by Adam Hartung | May 17, 2008 | General, Leadership, Openness
It’s been 32 years since Network emerged from Hollywood to win 4 academy awards be nominated for 6 more. At the time, CBS was #1 in broadcast news, and Walter Cronkite was a fixture on the American landscape. All Americans watched as Walter told us about the shooting of President Kennedy, and as a man first put his foot on the moon. In the late 1970s we all scoffed when Network projected a future in which news would become entertainment, when a "newscaster" could become a ranting lunatic like Howard Beal the "mad profit of the airwaves" (anyone watch Jim Cramer on CNBC lately, or Bill O’Reilly on Fox News), and ratings would be so critical that people would live or die by them.
How little did we know the predictiveness of this film. It wasn’t long before Lawrence Tisch took over CBS, drastically slashed costs in news and put the network focus on ratings over content. What that set in motion is now almost hard to recognize, as 3 decades later U.S. network news is struggling to survive in the internet age. Seperating news from comment, and fact giving from entertainment, has not only allowed "The Daly Show" to be considered news (on The Comedy Channel) but thousands of websites to get into the "news" business. Increasingly, tens of millions of Americans rely on the internet for their news – abandoning newspapers and televion as well.
And now CBS has purchased Cnet (read article here). Paying 4.5 times revenue, and over 100 times earnings. But this may well be a survival issue for modern news reporting. We will never again return to the family all watching an anchor, or even depending upon television to report an election victory or breaking item (as I write this I’ve been updated via the web that within the last 3 hours Senator Kennedy of Massachusetts appears to have suffered a stroke – something network news watchers won’t learn about for another 6 hours). CBS must find a way to evolve or watch as its ability to maintain "news" shrinks into oblivian. The price CBS paid appears high – but what is the right price for survival?
Will this work? History has warned us to be skeptical. When Time Warner of HBO, CNN and other cable TV fame bought AOL it was heralded as a change in the media landscape. But the acquisition made no difference on Time Warner’s future as AOL stopped evolving and both companies found themselves struggling to survive.
For CBS to avoid this fate it must be careful how it treats this acquisition. Firstly, CBS MUST Disrupt the existing CBS organization. Make clear that not only news, but traditional entertainment (such as prime time dramas and sitcoms) is losing audience to the web. More people watch top YouTube flicks than watch most network television programs. The people at CBS from the top all the way to the bottom have to see their Lock-ins to traditional business attacked, and made clear that the future will be very different (much as Mr. Tisch did when he took over the powerful but struggling enterprise so long ago.)
Secondly, CBS must make sure Cnet is managed in White Space. Cnet must be challenged to LEAD CBS by setting high goals and then accomplishing them. CBS must resource Cnet to succeed, operated in White Space, and then work very hard to make sure EVERYONE becomes as familiar with Cnet as we now know about Google (a lofty goal – but the one to shoot for). Traditional CBS must be guided to watch and learn from Cnet. To rapidly adopt what works in this White Space project. CBS must migrate toward the internet-enabled media future, and Cnet must be the guiding group providing insight to what will work. This is a big challenge for Cnet – but it must take on this challenge and be held accountable for results.
CBS is facing big Challenges as media goes through this wrenching change. No longer do newspapers "own" a city and therby its advertisers. No longer do networks – broadcast or cable – have a grip on viewers that virtually forces them to watch ads as well as programming. The web has changed what we can do to be informed and entertained. Google is leading this market change today, followed by Yahoo! and News Corp. Will CBS make it through the challenges? Will CBS remain a viable competitor in the media landscape of 2020? Or will it disappear like a dinosaur overtaken by a shifting environment? It depends on what CBS does with Cnet. Managed right, this could be the most powerful decision the company makes this decade. Managed wrong, and CBS could be something we have to teach in high school history as students discuss the "golden age of TV."
by Adam Hartung | May 9, 2008 | Defend & Extend, General, In the Swamp, Leadership, Lifecycle
Giant insurance company AIG (see chart here) has hit a growth stall. AIG has reported two consecutive quarterly losses, the worst in company history, and worse than the prior year (read article here). This constitutes a growth stall – and implies that the more than 50% of company valuation lost since earlier in this decade will never be recovered. Furthermore, AIG has a less than 7% chance of ever consistenly growing at a mere 2%. On the other hand, AIG has a 55% chance of declining growth and a 38% chance of revenue stagnation.
