by Adam Hartung | Jun 30, 2020 | Culture, Leadership, Marketing, Politics, Web/Tech
In my recent “Rebooting Business” on-line conference I was asked if Black Lives Mattered and other protests should affect strategy. I said “of course!!” These demonstrations clearly show a segment of the marketplace with unserved and under-served needs. Needs so badly served people have taken to the streets!
Every organization needs to assess its strategy to determine if it is on this trend toward inclusion. Are you sensitive to the needs of these under-served segments? Or are you sloppily still out there with old stereo-tropes like the Aunt Jemima syrup – which Quaker Oats finally pulled. Do you know if your organization, products, suppliers, customers and communities are meeting market needs for inclusion? Or are you just assuming you’ll be OK?
Amazingly one of the biggest trend creating companies has demonstrated the cost of missing trends. Facebook is a remarkable company. Where MySpace failed, and countless others never created a marketplace, Facebook used its initial platform, then added Instagram, then Messenger, then WhatsApp to take an enormous lead in social media. Facebook built on trends in our desire to be mobile, and to communicate asynchronously, to attract billions of people to its platform – and as a result advertisers.
But…. Inexplicably…. the CEO Mark Zuckerberg and his leadership team have been tone-deaf to the events since George Floyd was killed. And they were remarkably blindsided, showing they truly weren’t prepared. Zuckerberg has long refused to even look for false information on Facebook – and never really considered removing it. Lies, falsehoods, misstatements – Facebook let people of all stripes (good, and very often bad) say anything they wanted on the platform. This wasn’t inclusion, it was allowing loud voices to present harmful content – and it was clearly disturbing a whole lot of people.
Now is the comeuppance. Advertisers have decided not to advertise on Facebook. They realize that their ads, presented next to false, and sometimes truly hateful, content gives the impression that they support this content. So, in droves, they have said their ad dollars will go somewhere else. Giant consumer goods companies Honda, Unilever, Proctor & Gamble, Coca-Cola, Diageo and Hershey as well as one of the world’s largest mobile providers Verizon, and mercantile suppliers North Face and Patagonia have joined retailers like Starbucks and REI as just some of the larger boycotters – out of over 100 on the growing list. So serious is this problem that some advertisers are “pausing” social media ads all together, suggesting another possible trend
Nobody can fight trends and hope to win. Nobody. No matter how big. And this is a sharp rebuke for one of the trendiest companies on the planet. That the leadership team didn’t see this coming is astonishing. In a late reversal, Facebook has made new efforts to identify hate content (including harmful posts by politicians), but that they didn’t react much quicker is just absurd. That they appeared to think they could platform political ads, and political content, and not have viewers associate Facebook with politics is downright bizarre. This has been the dumbest self-inflicted move by a big company in a very long time. And all they had to do to avoid this nightmare was admit that inclusion was a very big global trend that they had to build into their offering.
But don’t lose sight of the lesson. TRENDS MATTER. If you align with trends your business can do GREAT! Like Facebook. But if you don’t pay attention, and you miss a big trend (like demographic inclusion) the pain the market can inflict can be HUGE and FAST. Like Facebook. Are you aligned with trends? What are the threats and opportunities in your strategy and markets? Do you need an outsider to assess what you don’t know you don’t know? You’ll be surprised how valuable an inexpensive assessment can be for your future business https://adamhartung.com/assessments/
by Adam Hartung | Jul 26, 2017 | Regulations, Scenario Planning, Trends
Leaders like to be deciders. Most leaders think of themselves as decision makers. In 2006 President George Bush, defending Donald Rumsfeld as his Defense Secretary said “I am the Decider. I decide what’s best.” It earned him the nickname “Decider-in-Chief.” Most CEOs echo this sentiment. Most leaders like to define themselves by their decisions.
But whether a decision is good or not is open to interpretation. Often immediately after a decision things may look great. It might appear as if that decision was obvious. And often decisions quickly make a lot of people happy.
As we enter the most intense part of the U.S. presidential election, both candidates are eager to tell potential voters what decisions they have made – and what decisions they will make if elected. And most people will look no further than the immediate expected impact of those decisions.
AP Photo/Chuck Burton, File
It takes time to determine the quality of any decision.
