

The App Store

Apple’s App Store, Android’s Market and Window’s Marketplace have all been built in such a way as to allow the community to have enormous influence over the future utility of smart phones and devices. At the latest count, there are over 600,000 apps in the Apple and Android online stores alone, and with each new app the popularity and value is determined by the marketplace. Both Apple and Android have leaned heavily on the innovation of app developers to help guide them to decide which capabilities and refinements to incorporate into both their hardware and their software. And instead of the companies having to decide what’s important, or hire thousands of developers, the community does much of that for them. 

Lawyers on Demand

www.legalzoom.com is essentially an API into the expertise of lawyers like Robert Shapiro. Opening up the industry to support the development of new kinds of businesses and addressing emerging challenges in specific areas like copyright and trademark law. The company doesn’t have to determine the kinds of law in which it should invest, the community guides them towards that. And the volume of demand for each kind of law gives LegalZoom a set of analytics about how to balance future hiring that beats any HR department’s projections, and insights into emerging business trends that are ahead of any industry forecast.

The New York Times Digital

The New York Times website is an API to the newspapers’ journalistic and editorial expertise. Before its website, the NYT had 900,000 daily print subscribers. Today, its website has more than 33 million unique monthly users. But the underlying value of its digital presence is the ability of the paper to receive instant feedback from its customers about which areas they find most valuable and to invest resources into developing those capabilities. That insight gave the New York Times the confidence to create one of the industry’s most significant pay-wall models, creating both new profit streams and long-term economic viability. The initial investment being the Times’ willingness to give away almost everything for free until a mutually valuable relationship was established.

The simple fact is that once you give a customer an opportunity to explore their own interests, they rarely stop. Which is exactly what any business should want.

With imagination, every company can build an API. Pathways that allow you not just to listen to your customers more attentively, but that give them the ability to experiment with what you have to offer. Experimentation that is key.

How could you open up the possibilities for your customers’ imagination to start to play. Without risk. Without expectations. 

In other words, what would an API look like in your business and how far would you go to develop one?

First, a Word From Our Sponsor

About nine months ago I changed the name of this blog to ‘Art, Meet Commerce’. As I’ve written under that umbrella it’s become increasingly comfortable, and increasingly resonant - both to me and, based on the audience numbers, to you too.

As a result, I feel the time has come to take a couple of important steps.

The first is to establish the blog as its own brand. To that end, I’ve purchased www.ArtMeetCommerce.com, and have moved the blog to a new site under that name.

The practical consequences of this to you depend on how you receive this feed. If you subscribe through email, I’ll be making the change over the next few days, hopefully in a seamless way to you. Until I’m sure that has happened I’ll continue to also post under the Lookinglass domain so that the feed remains uninterrupted.

If you subscribe via RSS, you should sooner or later update that feed from the home page of the blog here. Or copy and paste this into your RSS feed aggregator. feed://artmeetcommerce.com/blog/rss.xml

I’ve also auto-forwarded all old links to the new site. Between all that, I hope not to lose anyone.

The second step is that I have embarked on the process of writing a book by the same name. 

It will encompass much of the thinking and some of the thoughts found on the blog. But the majority of the book will be brand new. 

It will be guided by a structure that is designed to answer the question, “How do you build a creativity-driven business in a bottom-line world?” 

And fueled by a series of interviews with some of the world’s leading creative business founders and leaders. A process that begins next week in London.

These are nervous times. We need to use the power of original thought to solve increasingly challenging problems. 

And we need to build businesses capable of doing so every day. 

Art, Meet Commerce. 

Here’s to an increasingly beautiful friendship.

Building Companies That Fly

It’s a small world. Six points of separation being about three in my experience. Four at most. 

Which explains why as I boarded my flight from London to Nice last month on my way to Cannes, I found myself assigned a seat one row in front of one of my very good friends, Jerry Solomon. A quick seat negotiation later and we settled in for two plus hours of entertainment with nary a screen in sight. Good, old fashioned, provocative conversation.

I can’t remember if it was as we took off or landed that Jerry brought up something he’d heard about flying that captured the essence of flight in six words. But it struck me sufficiently to write it down. That is, I made a note in my iPhone.