The telltale signs of this situation have been obvious since 2005 when the company’s CEO was forced out in an accounting scandal. Since then we’ve learned that rather than make money by selling and servicing insurance AIG has tried to Defend & Extend its glorious past by using increasingly complex, poorly understood and dramatically risky loans (they got neck deep in the mortgage mess) as well as relying on risky trading strategies in an effort to prop up a struggling Success Formula. These are the typical tactics of a Locked-in organization sliding into the Swamp. Due to market changes making the old Success Formula produce poorer results management attempts to prop up results with financial machinations and various opportunistic tactics.
We can now see that long ago, probably as early as 2000 when financial services of all kinds were being inextricably changed by internet competition, AIG needed to start changing its Success Formula. But the company relied on its size (a Dow Jones Industrial company) to save itself. Even after replacing the disgraced CEO, and recognizing that various accounting irregularities were hiding accurate results, AIG’s Board of Directors and senior leadership team failed to Disrupt the Lock-ins and implement White Space to develop a new Success Formula which would sustain growth. Now AIG is another "sick puppy" amongst the DJIA Locked-in on doing what it always did even though results are weaker. It’s in good company, joining Wal-Mart, Citigroup, DuPont, GM, McDonald’s, Coca-Cola, Microsoft, Home Depot and Walt Disney as companies that are going nowhere good despite being on the list of 30 "leading" industrial corporations.
by Adam Hartung | May 8, 2008 | Defend & Extend, General, In the Swamp, Leadership, Lock-in
Sara Lee (see chart here) missed its estimates yet again, and the CEO had no shortage of excuses for the poor performance (read article here). Let’s see, since taking over in 2005 the new CEO has made the company smaller by selling businesses for cash, yet hasn’t found any growth markets for investment. So the money’s gone, but no new businesses. She has centralized everything from headquarters to R&D to cut costs, but there has been no improvement in profitability nor new product development. She keeps talking about a turnaround, yet the equity value peaked in 2005 (when she was hired) and since has declined a third – reaching a 5-year low earlier in 2008.
What we see at Sara Lee are lots of excuses, but no real performance improvement. The CEO wants us to keep waiting for her "turnaround plan" to work, but so far – no signs. And if GE, IBM and P&G are "battleships" which are hard to turn, Sara Lee is at best a mere destroyer which should be swift and able to maneuver quickly. So saying its size has been the problem (after 3 years and several business and asset sales) is a misstatement.
I’ve predicted poor performance for Sara Lee ever since the new CEO took over (to much ballyhoo and several interviews including magazine covers). Why? Because her plan has always been to contract and rely on Defend & Extend tactics – in a company where the results clearly indicated that a new Success Formula was needed rather than trying to Defend the old broken one. As a result, every quarter we hear excuses about why she needs only a little more time, and investor patience, to reach the goals she set 3 years ago. This time the blame is all on rising commodity and energy prices. Like Roseanne Rosanadana said on Saturday Night Live over 25 years ago "it’s always something."