However, the quality of most decisions is not based on the immediate, or obvious, first implications. Rather, the quality of a decision is discovered over time, as the consequences are revealed – intended and unintended. Because quite often, what looked good at first can turn out to be very, very bad.
The people of North Carolina passed a law to control the use of public bathrooms. Most people of the state thought this was a good idea, including the governor. But some didn’t like the law, and many spoke up. Last week the NBA decided that it would cancel its All-Star game scheduled in Charlotte due to discrimination issues caused by this law. This change will cost Charlotte about $100 million.
That action by the NBA is what’s called
unintended consequences. Lawmakers didn’t really consider that the NBA might decide to take its
business elsewhere due to this state legislation. It’s what some people call, “Oops. I didn’t think about
that when I made my decision.”
Often unintended consequences are more important than first reactions to decisions.
Robert Reich, Secretary of Labor for President Clinton, was a staunch supporter of unions. In his book Locked in the Cabinet, he tells the story of visiting an auto plant in Oklahoma supporting the local union. He thought his support would incent the company’s leaders to negotiate more favorably. Instead, the company closed the plant. Laid-off everyone. Oops. The unintended consequences of what he thought was obvious support led to the worst possible worker outcome.
President Obama worked Congress hard to create the Affordable Care Act, or Obamacare, for everyone in America. One intention was to make sure employers covered all their workers, so the law required that if an employer had health care for any workers he had to offer that health care to all employees who worked over 30 hours per week. So almost all employers of part time workers suddenly said that none could work more than 30 hours. Those that worked 32 (four days per week) or 36 suddenly had their hours cut. Now those lower-income people not only had no health care, but less money in their pay envelopes. Oops. Unintended consequence.
President Reagan and his First Lady launched the “War on Drugs.” How could that be a bad thing? Illegal drugs are dangerous, as is the supply chain. But now, some 30 years later, the Federal Bureau of Prisons reports that almost half (46.3% or over 85,000) of inmates are there on drug charges. The U.S. now spends $51 billion annually on this drug war, which is about 20% more than is spent on the real war being waged with Afghanistan, Iraq and ISIS. There are now over 1.5 million arrests each year, with 83% of those merely for possession. Oops. Unintended consequences. It seemed like such a good idea at the time.
This is why it is so important leaders take their time to make thoughtful decisions, often with the input of many other people. Because the quality of a decision is not measured by how one views it immediately. Rather, the value is decided over time as the opportunity arises to observe the unintended consequences, and their impact. The best decisions are those in which the future consequences are identified, discussed and made part of the planning – so they aren’t unintended and the “decider” isn’t running around saying “oops.”
Think hard about the long-term complications of any decision.
As you listen to the politicians this cycle, keep in mind what could be the unintended consequences of implementing what they say:
- What would be the social impact, and transfer of wealth, from suddenly forgiving all student loans?
- What would be the consequences on trade, and jobs, of not supporting historical government trade agreements?
- What would be the consequences on national security of not supporting historically allied governments?
- What would be the long-term consequence of not allowing visitors based on race, religion or sexual orientation?
- What would be the consequence of not repaying the government’s bonds?
- What would be the long-term impact on economic growth of higher regulations on banks – that already have seen dramatic increases in regulation slowing the recovery?
- What would be the long-term consequences on food production, housing and lifestyles of failing to address global warming?
Business leaders should be very aware of the long-term consequences of their decisions. Every time a decision is necessary, is the best effort made to obtain all the information available on the topic? Are inputs and expectations obtained from detractors, as well as admirers? Is there a balance between not only what is popular, but what will happen months into the future? Did you consider the potential reaction by customers? Employees? Suppliers? Competitors?
There are very few “perfect decisions.” All decisions have consequences. Often, there is a trade-off between the good outcomes, and the bad outcomes. But the key is to know them all, and balance the interests and outcomes. Consider the consequences, good and bad, and plan for them. Only by doing that can you avoid later saying “oops.”
by Adam Hartung | Aug 4, 2016 | Election, Leadership, Politics
Donald Trump has had a lot of trouble gaining good press lately. Instead, he’s been troubled by people from all corners reacting negatively to his comments regarding the Democrat’s convention, some speakers at the convention, and his unwillingness to endorse re-election for the Republican speaker of the house. For a guy who has been in the limelight a really long time, it seems a bit odd he would be having such a hard time – especially after all the practice he had during the primaries.