I’ll come back to that.

When you’re building a business whose output must be absolutely reliable but whose existence is dependent on forces of nature, it takes significant organization and structure to fill the gap that naturally exists between the two.

Many, many creativity driven businesses adopt a different approach and throw vast amounts of manpower and energy to deal with the day to day stress of marrying the capacity of creative people and the needs of the client.

The result is that instead of building a lasting, and reliable business, they build a temporary and fragile business.

In the short-term it’s not obvious that this day-to-day approach is causing any permanent damage. But over-time the erosion of passion, enthusiasm, energy, and commitment that naturally occurs  as human beings evolve and grow has a devastating effect that is usually not visible until the organization is in free-fall and the future is coming at you like a freight-train.

Companies fail quickly in the creative industries. It’s the result of years of short-term decisions and a belief that our own energy supply is infinite.

Which brings us back to the essence of flight. And a description which, in my experience, also captures the risk of building creative organizations that operate with a short-term view.

Not inherently dangerous. But incredibly unforgiving.

'Transferable Power' - The Secret to A Networked Company

One of the good guys of the business left us a couple of weeks ago. Gene Kummel  was the former chairman, president and CEO of McCann-Erickson. As Ad Age describes it, he had, “a strong emphasis on global agency operations, Mr. Kummel expanded McCann's reach around the world as he led the development of a force of more than 100 international executives familiar with the McCann system and its worldwide clients.”Mr Kummel referred to this concept as "transferable power." A concept that is more necessary and less practiced than ever before.

Seeing it clearly is a challenge, made more difficult the closer you sit, ownership usually being the blurriest of all vantage points.

But once you have taken the steps to identify and articulate your value, the next challenge is to maximize its impact.

Almost every service company ultimately expands geographically, there being a limit to both talent and opportunity in any single location. In many cases, adding more offices is seen - both internally and externally - as an expression of success, the risk of which is that the simple presence of an extra city on the letterhead and a new phone number is enough to satisfy the strategic view of some business owners.

The result of which is that throughout the communications industry, many companies are operating under the banner of networks but which are simply individual offices that share the same name.

Extending your business so that the sum is greater than the parts has at its core, Mr Kummel’s concept of Transferable Power. It requires, in my experience ten elements:

1. A clear articulation of how the company improves the condition of its customers and clients
2. A set of standards, both practical and esoteric, on which the company operates
3. Sufficient infrastructure to allow sharing of data to take place in real time
4. A relentless commitment by the company’s senior management to reinforce the benefits of collaboration between offices, and a willingness to take on the ‘not invented here’ mentality that most people instinctively bring to the table
5. A considered compensation philosophy that rewards collective achievement as much or ideally more than local achievement
6. A transparent compensation philosophy which confidently acknowledges the disparity in pay between the same job descriptions in different cities, and which has a clear understanding of when and why to adjust for that difference
7. A standard of employment that ensures that each person can contribute to any office
8. A recognition that each office should contain the same skills, but an understanding that a standardized template of how to organize those skills will never satisfy the needs of each office
9. A willingness to invest so that your staff can see for themselves the benefits and challenges of other offices, and in so doing can improve the connections between those offices
10. An understanding that every market, even within the same country, has individual idiosyncrasies that require a distinct and local approach, and that the battle for balance between local and global is an ongoing and necessary one.

Companies make enormous investments every day in finding and keeping customers happy.

Doing so on a networked basis is the most valuable use of that investment, both to the business and its customers.

Making that a reality requires Transferable Power. Thank you Mr Kummel, for putting such a powerful name to such a valuable concept.

Looking Ahead

The impulse to act first and fix the consequences second runs deep with a lot of people.

It’s a trait borne of curiosity, supported by an understanding that for some of us learning by doing is a better teacher than any other.

This is the world of the entrepreneur, where trial and error are essential components in the growth of any business. 

The key, as the song says, is knowing when to hold ‘em and when to fold ‘em, there being a cost to either strategy. The understanding of which come with experience, often painfully-earned.

