Innovation Matters; or Why You Care More About Apple than Kraft

Apple is launching the iPhone 5, and the market cap is hitting record highs.  No wonder, what with pre-orders on the Apple site selling out in an hour, and over 2 million units being presold in the first 24 hours after announcement. 

We care a lot about Apple, largely because the company has made us all so productive.  Instead of chained to PCs with their weight and processor-centric architecture (not to mention problems crashing and corrupting files) while simultaneously carrying limited function cell phones, we all now feel easily interconnected 24×7 from lightweight, always-on smart devices.  We feel more productive as we access our work colleagues, work tools, social media or favorite internet sites with ease.  We are entertained by music, videos and games at our leisure.  And we enjoy the benefits of rapid problem solving – everything from navigation to time management and enterprise demands – with easy to use apps utilizing cloud-based data.

In short, what was a tired, nearly bankrupt Macintosh company has become the leading marketer of innovation that makes our lives remarkably better.  So we care – a lot – about the products Apple offers, how it sells them and how much they cost.  We want to know how we can apply them to solve even more problems for ourselves, colleagues, customers and suppliers.

Amidst all this hoopla, as you figure out how fast you can buy an iPhone 5 and what to do with your older phone, you very likely forgot that Kraft will be splitting itself into 2 parts in about 2 weeks (October 1).  And, most likely, you don't really care. 

And you can't imagine why I would even compare Kraft with Apple.

Kraft was once an innovation leader.  Velveeta, a much maligned product today, gave Americans a fast, easy solution to cheese sauces that were difficult to make.  Instant Mac & Cheese was a meal-in-a-box for people on the run, and at a low budget.  Cheeze Whiz offered a ready-to-eat spread for canape's.  Individually wrapped American cheese slices solved the problem of sticky product for homemakers putting together lunch sandwiches for school children.  Miracle Whip added spice to boring sandwiches.  Philadelphia brand cream cheese was a tasty, less fattening alternative to butter while also a great product for sauces. 

But, the world changed and these innovations have grown a lot less interesting.  Frozen food replaced homemade sauces and boxed solutions.  Simultaneously, cooking skills improved.  Better options for appetizers emerged than stuffed celery or something on a cracker.  School lunches changed, and sandwich alternatives flourished.  Across Kraft's product lines, demand changed as new technologies were developed that better fit customers' needs leading to revenue stagnation, margin erosion and an increasing irrelevancy of Kraft in the marketplace – despite its enormous size.

Apple turned itself around by focusing on innovation, becoming the most valuable American publicly traded company.  Kraft eschewed innovation for cost cutting, doing more of the same trying to defend its "core," leaving investors with virtually no returns.  Meanwhile thousands of Kraft employees have lost their jobs, even though revenues per employee at Kraft are 1/6th those at Apple.   And supplier margins are a never-ending cycle of forced reductions as Kraft tries to capture their margin for itself.

AAPL v KFT 9-2012
Chart Source:  Yahoo Finance 18 September, 2012

Apple's value went up because it's revenues went up.  In 2007 Apple had #24B in revenues, while Kraft was 150% bigger at $37B.  Ending 2011 Apple's revenues, all from organic growth, were up 4x (400%) at $108B.  But Kraft's 2011 revenues were only $54B, including roughly $10B of purchased revenues from its Cadbury acquisition, meaning comparative Kraft revenues were $44B; a growth of (ho-hum) 3.5%/year. 

Lacking innovation Kraft could not grow the topline, and simply could not grow its value.  And paying a premium price for someone else's revenues has led to…. splitting the company in 2 in only 2 years, mystifying everyone as to what sort of strategy the company ever had to grow!

But Kraft's new CEO is not deterred.  In an Ad Age interview he promised to ramp up advertising while slashing more jobs to cut costs.  As if somehow advertising Velveeta, Miracle Whip, Philadelphia and Mac & Cheese will reverse 30 years of market trends toward different products which better serve customer needs!

Apple spends nearly nothing on advertising.  But it does spend on innovation.  Innovation adds value.  Advertising aging products that solve no new needs does not.