The trouble is that Donald Trump still thinks like a CEO. And being a CEO is a lot easier than being the chief executive of a governing body.
CEOs are much more like kings than mayors, governors or presidents:
- They aren’t elected, they are appointed. Usually after a long, bloody in-the-trenches career of fighting with opponents – inside and outside the company.
- They have the final say on pretty much everything. They can choose to listen to their staff, and advisors, or ignore them. Not employees, customers or suppliers can appeal their decisions.
- If they don’t like the input from an employee or advisor, they can simply fire them.
- If they don’t like a supplier, they can replace them with someone else.
- If they don’t like a customer, they can ignore them.
- Their decisions about resources, hiring/firing, policy, strategy, fund raising/pricing, spending – pretty much everything – is not subject to external regulation or legal review or potential lawsuits.
- Most decisions are made by understanding finance. Few require a deep knowledge of law.
- There is really only 1 goal – make money for shareholders. Determining success is not overly complicated, and does not involve multiple, equally powerful constituencies.
- They can make a ton of mistakes, and pretty much nobody can fire them. They don’t stand for re-election, or re-affirmation. There are no “term limits.” There is little to tie them personally to their decisions.
- They have 100% control of all the resources/assets, and can direct those resources wherever they want, whenever they want, without asking permission or dealing with oversight.
- They can say anything they want, and they are unlikely to be admonished or challenged by anyone due to their control of resource allocation and firing.
- 99% of what they say is never reported. They talk to a few people on their staff, and those people can rephrase, adjust, improve, modify the message to make it palatable to employees, customers, suppliers and local communities. There is media attention on them only when they allow it.
- They have the “power of right” on their side. They can make everyone unhappy, but if their decision improves shareholder value (if they are right) then it really doesn’t matter what anyone else thinks
One might challenge this by saying that CEOs report to the Board of Directors. Technically, this is true. But, Boards don’t manage companies. They make few decisions. They are focused on long-term interests like compliance, market entry, sales development, strategy, investor risk minimization, dividend and share buyback policy. About all they can do to a CEO if one of the above items troubles them is fire the CEO, or indicate a lack of support by adjusting compensation. And both of those actions are far from easy. Just look at how hard it is for unhappy shareholders to develop a coalition around an activist investor in order to change the Board — and then actually take action. And, if the activist is successful at taking control of the board, the one action they take is firing the CEO, only to replace that person with someone knew that has all the power of the old CEO.
It is very alluring to think of a CEO and their skills at corporate leadership being applicable to governing. And some have been quite good. Mayor Bloomberg of New York appears to have pleased most of the citizens and agencies in the city, and his background was an entrepreneur and successful CEO.
But, these are not that common. More common are instances like the current Governor of Illinois, Bruce Rauner. A billionaire hedge fund operator, and first-time elected politician, he won office on a pledge of “shaking things up” in state government. His first actions were to begin firing employees, cutting budgets, terminating pension benefits, trying to remove union representation of employees, seeking to bankrupt the Chicago school district, and similar actions. All things a “good CEO” would see as the obvious actions necessary to “fix” a state in a deep financial mess. He looked first at the financials, the P&L and balance sheet, and set about to improve revenues, cut costs and alter asset values. His mantra was to “be more like Indiana, and Texas, which are more business friendly.”
Only, governors have nowhere near the power of CEOs. He has been unable to get the legislature to agree with his ideas, most have not passed, and the state has languished without a budget going on 2 years. The Illinois Supreme Court said the pension was untouchable – something no CEO has to worry about. And it’s nowhere near as easy to bankrupt a school district as a company you own that needs debt/asset restructuring because of all those nasty laws and judges that get in the way. Additionally, government employee unions are not the same as private unions, and nowhere near as easy to “bust” due to pesky laws passed by previous governors and legislators that you can’t just wipe away with a simple decision.
With the state running a deficit, as a CEO he sees the need to undertake the pain of cutting services. Just like he’d cut “wasteful spending” on things he deemed non-essential at one of the companies he ran. So refusing funding during budget negotiations for health care worker overtime, child care, and dozens of other services that primarily are directed at small groups seems like a “hard decision, well needed.” And if the lack of funding means the college student loan program dries up, well those students will just have to wait to go to college, or find funding elsewhere. And if that becomes so acute that a few state colleges have to close, well that’s just the impact of trying to align spending with the reality of revenues, and the customers will have to find those services elsewhere.