Take Monday afternoon, for example, when a simple drive to take Jon Collins and his wife Sarah to the train station after a glorious weekend of eating, drinking and a continuation of the Millbrook, go-kart time trials evolved, in retrospect, in a way that was inevitable.

It takes a number of decisions to bring four talented people with a history of solving some of the Communications industry’s most challenging problems, to a place where they are trying to decide how best to prop up a car that is resting on a slope, without using the hand-brake, so they can spin the back right wheel to re-align the bolt holes in order to replace the tire that is too hot to touch and which is attached to the wheel whose lug nuts are applied so tightly that none of them can loosen even one of the five.

The answer, it turns out, is to apply sequential logic supported by creative thinking, which results in a process that goes like this:

1. Wait a few minutes until the smoking rubber of the flat tire has cooled enough to pull it from the wheel mount, having first loosened the lug-nuts by kicking the crowbar with your foot, while your wife makes two trips home to get a sledgehammer that it turns out you didn’t need.
2. Call road-side assistance twice and answer the same set of questions three times while simultaneously watching the car slide slowly back down the hill and off the jack the instant you release the handbrake.
3. Re-apply the handbrake and re-jack up the car while noting a number of improvements you would like to suggest to whomever at Audi designed the interface between jack and chasis.
4. Discover that in the process of sliding off the jack, the rear wheel has spun so as to mis-align the lug nut holes. Further discover that the wheel can not be rotated while the handbrake is on. Deduce that the car will not stay on the jack once the handbrake is released. Recognize that without the jack or rear wheel in place, there is nothing to prevent the car from sitting either on its fibre glass chasis or its wheel mount. Acknowledge that neither was designed for the purpose.
5. Recognize the residual value provided by the original wheel and the lacerated tire if turned on its vertical axis.
6. Place said wheel flat on the ground and slide beneath rear bumper, aligning hub with tow-hitch for confident support.
7. Cautiously lower jack and allow rear of car to rest on damaged wheel
8. Remove handbrake.
9. Rotate wheel to re-align holes
10. Insert lug-nuts to hold wheel alignment in place
11. Re-apply handbrake
12. Re-jack car
13. Remove lug nuts and attach spare wheel
14. Remove damaged wheel from beneath rear of car
15. Lower car to the ground
16. Tighten lug nuts and replace hub cap
17. Throw everything in the trunk of the car while trying not to smear the white shorts and golf shirt you have been wearing throughout the whole exercise with any more axle grease than they have already been adorned with
18. Get close friends to the station 90 minutes later than planned with their resulting trip home taking precisely twice as long as intended.

There is an alternative to this process.

When you turn to Sarah Dowland, one of the world’s great producers, half a mile after leaving the driveway of your house and tell her you’ve just remembered you have a slow puncture in your rear, right tire, and she says to you, “Okay, then let’s just go back and deal with it at home,” listen to her. Don't see whether there's still enough air in the tire to make it the 6 miles to the gas station. 

There are times for experimentation and exploration. And there are times to listen to experience and pay attention to reality. These are the times that require we see pre-emptively what will soon become clear retrospectively.

Because the cost of getting that wrong will effect not just you, but the people who choose, for now, to put their future in your hands.

Whether you are driving a car or managing a business. 

A Week of Cannes - Inside The Box

Fear is creative kryptonite. Its proximity alone enough to sap the life force of original intent. 

Put fear in a lead box and throw away the key. Or at least hide it for a few hours every day. The alternative being the status quo. Which as history has proven, is a fool's paradise.

For the last week, Cannes has provided its own lead box. One formed by a combination of conversation, exploration, exhortation, celebration and a good deal of rose. It is a box strong enough to withstand even sleep deprivation - the late night bogeymen being banished to the shadows by the simple practice of staying awake until the dawn. 

Fear’s absence has, for a few days at least, removed the fog, cleared the air and revealed a horizon of possibilities. 

Which makes Cannes the most important catalyst within the communications industry today. 

The truth is those possibilities are always there. Waiting, silently, for those with vision and courage to walk through them armed with simple truths.

That the way forward is not barred by economics or by others.

It is not restricted by rules. It is not determined by rulers.