While she was intent to cut costs and shrink, the CEO should have been Disrupting the old Lock-ins and implementing White Space to transform the company. Without those actions, Sara Lee will remain a perpetual underperformer. Even though Sara Lee is in suburban Chicago, adopting the Cubs refrain of "wait until next year" is not good business leadership. Sara Lee needs new leadership that will create the opportunity for future success – rather than constantly trying to find past glory with D&E actions that just keep weakening the company and producing below-average performance for investors. If you’re a still an investor in Sara Lee – why? If you’re an employee, are you prepared for the next layoff or eventual take-over that will end your job? If you’re a supplier, have you insured your receivables? No business can make below-average rates of return forever, milking or selling assets to keep the company afloat. And with no signs of Disruption or White Space anywhere on the Sara Lee horizon we can only expect the ongoing demise to continue.
by Adam Hartung | May 5, 2008 | Defend & Extend, General, In the Swamp, Leadership, Lock-in
Microsoft (chart here) announced it is backing out of its offer to buy Yahoo! (read article here). We should all breath a sigh of relief.
Twenty years ago Microsoft was well on its way to taking over the desktop in corporate America – resulting in domination in homes as well. Once Microsoft won, the amount of innovation in desktops declined. As Apple (pre-iPod) fell by the wayside Microsoft became a Locked-in machine Defending & Extending its Success Formula as users had practically no option for not only operating system but the applications – such as desktop worksheets, word processing and presentations – sold by Microsoft. Microsoft developed no internal Disruption mechanisms (save for Mr. Gates’ lone effort to launch IE and turn on Microsoft to the web), nor White Space.
Microsoft’s single minded focus on the desktop meant that it never developed any skill at developing new things. Microsoft’s acquisitions always ended up in the acquirer being swallowed, and usually the people leaving as the technology was marginalized by the "not invented here" mentality inside Microsoft. If Microsoft acquired Yahoo! we can easily predict that within short order Yahoo!’s competitiveness would decline further, making life easier for Google and destroying value for Microsoft’s shareholders. Without a Disruption, Microsoft’s organization would not value Yahoo! and without White Space Yahoo! would soon disappear into the bowels of the Microsoft machine – with so many billions of dollars lost. Microsoft has no idea how to compete for ad sales, nor how to compete in the "Web 2.0" marketplace – and their acquisition of Yahoo!, which in theory might sound good, would have been a disaster leaving the market with even less competition for Google.
Yahoo! got itself into this problem by management trying to Lock-in on a Success Formula and then Defend & Extend it in a dynamic marketplace. Remember when almost all of us opened our web browser to the Yahoo! home page? But leadership frittered their early advantage away by not maintaining Disruptions and not keeping enough White Space alive to prepare for competing with Google. But combining 2 D&E organizations is not the route to success. Rather, it’s like injecting the flu into a cancer patient.
Yahoo! needs to use this Challenges as a wake up call. Leadership needs to internally Disrupt big and fast. Start talking seriously with News Corp. about some kind of relationship to grow, including possibly joint venturing with MySpace.com. Look for anything valuable left in AOL over at Time Warner. Explore new technologies and the emerging Facebooks out there. Yahoo! needs Disruption and lots of White Space, not the closed-minded D&E mentality at Microsoft which would be sure to suck all the potential life out of this struggling competitor.
And Microsoft should start paying dividends. Big ones. Microsoft is generating huge positive cash flow from its near monopoly of the desktop. But since the company won’t Disrupt (Steve Ballmer is the quintessential D&E leader), and it has no idea how to create or manage White Space, give the money to shareholders. Let them find growth opportunities. What Microsoft most needs is new leaders – people who will Disrupt and create real White Space to develop a new future. Microsoft has to overcome the powerful Lock-ins created during the Gates/Ballmer regime if it is to be a powerful competitor in 10 years. But, if the board won’t replace the leadership then at least give the money to shareholders before management fritters it away trying to pretend this is still 1988.
At least we can all breath a sigh of relief that Microsoft (at least not yet) hasn’t thrown away a ton of money on an acquisition they don’t know how to manage, and Yahoo! hasn’t lost its opportunity to evolve to a more competitive Success Formula, and we all aren’t destined to have a monopolistic controller for internet ad buying called Google. That future will leave us with about as much creativity in the Web 2.0 marketplace as we get today out of Microsoft in desktops.
by Adam Hartung | May 2, 2008 | General, Leadership, Lock-in
A colleague was bragging to me today about his company’s 3% growth. "We’re doing great" he said "given this lousy economy." Great? 3%? I looked at him and said "Great is Genpact" (see chart here.) Genpact announced quarterly results yesterday (read press release here). First quarter revenues of $234million were up 33% versus first quarter 2007. Net income of almost $20million was up almost 10X (1,000%) versus last year. Operating margin was up to 15% versus 12.2% last year. Now, that’s growth!