And when every decision is subjected to media reporting, suddenly every single decision is questioned. There is no anonymity behind a decision. People don’t just see a college close and wonder “how did that happen” because there are ample journalists around to report exactly why it happened, and that it all goes back to the Governor. Just like the idea of matching employee rights, pay requirements, contract provisioning and regulations to other states – when your every argument is reported by the media it can come off sounding a lot like as state CEO you don’t much like the state you govern, and would prefer to live somewhere else. Perhaps your next action will be to take the headquarters (now the statehouse) to a neighboring state where you can get a tax abatement?
Donald Trump the CEO has loved the headlines, and the media. He was the businessman-turned-reality-TV-star who made the phrase “you’re fired” famous. Because on that show, he was the CEO. He could make any decision he wanted; unchallenged. And viewers could turn on his show, or not, it really didn’t matter. And he only needed to get a small fraction of the population to watch his show for it to make money, not a majority. And he appears to be very genuinely a CEO. As a CEO, as a TV celebrity — and now as a candidate for President.
Obviously, governing body chief executives have to be able to create coalitions in order to get things done. It doesn’t matter the party, it requires obtaining the backing of your own party (just as John Boehner about what happens when that falters) as well as the backing of those who don’t agree with you. ou don’t have the luxury of being the “tough guy” because if you twist the arm to hard today, these lawmakers, regulators and judges (who have long memories) will deny you something you really, really want tomorrow. And you have to be ready to work with journalists to tell your story in a way that helps build coalitions, because they decide what to tell people you said, and they decide how often to repeat it. And you can’t rely on your own money to take care of you. You have to raise money, a lot of money, not just for your campaign, but to make it available to give away through various PACs (Political Action Committees) to the people who need it for their re-elections in order to keep them backing you, and your ideas. Because if you can’t get enough people to agree on your platforms, then everything just comes to a stop — like the government of Illinois. Or the times the U.S. Government closed for a few days due to a budget impasse.
And, in the end, the voters who elected you can decide not to re-elect you. Just ask Jimmy Carter and George H.W. Bush about that.
On the whole, it’s a whole lot easier to be a CEO than to be a mayor, or governor, or President. And CEOs are paid a whole lot better. Like the moviemaker Mel Brooks (another person born in New York by the way) said in History of the World, Part 1 “it’s good to be king.“
by Adam Hartung | Jul 26, 2016 | Leadership, Marketing, Sports
Most leaders think of themselves as decision makers. Many people remember in 2006 when President George Bush, defending Donald Rumsfeld as his Defense Secretary said “I am the Decider. I decide what’s best.” It earned him the nickname “Decider-in-Chief.” Most CEOs echo this sentiment, Most leaders like to define themselves by the decisions they make.
But whether a decision is good, or not, has a lot of interpretations. Often the immediate aftermath of a decision may look great. It might appear as if that decision was obvious. And often decisions make a lot of people happy. As we are entering the most intense part of the U.S. Presidential election, both candidates are eager to tell you what decisions they have made – and what decisions they will make if elected. And most people will look no further than the immediate expected impact of those decisions.
However, the quality of most decisions is not based on the immediate, or obvious, first implications. Rather, the quality of decisions is discovered over time, as we see the consequences – intended an unintended. Because quite often, what looked good at first can turn out to be very, very bad.
The people of North Carolina passed a law to control the use of public bathrooms. Most people of the state thought this was a good idea, including the Governor. But some didn’t like the law, and many spoke up. Last week the NBA decided that it would cancel its All Star game scheduled in Charlotte due to discrimination issues caused by this law. This change will cost Charlotte about $100M.
That action by the NBA is what’s called unintended consequences. Lawmakers didn’t really consider that the NBA might decide to take its business elsewhere due to this state legislation. It’s what some people call “oops. I didn’t think about that when I made my decision.”
Robert Reich, Secretary of Labor for President Clinton, was a staunch supporter of unions. In his book “Locked in the Cabinet” he tells the story of visiting an auto plant in Oklahoma supporting the union and workers rights. He thought his support would incent the company’s leaders to negotiate more favorably with the union. Instead, the company closed the plant. Laid-off everyone. Oops. The unintended consequences of what he thought was an obvious move of support led to the worst possible outcome for the workers.