Unfortunately for employees, suppliers and shareholders we can expect Kraft to end up just like Hostess Brands, owner of Wonder Bread and Twinkies, which recently filed bankruptcy due to 40 years of sticking to its core business as the market shifted.  Industry leaders know this, as they announced this week they are using Kraft's split to remove the company from the Dow Jones Industrial Average

Companies that innovate change markets and reap the rewards.  By delivering on trends they excite customers who flock to their solutions. Companies that focus on defending and extending their past, especially in times of market shifts, end up failing. Failure may not happen overnight, but it is inevitable. 

Baffle ’em with Bulls**t – Forget Kraft


"If you can't dazzle 'em with brilliance – Baffle 'em with Bulls**t" – W. C. Fields

Just 18 months ago Kraft CEO Irene Rosenfeld was working very hard to convince investors she needed to grow Kraft with a $19B acquisition of Cadbury.  This was after her expensive acquisition of Lu Biscuits from Danone. Part of her justification for the massive expenditure was an out-of-date industrial manufacturing adage, "Scale is a source of great competitive advantage. " How these acquisitions provided scale advantage was never explained.

Now she wants to convince investors Kraft needs to be split into two companies, saying the acquisition trail has left her with "different portfolios."  (Quotes from the Wall Street Journal, "Activists Pressed for Kraft Spinoff") For some reason, scale is now less important than portfolio focus.  And the scale advantages that justified the acquisition premiums are now – unimportant?

If Ms. Rosenfeld was a politician, she might be accused of being a "flip-flopper." Remember John Kerry?

Ms. Rosenfeld would like to break Kraft into 2 parts.  Some brands would be in a new "grocery," or "domestic" business (Oscar Mayer, Cool Whip, Maxwell House, Jell-O, Philadelphia Cream Cheese, Kool Aid, Miracle Whip is a partial list.)  The rest of the company would be a "snack" or "international" business.  Although the latter would still include the North American snacks and confectionary brands.  (More detail in the Wall Street Journal "Kraft: Breaking Down the Breakup.")

We will ignore the obvious questions about why the acquisitions if your strategy was to split up the company.  Instead, looking forward, the critical questions to have answered would be "How will this break-up help Kraft grow? And what is the benefit for investors, employees and shareholders of this massive, and costly, change?" 

Kraft was split off from Altria at the end of 2006, with Ms. Rosenfeld at the helm.  At its rebirth, Kraft became a Dow Jones Industrial member.  Rich in revenues and resources, at the time, Kraft was valued at about $35/share.  Now, 5 years and all the M&A machinations later, Kraft is valued (with optimism about the breakup value) at about $35/share!  Between the two dates the company's value was almost always lower.  So investors have gained nothing for their 5 years of waiting for Ms. Rosenfeld to "transform" Kraft.

The big winners at Kraft have been their investment bankers.  They received enormous multi-million dollar fees for helping Ms. Rosenfeld buy and sell businesses.  And they will receive massive additional fees if the company is split in two.  In fact, given her focus on M&A as opposed to actually growing Kraft, one could well assess Ms. Rosenfeld's tenure as more investment banker than Chief Executive Officer.  She didn't really do anything to improve Kraft.  She just moved around the pieces, and swapped some.

Kraft has had no growth, other than from the expensive purchased acquisition revenues.  Despite its massive $50B revenue stream, what new innovation – what exciting new product – can you recall Kraft introducing?  Go ahead, take your time.  We can wait. 

What's that – you can't think of any.  Nor can anybody else. 

In Kraft's historical businesses, volume declined 1.5% over the last couple of years.  The company has been shrinking.  According to Crain's Chicago Business in "Kraft's Rosenfeld's About Face Spurred by Dwindling Options," the only reason revenues grew in the base business was due to rising commodity prices, which were passed along, with a premium added, in retail price increases to consumers!  A business doesn't have a sparkling future when it keeps selling less, and raising prices, on products that consumers largely could care less about. 

When was the last time you asked for a Velveeta sandwich?  Interestly, Tang now seems to have outlived even NASA and the American space program.  Have you enjoyed that sugar-laden breakfast delight lately?  Or when did you last look for that special opportunity to use artificial ice-cream (Cool Whip) in your desert?

BusinessInsider.com tried valiantly to make the case "The Kraft Foods Split is the Grand Finale of an Epic Transformation." But as the author takes readers through the myriad re-organizations, in the end we realize that all these changes did nothing to actually improve the business – and managed to tick off Kraft's largest investor, Warren Buffet of Berkshire Hathaway, who has been selling shares!