"Genpact?" he asked. I reminded him it was the GE company started in 1997 to do back-office operations. "Oh yeah, that’s the Indian company. That’s not a fair comparison." "You’re right I said, let’s look at what they faced developing their growth:
- The company has no sales in its local country – it is 100% export dependent
- Over 80% of sales are in the "lousy economy" U.S.A.
- The company is located in a country with terrible infrastructure problems – there is no potable water, power outages are common, bad roadways inhibit worker commuting, terrible public transit hurts commuting, the country produces no oil – so it has limits on auto usage – and almost no worker can afford a car
- Most employees cannot obtain visas to visit the country where most sales occur
- The country has one of the greatest poverty rates in the world, and struggles with education, health care and all other poverty-based problems
- It is based in a country with almost no foreign exchange, so it cannot import hardly any components, nor import managers from rich, developed countries
- The government is regulation-happy with controls and limits on practically everything
- Costs are going up faster than revenues – because the U.S. dollar keeps going down in value dropping revenues while the costs of people paid in Indian rupees keeps going up!
It really isn’t a fair comparison. Compared to my friend, he has all the advantages, and Genpact is beleagured with phenomenal problems. For most American’s facing that list of challenges (plus more) they would give up before even starting. Yet, my friend felt 3% growth was "great" – meanwhile Genpact blew the doors off almost every U.S. company last quarter – and certainly its competitors like IBM, CSC, EDS and Accenture.
When we Lock-in, we start making excuses for why we don’t grow. We blame our historical marketplace, or our historical customers, or our historical suppliers, or our historical investments – we blame all our old decisions and then say it’s OK if performance – well – sucks. To grow, to exceed expectations, requires first getting the right mindset. Instead of looking for reasons to explain bad performance the managerial mindset must be "what do I have to do to exceed expectations? What would someone looking to the future do to grow fast and make higher returns?" We have to get out of Defending & Extending our past, and being satisfied with whatever results that D&E behavior produces and instead focus on the future and be willing to do the things necessary to GROW.
Kudos to the leadership at Genpact. Quarter after quarter the company keeps growing and making better returns. If readers don’t know why they are successful, best to study them. It’s not a simple story of "they are in India". Hopefully readers realize that being in India does not create "no-way-to-lose bliss." Business as an Indian company competing offshore is cutthroat and must overcome a multitude of challenges. It’s the skill of Genpact’s management to overcome challenges while staying focused on high-growth opportunities that sets Genpact apart from competitors. The markets where Genpact competes are open to everyone – Genpact is just better at seeing the opportunities earlier, keeping themselves Disrupted to try new things and maintaining White Space to develop new solutions that allows them to keep exceeding expectations.
So the next time you want to talk about your growth – better check results at Genpact before you start bragging. And if you really want to grow, better start setting your own bar much higher and managing for the future. Succeeding is about getting out of the D&E Mindset and following The Phoenix Principle – not being in the right location.
by Adam Hartung | Apr 30, 2008 | General, In the Rapids, Leadership, Lifecycle
A lot has been recently about Rupert Murdoch’s News Corpation’s (see chart here) bid to buy Newsday newspaper in New York (read overview article here.) The officianados in media are worried about concentration of media ownership – as well as the politics of Mr. Murdoch and the implications on journalism.
These are two very different issues. Mr. Murdoch is a far-right conservative, and he makes no bones about his political leanings. Since the days of William Randolph Hearst the politics of newspaper owners has been a hot topic among media elite. But is that the determinant of who should own newspapers? Their politics? If we allow free speach, then no. Whether you like Mr. Murdoch, or not.