President Obama worked the Congress hard to create the Affordable Care Act, or Obamacare, for everyone in America. One intention was to make sure employers covered all their workers, so the law required that if an employer had health care for any workers he had to offer that health care to all employees who work over 30 hours per week. So almost all employers of part time workers suddenly said that none could work more than 30 hours. Those that worked 32 (4 days/week) or 36 suddenly had their hours cut. Now those lower-income people not only had no health care, but less money in their pay envelopes. Oops. Unintended consequence.
President Reagan and his wife launched the “War on Drugs.” How could that be a bad thing? Illegal drugs are dangerous, as is the supply chain. But now, some 30 years later, the Federal Bureau of Prisons reports that almost half (46.3% or over 85,000) inmates are there on drug charges. The USA now spends $51B annually on this drug war, which is about 20% more than is spent on the real war being waged with Afghanistan, Iraq and ISIS. There are now over 1.5M arrests each year, with 83% of those merely for possession. Oops. Unintended consequences. It seemed like such a good idea at the time.
This is why it is so important leaders take their time to make thoughtful decisions, often with the input of many other people. Because the quality of a decision is not measured by how one views it immediately. Rather, the value is decided over time as the opportunity arises to observe the unintended consequences, and their impact. The best decisions are those in which the future consequences are identified, discussed and made part of the planning – so they aren’t unintended and the “decider” isn’t running around saying “oops.”
As you listen to the politicians this cycle, keep in mind what would be the unintended consequences of implementing what they say:
- What would be the social impact, and transfer of wealth, from suddenly forgiving all student loans?
- What would be the consequences on trade, and jobs, of not supporting historical government trade agreements?
- What would be the consequences on national security of not supporting historically allied governments?
- What would be the long-term consequence not allowing visitors based on race, religion or sexual orientation?
- What would be the consequence of not repaying the government’s bonds?
- What would be the long-term impact on economic growth of higher regulations on banks – that already have seen dramatic increases in regulation slowing the recovery?
- What would be the long-term consequences on food production, housing and lifestyles of failing to address global warming?
Business leaders should follow the same practice. Every time a decision is necessary, is the best effort made to obtain all the information you could on the topic? Do you obtain input from your detractors, as well as admirers? Do you think through not only what is popular, but what will happen months into the future? Do you consider the potential reaction by your customers? Employees? Suppliers? Competitors?
There are very few “perfect decisions.” All decisions have consequences. Often, there is a trade-off between the good outcomes, and the bad outcomes. But the key is to know them all, and balance the interests and outcomes. Consider the consequences, good and bad, and plan for them. Only by doing that can you avoid later saying “oops.”
by Adam Hartung | Dec 10, 2012 | Current Affairs, Defend & Extend, In the Whirlpool, Leadership, Lifecycle, Television
Remember when almost everyone read a daily newspaper?
Newspaper readership peaked around 2000. Since then printed media has declined, as readers shifted on-line. Magazines have folded, and newspapers have disappeared, quit printing, dramatically cut page numbers and even more dramatically cut staff.
Amazingly, almost no major print publisher prepared for this, even though the trend was becoming clear in the late 1990s.
Newspapers are no longer a viable business. While industry revenue grew for
almost 2 centuries, it collapsed in a mere decade.
Chart Source: BusinessInsider.com
This market shift created clear winners, and losers. On-line news sites like Marketwatch and HuffingtonPost were clear winners. Losers were traditional newspaper companies such as Tribune Corporation, Gannett, McClatchey, Dow Jones and even the New York Times Company. And investors in these companies either saw their values soar, or practically disintegrate.
In 2012 it is equally clear that television is on the brink of a major transition. Fewer people are content to have their entertainment programmed for them when they can program it themselves on-line. Even though the number of television channels has exploded with pervasive cable access, the time spent watching television is not growing. While simultaneously the amount of time people spend looking at mobile internet displays (tablets, smartphones and laptops) is growing at double digit rates.
Chart Source: Silicone Alley Insider Chart of the Day 12/5/12
It would be easy to act like newspaper defenders and pretend that television as we've known it will not change. But that would be, at best, naive. Just look around at broadband access, the use of mobile devices, the convenience of mobile and the number of people that don't even watch traditional TV any more (especially younger people) and the trend is clear. One-way preprogrammed advertising laden television is not a sustainable business.