The argument that Kraft has 2 portfolios as a justification for splitting the company makes no sense.  Every investor is taught to have a wide portfolio in order to maximize returns at lowest risk.  That Kraft has multiple product lines is a benefit to investors, not a negative! 

Unless the leaders have no idea how to use the resources from these businesses to innovate, and bring out new products building on market trends and creating growth!  And that's the one thing most lacking at Kraft.  It's not a portfolio issue – it's a complete lack of innovation issue! As Burt Flickingerof Strategic Resources Group pointed out, Kraft has been losing .5% to 1% market share every year for the last decade in its "core" business, and he understatedly commente that Kraft has "very little innovation."

Markets have shifted dramatically the last 5 years, and food is no exception.  People want fewer carbs, and fewer fats.  They want easily prepared foods, but without additives like sugar (or high fructose corn syrup,) salt and oil that have negative long-term health implications for blood pressure, heart disease and diabetes.  Also, they don't want hidden calories that make ease of preparation a trade-off with their wastelines!  Further, most families have changed from the traditional 3 times per day standard meals to more grazing habits, and from large portions to smaller portions with greater variety. 

But Kraft addressed none of these shifts with new products.  Instead, it kept pouring advertising dollars into the traditional foodstuffs, even as these were finding less and less fit with 2011 dietary needs – or consumer interest! When the most exciting thing anyone can say about a Kraft launch the last 5 years was the re-orientation of the Triscuit line (did you catch that, or did you somehow miss it?) then it's pretty clear innovation has been on the back burner.  Or maybe stuck in the shelf with the Cheez Whiz.

It is clear that Ms. Rosenfeld offered no brilliance as Kraft's leader.  Uninspiring to consumers, investors and employees.  She made very expensive acquisitions to create the illusion of revenue growth; financial machinations that hid declines in the traditional business which suffered from no innovation investment. After all that money was thrown around, and facing very little prospect of any growth, it was time for the biggest baffling bulls**t of all – split the company up so nobody can trace the value destruction!

Andrew Lazar at Barclay's Capital Plc gave a pretty good insight in another Crain's Chicago Business article ("Kraft Jettisons U. S. Brands so Global Snack Biz Can Fly Higher.")  He said Kraft (aka Ms. Rosenfeld) is "Taking action before it ever has to potentially disappoint investors in a struggle to reach overly optimistic sales growth targets."

Yes, I think Mr. Fields had it pretty right when it comes to describing the leadership of Ms. Rosenfeld and her team at Kraft.  They have been unable to dazzle us with any brilliance.  The question is whether we'll be foolish enough to let them baffle us with their ongoing bulls**t.   What Kraft needs is not a break-up.  What Kraft needs is new leadership that understands how to move beyond the past, tie investments to market needs, and start Kraft growing again!! 

This week most people don't really care about Kraft.  After the U.S. debt ceiling "crisis," followed by the Friday night announcement of the U.S. debt downgrade, the news has been dominated by mostly economic, rather than company, items.  The collapse of the DJIA has been a lot more important than a non-value-adding split-up of a single component.  And that is unfortunate, because the leadership of Kraft have been playing chess games with company pieces, rather than actually doing what it takes to help a company grow.  With the right leadership, Kraft could be creating the jobs everyone so desperately wants.

Look for Disruption, not Consistency, to Find Superior Returns – Kraft v Groupon


Summary:

  • Business leaders like consistency
  • Consistency leads to repetition, sameness, and lower rates of return
  • Kraft's product lines are consistent, but without growth
  • Kraft's value has been stagnant for 10 years
  • Disruptive competitors make higher rates of return, and grow
  • Disruptive competitors have higher valuations – just look at Groupon

"Needless consistency is the hobgoblin of small minds" – Ralph Waldo Emerson

That was my first thought when I read the MediaPost.com Marketing Daily article "Kraft Mac & Cheese Gets New, Unified Look." Whether this 80-something year old brand has a "unified" look is wholly uninteresting.  I don't care if all varieties have the same picture – and if they do it doesn't make me want to eat more powdered cheese and curved noodles. 

In fact, I'm not at all interested in anything about this product line.  It is kind of amusing, in an historical way, to note that people (largely children) still eat the stuff which fueled my no-cash college years (much like ramen noodles does for today's college kids.)  While there's nothing I particularly dislike about the product, as an investor or marketer there's nothing really to like about it either.  Pasta products always do better in a recession, as people look for cheaper belly-fillers (especially for the kid,) so that more is being sold the last couple of years doesn't tell me anything I would not have guessed on my own.  That the entire category has grown to only $800M revenue across this 8 decade period only shows that it's a relatively small business with no excitement!  Once people feel their finances are on firm footing sales will soon taper off.