That the way forward lies within our grasp.

We need only a destination that is important to us and a means of transportation.

Which makes it a pragmatic journey, and a practical one. A journey guided by Purpose, powered by a process and sustained by known practices.

This is not esoteric optimism. Or fanciful philosophizing. 

It is the foundation on which to build a business that sits, as Jeffrey Katzenberg said in his session with Sir Martin Sorrell on Friday, “at the intersection at which Art meets Commerce.”

It is an intersection that offers endless choices. 

And only one wrong one. 

To stay on the current road. 

No matter what discipline you practice, or skill you sell, doing more of what brought you to this point in the journey is the equivalent of putting two feet on the brakes while you drive down the side of a cliff. You might slow how long it takes to reach the bottom, but the final resting place is guaranteed.

We coach a growing number of business owners and business leaders. Our focus is to help them be clear about the future they want and to begin the practical steps to reach it.

In essence, we become their lead box. A place to explore possibilities without fear. And to take the journey best suited to them.

It takes courage to stop what you’re doing. And fear influences us all in ways overt and unseen. 

But as Cannes reminded us this week, what is yet to come is open to our influence. 

And diminished only through the choices we make.

Should You Innovate or Imitate?

A couple of years ago, I began to document all of the creatively-driven businesses that I’ve worked with closely, and built a simple diagnostic tool by which to assess the characteristics that were common to those that were successful, as well as the traits and practices of those that were not. 

It’s become a powerful body of work. And, although confidentiality means it will never be published, its growing value as an objective reference and reminder gives me powerful insights about what makes a good company great, and a great company unstoppable.

What surprises me sometimes is how obvious some of these insights appear in hindsight. Which does not make them less valuable. Unlike most precious commodities, the more common the sense the more it is worth.

One of the key variables I’ve tracked is the result of changes that are driven by innovation and those that are driven by imitation. Both have a specific role to play in the longevity and success of a business. 

Most business leaders spend much of their careers studying and often worrying about the competition. If they see something work, they copy it. Sometimes they improve the practice, sometimes they do it less well. But most industries are filled with imitators. Which is why when economies struggle, very few companies can outperform their own industry.

Those that do are driven by innovation. Not imitation. Apple being an obvious example.

In a conversation with the brilliant designer and architect Ron Pompei yesterday, he said something that struck me immediately. “You can’t innovate by looking within your own industry. I don’t care who you are.” 

Ron and his company, PompeiAD, were responsible for the concept and design of Anthropologie, a brand that has made individuality scalable in that of its 135 stores, no two are exactly alike.

Consumers value the consistency of expectation and performance of national brands because a brand defines a minimum set of expectations. Most of our retail experiences are defined not by a sense of surprise, but by a sense of satisfaction. We got what we came for for a price that represented sufficient value for the transaction to have taken place. The variables are our emotional connection to the prospective purchase. Dishwashing liquid, lower. Clothes, higher. At least for most people. Self-image being another variable.

The business genius of Anthropologie’s founder, Dick Hayne - he also founded Urban Outfitters - was the recognition that combining the unexpected with brand consistency would create a different emotional connection with the consumer. One of discovery and unknown possibilities, supported by a minimum threshold of expectation.

This sense of risk-free adventure would increase traffic. Anthropologie became the emotional equivalent of an upscale flea-market (to use PompeiAD's description), but without the concern that you might have an entirely wasted trip.

People love surprises. People hate surprises. Sometimes you can square a circle. This insight came to Dick Hayne not because he was a retailer who had studied retailers. But because he was an anthropologist who had studied people. 

This perspective allowed him to innovate.

It is a perspective that every industry in the world can benefit from, and one which happens when you find a way to step back and take a different look at why you’re in business and what really matters to your customers. Personally.

But while innovation drives growth and competitive advantage, it is not a platform for sustainability.

Being successful in the long-run requires you imitate. Best practices especially. All of which come market tested, refined and proven. Extraordinary value once they are in place.

The key is knowing what those are and having the capacity to customize them so that they are applied sensitively to your unique culture. A best practice can quickly become a worst practice when mis-used.