What’s brilliant about Mr. Murdoch is his ability to modify News Corp. to meet changing environmental requirements (see News Corp web site here). While Tribune Company is struggling to admit that newspaper circulation and advertising is never going to recover to 1999 levels, News Corp. long ago moved on. News Corp doesn’t rely on newspapers, the founding business, nor television – the media of the 1960s. News Corp is a major player in internet communications owning, among other properties, MySpace.com. This is in addition to book publishing, newspapers, direct broadcast satellite, film, cable TV, and magazines. News Corp actually HAS a strategy that addresses all of media – and its fast paced change – something almost none of its competitors has. This includes AOL Time Warner – the company that hoped to dominate the web by merging traditional news with the high growth AOL that bought Netscape – but failed miserably as the traditionalists took over.
Competitors are right to be fearful of News Corp. Mr. Murdoch is a consummate Disruptor. He’s observing Challenges in the environment and forcing his company to launch White Space allowing News Corp to adapt its Success Formula and remain at the industry’s forefront. Given how people now receive news – all the many channels – his ability to consolidate New York daily print news (including his recent Dow Jones purchase which provides him The Wall Street Journal) is really irrelevant. Dominating New York print is irrelevant in the TV, Cable TV, Satellite TV, internet world. But reaching customers through all of these channels sets News Corp. apart from its competition. While real estate developer Sam Zell is trying to figure out how to maximize sales of the Cubs and Wrigley Field (Tribune properties – as is Newsday), and simultaneously stop floundering performance from his remaining declining print properties, Mr. Murdoch is a decade ahead implementing cross-media platforms to maximize value for readers and advertisers.
Most of the media elite simply are too Locked-in. Their frameworks are based in the 1980s – not 2008. You have to hand it to the competitor that uses Disruption and White Space to define a new future for the industry – and everyone else should be paranoid. Long after we’ve forgotten the newspaper failures, mergers and buyouts News Corp. is quite likely to be providing info to people globally from any media format users desire.
by Adam Hartung | Apr 28, 2008 | Defend & Extend, General, In the Swamp, Leadership
Thirty years ago The Steve Miller Band put out a son "Take the Money and Run" – and that’s exactly what the investors in Wrigley (see chart here) now need to do. Mars has made an offer to purchase Wrigley at a substantial premium, and investors get their money all in cash (read article in Chicago Tribune here and on Marketwatch here). Take it and run.
Wrigley is well known for its chewing gum – a no growth business at best. In 2005 Wrigley acquired the candy business from Kraft, including Altoids and Lifesavers. And it bought a Russian chocolate company. One would have hoped these acquisitions would have sparked White Space and growth for Wrigley – but the results have been nothing more than the sum of the parts. No internal Disruptions happened, no White Space developed and nothing new happened.
New things can happen in the sweets business. Do you remember in 1982-1985 when we Mrs. Field’s Cookies came along? Suddenly, cookies became a hot item and we paid lots more than before as we switched to cookies from many other sweets. But the good folks at Wrigley really didn’t push for more innovation, and nothing substantially new came out of these acquisitions. And Mars, the acquirer of Wrigley has done nothing exciting for several decades – practically since inventing M&Ms. And they have no plans for Disrupting or creating White Space with the Wrigley acquisition. All the analysts quoted in the articles talk about "industry consolidation" as the future road – with Cadbury selling its go-nowhere soft drinks business to buy Hershey, for example. Ho Hum. Who cares?