Kraft's Mac & Cheese is emblematic of management teams that lock-in on defending and extending old businesses – even though the lack of growth leaves them struggling to grow cash flow and create a decent valuation.  Introducing multiple varieties of this product has not produced growth that even matched inflation across the years.  Primarily, marketing programs have been designed to try keeping existing customers from buying something else.  This most recent Kraft program is designed to encourage adults to try a product they gave up eating many years ago.  This is, at best, "foxhole" marketing.  Spending money largely just to keep the brand from going away, rather than really expecting any growth.  Truly, does anyone think this kind of spending will generate a billion dollar product line in 2011 – or even 2012?

What's wrong with defensive marketing, creating consistency across the product line – across the brand – and across history?  It doesn't produce high rates of return.  There are lots of pasta products, even lots of brands of mac & cheese.  While Kraft's product surely produces a positive margin, multiple competitors and lack of growth means increased spending over time merely leaves the brand producing a marginal rate of return. Incremental ad spending doesn't generate real growth, just a hope of not losing ground.  We know people aren't flocking to the store to buy more of the product.  New customers aren't being identified, and short-term growth in revenues does not yield the kinds of returns that would enhance valuation and make the world a better place for investors – or employees.

While Kraft is trying to create headlines with more spending in a very tired product, across town in Chicago Groupon has created a $500M revenue business in just 2 years!  And new reports from the failed acquisition attempt by Google indicate revenues are likely to reach $2B in 2011 (CNNMoney.com, Fortune, "Google's Groupon Groping Reveals the Shifting Power of the Web World.")  Where's Kraft in this kind of growth market?  After all, coupons for Kraft products have been in mailers and Sunday inserts for 50 years.  Why isn't Kraft putting money into a real growth business, which is producing enormous value while cash flow grows in multiples?  While Groupon has created somewhere around $6B of value in 2 years, Kraft's value has only gone sideways for the last decade (chart at Marketwatch.com.)

Kraft has not introduced a new product since — well — DiGiorno.  And that's been more than a decade.  While the company has big revenues – so did General Motors.  The longer a company plays defense, regardless of size, trying to extend its outdated products (and business model) the riskier that business becomes.  While big revenues appear to offer some kind of security, we all know that's not true.  Not only does competition drive down margins in these older businesses, but newer products make it harder and harder for the old products to compete at all.  Eventually, the effort to maintain historical consistency simply allows competitors to completely steal the business away with new products, creating a big revenue drop, or producing such low returns that failure is inevitable.

Lots of business people like consistency.  They like consistency in how the brand is executed, or how products are aligned.  They like consistency in the technology base, or production capabilities.  They like consistency in customers, and markets.  They like being consistent with company history – doing what "made the company famous."  They like the similarity of doing something again, and again, hoping that consistency will produce good returns. 

But consistency is the hobgoblin of small minds.  And those who are more clever find ways to change the game.  Xerox figured out how to let everyone be a one-button printer, and killed the small printing press manufacturers.  HP's desktop printers knocked the growth out of Xerox.  Google figured out a better way to find information, and place ads, just about killing newspapers (and magazines.)  Apple found a better way to use mobile minutes, taking a big bite out of cell phone manufacturers. Amazon found a better way to sell things, killing off bookstores and putting a world of hurt on many retailers.  Netflix found a better way of distributing DVDs and digital movies, sending Blockbuster to bankruptcy.  Infosys and Tata found a better way of doing IT services, wiping out PWC and nearly EDS.  Hulu (and soon Netflix, Google and Apple) has found a better way of delivering television programming, killing the growth in cable TV.  Groupon is finding a better way of delivering coupons, creating huge concerns for direct mail companies.  Now tablet makers (like Apple) are demonstrating a better way of working remotely, sending shivers of worry down the valuation of Microsoft. These companies, failed or in jeapardy, were very consistent.

Those who create disruptions show again and again that they can generate growth and above average returns, even in a recession.  While those who keep trying to defend and extend their old business are letting consistency drive their behavior – leading to intense competition, genericization, and lower rates of return.  Maybe Kraft should spend more money looking for the next food we would all like, rather than consistently trying to convince us we want more Mac & Cheese (or Velveeta).