So, the answer to the question posed at the outset is this.

Innovate in order to create competitive separation. 

Imitate to keep it. 

The Advertising Industry Is In A Race To The Future

Tonight is the annual AICP show. An evening of celebration of companies who sell creativity for a living.

Selling subjectivity is no easy matter. Particularly when most of the creative service world sells its output based on the time it takes to make it, not the value of the change it creates. A nonsense which these musings have contemplated before. And will, no doubt, again.

Tonight will see advertising agencies and their suppliers mingling at MOMA to honor the craft and technique of advertising in the motion image. Two weeks from now, and many of the same people (myself included) will rendezvous in Cannes to continue the conversation about the state of the industry, and where it’s headed.

In both cases, the shows themselves are reflections of an industry in transition. From what was to what will be. Whatever the future holds, I know no one who believes that very much of that future is yet set in stone. The race is on. And to the winner the spoils.

Winning that race requires not simply the talent to express original thought in compelling ways, but the capacity to translate those thoughts through technologically driven distribution channels.

Which at first glance sounds a lot like the marketing and advertising industries of the last fifty years - ideas expressed through television, radio and print all requiring use of the technology of their day to bring their power to inform, entertain and provoke to the public’s attention.

Sitting inside those industries, the knowledge that things have changed is unquestioned.

What to do about it is the source of much debate. A great deal of dissension. And no little denial. 

In our view, most creatively driven organizations were built for an age that no longer exists. The Industrial Age. Where process, specialization and standardization were foundations for success. 

Apply the analogy to the creation of advertising and the comparison is exact. Information flowed in a straight line, from client to account person to creative to producer, with the final piece being stamped out in a production-line environment in well ordered process. You filmed, reviewed, edited, added audio, finished and shipped. The only variable being the degree of complexity required within each discipline.

As a consequence of which, organizational structures matched the process exactly. Linear, predictable (the more the better) and measurable. The individuality came from the artist employed at each stage. But never from the process.

Today, organizations need to reflect the complex, multi-faceted world and media community in which we live and communicate. A world in which connections, and collaboration create un-predictable outcomes.  A world in which a sneaker company (no, not Nike) has become an investor in and a producer of original music. A multi-million dollar investment that until recently would have been spent on traditional media production and distribution. The age of earned audiences indeed.

Building organizations capable of encouraging and then applying this kind of original thought - and doing so with the reliability required of any business - involves a broader and more sensitive view than traditional thinking supports.

Which starts with solving a central problem. How do you build a business that simultaneously celebrates the individual while producing instinctive and organization-wide collaboration?

For we humans are not predictable. Nor do we take direction very well, or for very long. And organizations built on the presumption of either have less resilience in the face of change.

The answer, I believe, is to build organizations that are better reflections of the organisms they contain. Human beings. 

Here, are six truths towards that end that we have experienced and observed in companies that are winning the race for the future: 

1. It is easier to attract us, gravitationally towards a vision of the future we believe in, than to push us towards an unknown destination.
2. It is easier to command loyalty by listening to us, empowering us and purposing us, than bribing us - a transactional relationship at best.
3. It is easier to get the best out of us in an environment which values trial and exploration, than one which is rigid.
4. It is easier to hold us accountable to clearly articulated parameters, than to conduct post-mortems.
5. It is easier to get us to share when we feel secure and confident, than when we feel uncertain and threatened.
6. It is easier to encourage us towards evolution than revolution.

Having talent is a requirement of any creative company. 

But the winners of this race will not be those organizations who have the best talent. 

But those who use talent best.

Your Situation is Unique. Your Problems Are Not

We received some great press this week. By nature, we aren't spectacularly good at blowing our own horn. We're not alone in that. And we're working on it. In the meantime, here's a link to the Advertsing Age article.

We've taken the time to update some areas of our website to better reflect the breadth and depth of our work. 'Your Situation' now contains a precise summary of the nine physical characteristics of those companies that are best able to maximize the value of their creativity.

They're included here. As always, we're interested to know how these correspond with your own experiences.

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An organization's ability to unlock its creative potential and withstand the tests of time are based on nine characteristics. The first eight of these are inherent in every creative company regardless of its size.