But, a smart reader may say, what about Warren Buffet buying into this deal (see Berkshire Hathaway chart here)? Isn’t he the savviest investor alive? Don’t be fooled by his personal sweet tooth, or the notion that he thinks gum is exciting. With the debt market collapsing beneath us due to the financial crisis, Mr. Buffet was able to do what banks used to do but now won’t – and that is make a $4B loan to finance the acquisition. For this he will gets the backing of Mars, and a premium rate of return taking advantage of a breakdown in the market. Second, he negotiated to acquire $2.1B of equity AT BELOW THE PRICE BEING GIVEN INVESTORS – meaning he has a guaranteed positive rate of return on his equity holding. He could be financing cow pie collection for all the difference the underlying business matters. Berkshire Hathaway just made a financial deal that none of us could do – and for returns none of us (nor even banks) could get. Yes Mr. Buffet is savvy. But not because he likes Wrigley. Rather, because he knows a great guaranteed return when he sees one.
For us mere mortals, limited to buying traditional stocks, take the money and run. Don’t buy Mars. Be glad you’re getting this windfall, and find something with substantial growth to invest in.
by Adam Hartung | Apr 25, 2008 | Defend & Extend, General, In the Swamp, Leadership, Lock-in
This week a dozen high school seniors pulled a prank at their public high school in Zion, IL (read about the prank, with video, on Chicago NBC5 news website here). Apparently the boys thought up the idea of having 1 boy dress up like a gorilla, then the others dress up like bananas, and the gorilla would chase the bananas down the hallways and into the yard. A 4 minute prank. They weren’t very secretive about their prank, letting lots of fellow students as well as teachers in on it. And they even got their parents involved, having them call the boys home so they could change into the costumes during the school day. No one was hurt, no one injured, just a comical prank. There wasn’t even anything about the prank that anyone could think of that would have made it potentially dangerous – it was well planned to be just what it was and no more.
The boys have now been given a 7 day suspension by the administration. Right. Seven days of no school, no education. Let’s see, we take a few hundred 15-18 year old kids and put them into a closed environment. What are the odds they might think up something rambunctious to do? What are the odds they would try to express their personalities in non-traditional ways? What are the odds they would like to create some laughs, and possibly be remembered for a comical stunt? Could we expect this kind of thing to happen?
Of course. Watch movies going all the way back to silent days and you’ll find scene after scene of high school and college boys running pranks. Remember when the students opened the floor over the swimming pool during the dance in "It’s a Wonderful Life"? And remember how the top administrator, after hollering for about 1 minute for everyone to stop, held his nose and jumped into the pool himself? Seems like people have expected this behavior, and learned to accept it, for decades. It was part of "the rights of passage" that is American growing up. Harmless pranks are part of what happens, and for years good administrators learned to accept it, slap the hands of miscreants, and simply move on. It let young people behave improperly before they got too stressed, or too old to act-out inappropriately.
But not today. Now, even the slightest outside the box behavior leads to actions which can destroy a students GPA, restrict their extra-curricular participation and their efforts to move ahead. Straight A students that right fictional stories about guns -the fodder of many best selling mysteries – are expelled for discussing "taboo topics" in an educational setting (a recent experience in Mundelien, IL). In the Zion case, the administration threw the book at these boys because they violated so many rules. Let’s see, how critical were those violated rules – did they carry a gun, or knife, or dangerous object (no). Did they shout profanity and make threats (no). Did they attack anyone, or block the passage of any students or teachers (no). Did they threaten the authority of any teacher, administratory or security personnel (no.) No, they were suspended for 7 days for (a) wearing a costume to school (b) wearing a mask (c) disrupting the day. And the Superintendent was unapologetic on film saying "We’re basically enforcing our policy."
Right. And we wonder why our children are less accepting of authorities. Why they act as if schools are where "all the bad things happen." Children caught fighting in Zion’s school only get suspended for 5 days. But to expect a school administrator to act like a school is a place to learn – not only about geometry but about life – is expecting too much today. So they end up sending message such as this – that a simple prank is worse than an outright fistfight – or copying another students homework (not even a suspension, only a loss of grade). That the administrator appears arbitrary and completely unable to link the punishment to the nature of the violation is completely lost in the Lock-in to school rules. Rules which should be set by parents in the community – but are now set by administrators who have become wildly out of touch with their students needs in a global labor marketplace.