What are you supposed to do about shifting markets – Tribune and P&G

"TribCo Papers Will Try Ditching AP to Cut Costs" is the Crain's Chicago Business headline.  Tribune is in bankruptcy because it  is losing so much money trying to sell newspaper ads.  Subscribers are disappearing as more people get more news from the internet, so advertisers are following them.  So what should Tribune Corporation do?  You might think the company would focus on other businesses in order to go where customers are headed. 

But instead Tribune has decided to stop buying AP content for it's newspapers in a one week test.  Not sure what they are testing, as one week rarely changes a subscriber base.  What they know is that AP content has a cost, and Tribune is so broke it can't afford that cost.  Seems Tribune is redefining its business – to selling papers rather than newspapers.  They've dropped much of their content the last 2 years, so now they are going to drop the news as well.  This is an example of trying as hard as they can to keep the old business alive, even after it's clear that Success Formula simply won't make money.  In this case, we're seeing management ready to throw the baby out with the bathwater trying to keep a hold on the tub.

Interestingly "Vivek Shah Leaving Time Inc. to Go 100% Digital" is the MediaPost.com headline.  Mr. Shah headed the digital part of Time, and he's decided to throw in the towel personally, promising that he is going to a 100% digital operation.  He's tired of guys who think ink trying to manage bits – and doing it poorly.  So another option for dealing with market shifts is to Disrupt your personal Success Formula by going to an employer positioned in growing markets.  Not a bad idea if you can arrange it – even though there are lots of risks to changing employers.  While the risk of change may seem great, the probability of ending up unemployed because your company fails is a very likely risk if you work for a traditional publisher these daysWe often are afraid to go to the next thing because we hope that things will get better where we are.  Even when we're standing on a the edge of an active volcano.

"P&G Considers Booting Some Brands" as headlined in the Wall Street Journal is yet another alternative.  This one is more like GE used in the past where it sold underperforming businesses in order to invest in new ones.  This has a lot of merit, and really makes a lot of sense for P&G.  P&G is desperately short of any real innovation, and has been going downmarket to poorer products at lower prices in its effort to maintain revenues.  A strategy that cannot withstand the onslaught of time and competitors with new products and better solutions.

I don't know if the new CEO is really serious about changing the P&G Success Formula or not.  He hasn't demonstrated that he has any future scenarios for a different sort of P&G.  Nor has he talked a lot about competitors and how he hopes to remain in front of companies with new solutions.  Nor has he offered to Disrupt P&G's very staid organization or its very old Success Formula – which is suffering from lower returns as ad spending has less impact and younger people show less interest in old brands.  So there's a lot of reason to think his buy and sell approach to shifting with markets may not really happen.

What's most important to watch are P&G's business sales.  Any big company can make acquisitions to create artificial growth.  That's easy.  But it doesn't signal any sort of change in the company.  What does signal are the kinds of businesses sold.  McDonald's sold Chipotle's to invest in more McDonald's stores – that's defend & extend.  Kraft sold Altoids and other growth businesses to invest in advertising for Velveeta and "core brands" – that's defend & extend.  If P&G sells growth businesses – theres' little to like about P&G.  But if the company sells old brands that have big revenues and little growth – like GE has done many times – then you have something to pay attention to.  Selling off the "underperformers" that some hedge fund wants (like the guys that bought Chrysler from Daimler) so you get the money to invest in growth businesses can be very exciting.

When markets shift you have to go where the customers are headed.  If your employer won't go there, you should consider changing employers.  It's not about loyalty, it's about surviving by being where customers are.  But what's best is if you can convert your business to one that is oriented on growth. Shake up the old Success Formula by attacking Lock-ins and setting up White Space and you'll remain a company where people want to work – and customers want to buy.

Call to Action – Why we have to change

"Deeper Recession Than We Thought" is the Marketwatch headline.  As government data reporters often do, today they revised the economic numbers for 2008.  We now know the start to this recession was twice as bad as reported.  The 3.9% decline was the worst economic performance since the Great Depression of the 1930s.  The consumer spending decline was the worst since 1951 (58 years – a very low percentage of those employed today were even born then.)  Business investment dropped a full 20%.  Residential investment dropped 27%.  Stark numbers.