• Organizational Structure. Are you built vertically or horizontally? Creativity requires collaboration, which requires philosophies, platforms and practices that work laterally.

• Speed of Response. Creativity works at light speed. Organizations typically don't. Closing the gap requires systems that reduce the lag between a question and an answer, and encourage even more valuable exploration.

• Reactive or Resilient. In every discipline, creative companies are urgently redesigning themselves to satisfy a new set of business needs. Those that succeed will be built not only for today's certainties, but tomorrow's unknowns.

• Forwards or Backwards. Information is power. How it travels through your organization determines who has it and what they can do with it. The most innovative companies act like a funnel, pulling information through the front of the house - whose need is most urgent - and feeding it through to the back - whose need is most comprehensive.

• Client Management Structure. Are you project or account driven? Both are valuable. Both require different skills, structures and practices.

• Change Management Philosophy. Do you manage evolution or wait for revolution. The most innovative companies develop a Lean Change approach that lowers the risk of change and uses personal passion to explore and evangelize the benefits.

• Workspace vs Office space. Its rare to find inspirational work being produced in corporate environments. Long-term leases create practical limitations. But solving those problems is one of the early indicators of creativity at work.

• Long-term Leadership. Many, many creative businesses are founded by evangelical leaders. Resilient companies establish a clear transition path from inspirational founders to irrelevant founders.

• Unlocking the Network. As soon as a business adds its third office, it becomes a network. Taking advantage of that potential requires: a clear expression of a company’s Purpose; the ability to connect people, and a reason for them to want to connect. 

Building Tomorrow’s Company, Today

Most businesses find themselves precariously balanced between reacting and planning. 

It’s a battle almost always won by the need to tend to the impact of decisions we made yesterday, the consequences of which we couldn’t or didn’t see at the time.

This creates a defensive, reductive view of a company and its possibilities, and usually results in neither the business nor its people fulfilling their potential.

Regular readers here will know that I am an impassioned practitioner of the power of envisioning the future we aspire to create - for ourselves and our business - and then designing and building a model capable of fulfilling that vision.

At the Wired/MDC conference on Tuesday, I listened to the founder of Netflix - Reed Hastings - describe the quite remarkable story of how he and his partners built their company. 

Netflix started its subscriber-based movie and TV show rental business twelve years ago. Today, it has 23.6 million subscribers, and has just passed Comcast Cable in audience size. 

Quite something for a business whose original business model was mail-order DVD rentals.

Except that its original model was not mail-order DVD rentals. 

Its original model was the one it is living today: real-time streaming of movies and TV shows over the internet. 

A model which follows a strategy borne of a simple realization. That the Purpose of a movie rental company is to offer its customers the widest choice of rentable movies whenever they want to watch them. Or as Reed Hastings wrote in 2005, "We rent movies. But the real service we provide customers is convenience."

Back in 1999, when Netflix signed its first subscriber, anyone on the web looking for content was going to AOL.com and listening to their modem sync up to the AOL servers at 56K. If you were lucky, you got mail. And if you waited long enough, a picture or two. You would have waited a long time for a movie. For some movies, you’d still be waiting.

In 1999, the best way to rent movies was to go to Blockbuster. And from Blockbuster’s perspective, they were fulfilling the movie renters' need. Some people got their first choice movie. The stores were pretty close to most people's homes. And as long as you got the movie back within a couple of days, the prices were competitive.

Except, if you looked closely, they were doing it on their terms. Not on their customers. And whenever you build a business based on what works for you, you leave a gap for someone else to build a business that works for the customer.

Enter Netflix.

“They built the railway line over the Alps before there was an engine capable of making the journey.”

One of the rock-like foundations on which the Technology Age has been built is Moore’s Law, which states that computer processing power will double every 24 months. Its accuracy has allowed for technological R&D to produce rapidly iterative design and capability.

Were all of life based on such certainty, our time here would be both richer and poorer. But when it comes to building a scalable business, speed of success is dramatically encouraged by predictability of resources.