America relies on innovation and creativity to be competitive. The kind of creative innovation show often exhibited in pranks. We like pranks because they show us that someone has the ability to think outside the box, and we know that ability is often key to achieving success. But our schools no longer encourage, or even tolerate, creativity or innovation. Public school administrator Lock-in has eliminated that capacity – and made our schools second rate and far from providing students the most critical skills -including learning how to think rather than merely recite. Until we change the leaders, the American public school system is destined to continue its downward spiral. And the current leaders will never understand the need to change – because they are simply too Locked-in to consider any options, any Disruptions, or any White Space at all.
(PS – Don’t miss the comments on the NBC5 news link. You’ll find them overwhelmingly opposed to the school’s decision. Yet, we can be sure the school will pay no attention to these comments. Locked-in leaders never feel the need to listen to anyone outside their organization.)
by Adam Hartung | Apr 23, 2008 | Defend & Extend, General, In the Swamp, Leadership, Lifecycle, Lock-in
There’s a phrase used by stock brokers – "Don’t try to catch a falling javelin." They use this to describe a stock that has fallen recently – often a lot. Clients will ask "XY company stock has dropped Z percent, has it beome a good buy?" Brokers will warn the client that trying to catch that falling stock is not a safe way to invest your money.
This actually makes a lot of sense. Just look at Starbucks (see chart here). A high flyer, and a real Phoenix Principle company for many years, it created tremendous value for investors, employees and suppliers while creating many happy customers. There was lots of Disruption, and White Space galore as the company prepared for slowing sales. But in the last year the old CEO returned – and he’s doing exactly the opposite of what the company needs. As a result value has fallen – like a javelin – and there’s really no guessing how far down it will go.
This afternoon saw a rash of reports that Starbucks’ earnings are going to decline – not just miss expectations but actually decline – for the recent quarter and for the entire 2008 year versus 2007 (read Reuters’ release here). Even worse, same store sales have declined – meaning less is being sold in each store than last year. Starbucks has hit a growth stall, and that bodes very, very poorly for the company.
CEO Schultz is already making a rash of excuses for lousy performance – even blaming lower sales on lower home prices and a generally weak economy (read quotes here.) Even though it is leadership’s job to keep the company growing, especially when slowing sales are as easily predicted as this case. While making excuses, he’s shutting at least 100 stores and pulling products out of remaining ones – like the warm breakfast sandwiches. Let’s see, sales are down – so we’re going to remove products from the shelf. Right, that’s the ticket!
We don’t care if customers go into Starbucks to buy a coffee, latte, sandwich, muffin, coffee mug, coffee pot, CD, DVD, beans, glasses or MP3 download! What customers buy doesn’t matter – it just matters that we keep getting them into the store spending money! And that’s what the last CEO focused on. Creating new ways for Starbucks to make revenues and profits out of the existing footprint – while looking for new footprints in entertainment, grocery and liquor! Yet, when the old CEO returned he couldn’t wait to enforce his old Success Formula on the company – 25 years later – as if the world had never changed and Starbucks was again a 30 unit franchise. The repetitive Defend & Extend practices that worked to grow Starbucks 15 years ago are not what is now needed to keep it growing today. Starbucks was a flying javelin, but under Mr. Schultz it’s falling out of the sky very fast indeed. Investors had better run for safety!
by Adam Hartung | Apr 22, 2008 | Defend & Extend, General, Lock-in, Openness
Educational systems get a lot of attention all over the world. For years Americans thought their educational system was the world standard. America was early in offering an education free to all citizens. And Americans quickly got to the top of world charts with its percentage of high school graduates. But that was all long ago – back in the 1950s.
Since then almost every developed country has exceeded America’s educational system. Today America is known for its graduate schools. There is little doubt that if you want a master’s or Ph.D. you will get a good program at a good price in America. Same is true for professional degrees, like law, medicine or an MBA. But below that? But from kindergarten through high school, we are no longer even competitive with other countries like Japan, Taiwan, Germany and the U.K. (just a short starter list).