How did business people react?  Exactly as they were trained to react.  They cut costs.  Layed people off.  Dropped new products.  Stopped R&D and product development.  They quit doing things.  What's the impact?  The decline slows, but it continues.  Just like growth begets growth, cutting begets more decline. 

Then really interesting bad things happen

"ComEd loses customers for first time in 56 years" is the Crain's headline.  There are 17,000 fewer locations buying electricity in the greater Chicago area than there were a year ago.  That is amazing.  When you see new homes being built, and new commercial buildings, the very notion that the number of electricity customers contracted is hard to fathom.  People aren't even keeping the lights on any more.  They've gone away.

In the old days we said "go west."  But that hasn't been the case.  Everyone remembers the dot.com bust ending the 1990s.  "Silicon Valley Unemployment Skyrockets" is the Silican Alley Insider lead.  Today unemployment in silicon valley is the highest on record – even higher than the dot bust days.  When even tech jobs are at a nadir, it's clear something is very different this time

The old approaches to dealing with a recession aren't working.  While optimism is always high, what we can see is that things have shifted.  The world isn't like it was before.  And applying the same approaches won't yield improved results.  "For Illinois, recession looking milder – but recovery weaker" is another Crain's headline.  Nowhere are there signs of a robust economy.

We can't expect an economic recovery on "Cars for Cash" or "Clunker" programs.  By overpaying for outdated and obsolete cars we can bring forward some purchases.  But this does not build a healthy market for ongoing purchases.  These programs aren't innovation that promotes purchase.  They are a subsidy to a lucky few so they pay significantly less for an existing product.  To recover we must have real growth.  Growth from new products that meet new customer needs in new ways.  Growth built on providing solutions that advantage the buyer.  Only by introducing innovation, and creating value, will customers (businesses or consumer) open their wallets

Advertising hasn't disappeared.  But it has gone on-line.  Today you don't have to spend as much to reach your target.  Instead of mass advertising to 1,000 in order to reach the 100 (or 15) you really want, today you can target that buyer through the web and deliver them an advertisement far cheaper.  I didn't learn about Cash for Clunkers from a TV ad, I learned about it on the web.  As did thousands of people that rushed out to take advantage of the program at its introduction – exceeding expectations.  It no longer takes inefficient mass advertising through newspapers or broadcast TV to reach customers – so that market shrinks.  But the market for on-line ads will grow. So Google grows – double digit growth – while the old advertising media keeps shrinking.  To get the economy growing businesses (like Tribune Corporation) have to shift into these new markets, and provide new products and services that help them grow.

I live in Chicago.  Years ago, in the days of The Jungle Chicago grew as an agricultural center. There was a time the West Side of Chicago was known for its smelly stockyards and slaughter houses.  But Chicago  watched its agricultural companies move away.  They moved closer to the farms.  They were replaced by steel mills in places like Gary, IN and Chicago's south side.  But those too shut down, moved to lower cost locations offshore.  These businesses were replaced with assembly plants, like the famous AT&T Hawthorne facility, and manufacturers such as machine tool makers.  Now, for the last decade, these too have been moving away.  With each wave, the less valuable work, the more menial work, shifted to another location where it could be done as good but cheaper and often faster

Historically growth continued by replacing those jobs with work tied to the shifting market – jobs that provided more value.  So now, for Chicago to grow it MUST create information jobsThe market has moved.  Kraft won't regain its glory if it keeps trying to sell more Velveeta.  Kraft has not launched a major new product in over 9 years.  Sara Lee has been shedding businesses and cutting costs for 6 years – getting smaller and losing value.  McDonalds sold its high growth business Chipotles to raise money for defending its hamburger stores by adding new coffee machines.  Motorola has let mobile telephony move to competitors as it remained too Locked-in to old technologies and old products while new companies – like Apple and RIM – brought out innovations that attracted new customes and growth. 

Growth doesn't come from waiting for the economy to improve.  Growth comes from implementing innovation that gives us new solutionsEvery market, whether geographic or product based, requires new solutions to maintain growth.  If we want our economy to improve, we must change our approach.  We can't save our way to prosperity.  Instead we must create solutions that fit future scenarios, introduce new solutions that Disrupt old patterns and use White Space to help customers shift to these products.

If we change our approach we can regain growth.  Otherwise, we can expect to keep getting what we got in 2008.