Reed Hastings and his partners pulled out a spreadsheet and applied Moore’s Law to bandwidth expansion. Were the same growth-rate to hold true for both, when, they asked, would Netflix be able to satisfy the purest definition of its Purpose, and deliver streaming movies in real-time over the internet?

The answer, their spreadsheet projected, was 2008.

From that day, and every day for the next nine years, they worked to build a business capable of delivering the widest selection of movies as fast as possible to their customers based on current technology. It was a business whose end they had already designed.

The business was home delivery of DVDs, and they used it to create four long-term assets:

1. A brand synonymous with being the best way to bring movies into our living rooms
2. A reputation for a broad, deep and growing catalog
3. A loyal and growing subscriber base
4. A reputation for customer service

Everything else about Netflix 1999-2008, they planned to throw away.

As it turned out, the spreadsheet was right. And so was the strategy. 

In the meantime, Blockbuster - which already possessed all four of the foundations Netflix aspired to create - continued to look backwards.

Driven by its historic success, and an operational model based on number and location of storefronts, Blockbuster convinced itself its approach was right. And if its approach was right, the answer to falling revenues must be to address the fundamentals.

Extended rental periods; reduced late fees; earlier new releases; increased inventory. All of which added cost, cut into margins and did little to arrest declining interest.  Fundamentals in terms of Blockbuster’s business. But increasingly meaningless to its customers. 

Because in the pursuit of its long term strategy, Netflix had discovered that choice and convenience were more important to most renters than immediacy. And so, knowing they didn't yet have the means to satisfy the entire Purpose, they built a model that in the short-run would satisfy two thirds of it. And they started mailing out DVDs to its customers. No more disappointment at the store. No more store in fact. Just ease and choice.

And, even better, Netflix knew this was just a stepping stone. They knew that the third leg of the strategy was just a matter of time. Their spreadsheet said so. They just had to wait for the technology to catch up. 

When, in 2008, it did, Netflix satisfied their ten year old strategy to stream movies straight into the home. It took a couple of hours to download a movie, and the quality was only alright. But, innovation is about improvement, not perfection.

The results are astounding. Today, Netflix is valued at $12.5 billion and has recently committed $100 million to produce its own programming for the first time.

Blockbuster was sold a month ago for $400 million. $87 million of which was debt. From a high of 4,000 stores, its new owners are hopeful they will be able to keep 400 open. 

This week, Comcast announced a new residential internet service that will allow its subscribers to download an HD movie in 3 minutes. 

For Blockbuster, it probably means nothing.

For those waiting for new releases to be instantaneously available in 3D, it’s progress.

For Netflix, it’s just one more step on a journey that began when Reed Hastings pulled out his spreadsheet and designed the future of his company.

For the rest of us, it's perhaps a good reminder to make sure we're clear about what business we're building.

Agencies and Production Companies Are Fixing The Wrong Problems

When a fifty year-old model is destroyed by a massive seismic shift, it’s inevitable there will be some confusion about how to replace it. 

In the advertising industry this confusion has manifested itself in hyperbolic and frenetic re-invention, with Library of Congress-like amounts of exposition on “the new model” and the “agency of the future.”

Both quests depend on defining a fixed point of reference and then building towards it.

Which is like building a skyscraper in a known earthquake zone, and worrying largely about how to make it look compelling to prospective buyers.

The flaw in which is that when the ground shifts again - as inevitably it will - the structure we had so painstakingly built is suddenly as unsafe as the old one. And the buyers suddenly realize that for all the granite counter-tops, there’s no long term security here.

Which is a simple case of fixing the wrong problem.

From here on, building creative companies capable of delivering extraordinary work, exceptional performance and long-term stability requires a fundamental shift in perspective by those charged with their design. 

One that focuses not on rigid departments and precisely defined capabilities, but on building flexible foundations.

Experience shows there are three:

1. Organically collaborative environments
2. Geographically agnostic systems
3. Entrepreneurial practices

Transparent, authentic, ubiquitous, responsive.

A natural extrapolation of the world in which we live, consume and connect. 

A world that shakes our assumptions on a daily basis. And in doing so provides limitless opportunity to those agile enough to take advantage of the uncertainty.