Most Americans know this. It is the lead every year once or twice in the major newspapers. So Americans usually step up to vote bonds for more school buildings and equipment. And they pay the highest property taxes on the globe to cover operating costs like teacher salaries. While not the best, America’s is BY FAR the most expensive educational system on the planet. Yet, year after year America’s basic educational system falls farther behind competitively.
Today many of America’s best college admits are home schooled – they don’t go to a public school at all! Long considered an approach only used by religious extremists, home schooling the last 20 years has started to show dramatic results. This week the top high school applicant in Illinois (which includes the huge Chicago area) was a home schooled girl (read article here). She was accepted to Harvard, Yale, Princeton, Stanford, Northwester, etc.,etc. And in the last winter Olympics we learned America’s best shot at medaling was from a home schooled young male.
Again and again we are seeing people who do better on exams, are more emotionally balanced, have better self-images and are better equipped for life are home schooled. Heaven help me for saying this. My past-on father was a lifetime educator, as was his sister, as was my oldest sister and her husband. I’ve lived around educators all my life – and we all believed in public education. But today, students are increasingly miserable and under-educated in the American system. Drug use is high, absenteeism is high, extra-curricular participation is down, students are losing all their liberties to draconian security measures, and yet shootings are surprisingly common.
The problem lies in management. It’s hard to find a more Locked-in administrator than the one in your local school. Years ago we turned over the reigns of our schools to these administrators in the belief that professional management would be better than all the involvement which used to come from parents. And those professionals rapidly Locked-in a system for education, from curriculum to hours of teaching to accreditation for schools and teachers, that has served the administration well – and no one else.
I’ve had many discussions with the leaders at the nationally ranked and 4,000 student high school my sons attend. And the one thing that has always been consistent is they don’t care what I, or any other parent, or anyone else has to say. These administrators have no White Space in these schools to practice alternative educational techniques. And they don’t want any. NO DISRUPTIONS could be printed on a banner in the main hallway, since these managers have no tolerance for anyone doing anything that isn’t a defense or extension of the existing system. Results are immaterial to these administrators – all that matters is remaining Locked-in to past practices.
Talking to many school administrators the last 20 years, my impression is they have more in common with Korean dictator Kim Sung Il than early educational founders Plato, Socrates or Aristotle (those philosophers who were threatened with stoning for being teachers, yet laid the foundation for the inquisitive system of education we most value in graduate schools today). Their schools are dispassionate corridors of non-thinking supplication. Students, teachers and parents are not listened to, only disparaged if they disagree with these administrative stalwarts clearly happy to be Status Quo Police. The road to more money in education is via administration or seniority, and that route is only followed by pledging to never experiment, never do anything new and never actually open the doors to inquisitive thought and open-minded discussion.
It is hard for most parents to think that they could educate their children at home as well as they are taught at school. Yet, fledgling data (often anecdotal, admittedly) is that home schooling and alternative education is proving to be far more productive and valuable than the near-prison like conditions run by the modern wardens of thought we call principles, vice-principles and deans in the vast majority of our public schools. And we should not be surprised, because it is in these alternative and home schools that the educational process is Disruptive – like Socrates asking impossible questions of his students – and White Space is allowed where THINKING is more important than FOLLOWING RULES.
For young parents today, it should not be an automatic action to enroll their children in the local public or parochial (accredited but not public) school. If you want your child to be the next leader, someone needs to bring out the best in that child – and use the best available educational tools in new and possibly unique ways. And that is not going to happen in these Locked-in environments. American children are being set-up to fail when competing with better educated children from foreign countires once they enter universities which are increasingly filled with students from these other lands. It’s time parents get outside their box of traditional behavior and think about how their children can actually become competitive with children globally. There is no more important decision worthy of White Space than the education of our country’s youth.