So, now is the time to prepare. And change your business to align with impending new realities.
Losers, and winners, will be varied – and not entirely obvious. Firstly, a look at those trying to maintain the status quo, and likely to lose the most.
Giant consumer goods and retail companies benefitted from the domination of television. Only huge companies like P&G, Kraft, GM and Target could afford to lay out billions of dollars for television ads to build, and defend, a brand. But what advantage will they have when TV budgets no longer control brand building? They will become extremely vulnerable to more innovative companies that have better products and move on fast lifecycles. Their size, hierarchy and arcane business practices will lead to huge problems. Imagine a raft of new Hostess Brands experiences.
Even as the trends have started changing these companies have continued pumping billions into the traditional TV networks as they spend to defend their brand position. This has driven up the value of companies like CBS, Comcast (owns NBC) and Disney (owns ABC) over the last 3 years substantially. But don't expect that to last forever. Or even a few more years.
Just like newspaper ad spending fell off a cliff when it was clear the eyeballs were no longer there, expect the same for television ad spending. As giant advertisers find the cost of television harder and harder to justify their outlays will eventually take the kind of cliff dive observed in the chart (above) for newspaper advertising. Already some consumer goods and ad agency executives are alluding to the fact that the rate of return on traditional TV is becoming sketchy.
So far, we've seen little at the companies which own TV networks to demonstrate they are prepared for the floor to fall out of their revenue stream. While some have positions in a few internet production and delivery companies, most are clearly still doing their best to defend & extend the old business – just like newspaper owners did. Just as newspapers never found a way to replace the print ad dollars, these television companies look very much like businesses that have no apparent solution for future growth. I would not want my 401K invested in any major network company.
And there will be winners.
For smaller businesses, there has never been a better time to compete. A company as small as Tesla or Fisker can now create a brand on-line at a fraction of the old cost. And that brand can be as powerful as Ford, and potentially a lot more trendy. There are very low entry barriers for on-line brand building using not only ad words and web page display ads, but also using social media to build loyal followers who use and promote a brand. What was once considered a niche can become well known almost overnight simply by applying the new dynamics of reaching customers on-line, and increasingly via mobile. Look at the success of Toms Shoes.
Zappos and Amazon have shown that with almost no television ads they can create powerhouse retail brands. The new retailers do not compete just on price, but are able to offer selection, availability and customer service at levels unachievable by traditional brick-and-mortar retailers. They can suggest products and prices of things you're likely to need, even before you realize you need them. They can educate better, and faster, than most retail store employees. And they can offer great prices due to less overhead, along with the convenience of shipping the product right into your home.
And as people quit watching preprogrammed TV, where will they go for content? Anybody streaming will have an advantage – so think Netflix (which recently contracted for all the Disney content,) Amazon, Pandora, Spotify and even AOL. But, this will also benefit those companies providing content access such as Apple TV, Google TV, YouTube (owned by Google) to offer content channels and the increasingly omnipresent Facebook will deliver up not only friends, but content — and ads.
As for content creation, the deep pockets of traditional TV production companies will likely disappear along with their ability to control distribution. That means fewer big-budget productions as risk goes up without revenue assurances.
But that means even more ability for newer, smaller companies to create competitive content seeking audiences. Where once a very clever, hard working Seth McFarlane (creator of Family Guy) had to hardscrabble with networks to achieve distribution, and live in fear of a single person controlling his destiny, in the future these creative people will be able to own their content and capture the value directly as they build a direct audience. A phenomenon like George Lucas will be more achievable than ever before as what might look like chaos during transition will migrate to a much more competitive world where audiences, rather than network executives, will decide what content wins – and loses.
So, with due respects to Don McLean, will today be the day TV Died? We will only know in historical context. Nobody predicted newspapers had peaked in 2000, but it was clear the internet was changing news consumption behavior. And we don't know if TV viewership will begin its rapid decline in 2013, or in a couple more years. But the inevitable change is clear – we just don't know exactly when.
So it would be foolish to not think that the industry is going to change dramatically. And the impact on advertising will be even more profound, much more profound, than it was in print. And that will have an even more profound impact on American society – and how business is done.
What are you doing to prepare?
