Lots of new things are happening with technology. Everyone knows that. We see the emergence of new communication vehicles like Facebook, and new ways to exchange data – like Apple's iPhone and RIM's Blackberry. Skype replaces the telephone and in-person meetings. iTunes replaced CDs. The list is pretty long. But how much of these new technologies do you use regularly, how many do you use in your business, and how many do you use in "mission critical" applications of things you do?
Most of us watch new markets develop. Many even think the smart thing to do is to wait, let things evolve, see what happens. Be a late adopter when technology is "stabilized" and prices are lower. These are spectators to the world of innovation, doing what they've always done and waiting for some future time when it will seem better to switch.
Then there are participants. The participants are learning. While others watch, they actually learn how to get new customers, how to sell more product, how to apply technology to lower cost while improving the solution, how to be more competitive, how to read market shifts (and prepare) – how to make more money. Like Google.
Google just launched Buzz ("Google Betting on Mo Better Buzz" at Mediapost.com. Buzz is a new product that links up to social media sites for a variety of functions – one of which is its ability to deliver ads (imagine that) while also adding benefits to users like location tagging and enhancing email. It does new things, and some things already available via Facebook or Yelp. That it's market position, or even its functional position in the technology environment, isn't clear is not terribly important to Google management. In "A Buzz and A Shrug: Why Should Google Kill Anything?" MediaPost.com goes on to describe that at the launch meeting management went out of its way refusing to declare a specific position, or competitive plan, for Buzz.Google is in the market, trying something, learning and participating – being part of making Disruptions happen and seeing if it can find a way to create sales and profits.
And that's what White Space, and participation, is all about. While spectators watch and get left behind, participants are in the market. Spectators fall off the S-curve, as their capabilities fall away from market needs they become less relevant, sell less and profits fall. Participants use White Space to jump the curve – to move from an old product/market S curve to a new one. They are in the market learning, and adapting, and moving toward that point where the technologies and solutions collide – thus they are ready and able to move to the next new thing. While spectators are stuck, doing the same old thing, falling farther behind.
Being a participant isn't hard, nor is it all that expensive. It requires the willingness to get in the game. To start. To do less "planning" and instead get in there and do it – like the NIke ad recommends. Instead of devoting all your money to defending and extending what you know, take some and invest in the places where growth is rampant. The learning will pay for itself as it allows your business to move into new markets and generate new revenues. You will have to Disrupt your thinking and processes to do this, but the payoff is it could save your company!
Long ago business education started with a lot of focus on industrial engineering. Improving operations to get more stuff out the door. This was augmented by sales and marketing, to help sell stuff so we could get more out the door. And finance was added as a way to understand cash flow and funding in order to get more stuff out the door. All of that was predicated on endless demand for the stuff. But today, it's not about making lots of your stuff and cramming it down customer throats. Instead, winners have to be adaptable to market needs – to be part of creating new solutions that generate more revenues and higher profit rates.
You don't need all the answers. White Space is about having a plan, and goals, based upon scenarios. But then avoiding analytical paralysis and getting into the market. Google is phenomenal at this. Not everything Google launches is a big hit. Google Wave appears to be struggling. But that's OK. If you don't put all your eggs in one basket, because you get into markets earlier and faster, you can afford to have misses. You still get the benefits of market learning – and move forward to possibly jumping the next S curve. Google's Buzz is another stereotypical White Space entry into the market. A product with a lot of possibilities, looking for how to fit into a quickly shifting market, teaching Google more about the marketplace and aiding the company toward maintaining its torrid growth pace.
Sustaining growth is really hard. Consulting firm Bain & Company just published the statistic that only 12% of companies were able to grow revenues and profits more than 5.5% from 1998 to 2008 (read more in the Harvard Business Review downloadable book excerpt Profit from the Core.) Given that all companies want to grow, it seems remarkable so many stall.
But while most managers blame lack of growth on the economy, truth is we can learn a lot from those who DID sustain growth. What doesn't work, and what does, can be found by starting with a great OpEd column about Microsoft published in The New York Times "Microsoft's Creative Destruction." Former Microsoft Vice President Dick Brass provides insight to why Microsoft has become a market laggard in new products – despite enormous revenues, profits and new product development spending. Calling Microsoft "a clumsy, uncompetitive innovator," he says products are "lampooned" and the company is "failing." Harsh words.
He points out that profits are almost entirely from legacy products Windows and Office. "Microsoft has lost share in Web browsers, high-end laptops and smartphones. Despite billions in investment, its Xbox line is still at best an equal contender in the game console business." He explains how internal managers set up false hurdles, often claiming quality was the primary issue, for ClearType and a tablet PC. He claims the internal executives "sabotaged" new projects and he blames inability to meet market needs on "internecine warfare."
But all of that could be said about Apple as well. It once was just like Microsoft. In the 1990s Apple stopped everything but new Macs from making it to market. Remember that the first PDA (personal digital assistant) was Apole's Newton? Killing that product became a priority for several Apple executives, and caused the ouster of then CEO John Scully
So the Microsoft described behaviors can happen anyplace. When organizations begin to focus on Defending & Extending their "core" business it leads to hurdles and growth stalls. "Operational improvements" leads to "focusing" on doing what the business always did, perhaps just a touch better (like a next generation operating system [Vista], or a new variation on Office [2007].) The culture, decision-making processes and operating cost model all are geared to doing more of the same. Without intending any downside, in fact in pursuit of improved competitiveness in the "core" products, the business begins erecting hurdles to doing anything new, or different.
This problem isn't limited to Microsoft Although we can clearly see the impact and feel pessimistic about Microsoft's future. It has afflicted many companies, and is why they cannot adjust to market shifts. Even if loaded with executives and enormous budgets for R&D, technology or marketing. Don't forget how Apple looked even worse than Microsoft in 2000.
And that's why so few companies maintain growth. The desire to do more, better, faster, cheaper of what we've always done is overwhelming. Defending & Extending the existing business always looks marginally better, and marginally less risky, than doing something new, or different. In trying to maintain growth by getting better at what you've always done – you kill it.
Why? Because Defend & Extend management does not take account of market shifts. New products, new competitors, new technologies, new business models, new customer approaches — the list is endless of variations which competitors bring to the marketplace. And these variations change the market. Trying to stay on the same course becomes suicide when customers begin moving on.
And that's where Apple has excelled. When Steve Jobs took over he quit trying to Defend & Extend the Mac platform. To the contrary, he reduced the number of Mac models. Instead of planning based on old market share and sales, he pushed a rigorous scenario planning exercise to create a robust view of future markets – and what needs customers would like solved. He then led Apple to study competitors, both in-kind and on the fringe, to identify new markets being developed and new solutions being tested. He then Disrupted Apple – by cutting the Mac platforms and investing heavily in other market opportunities like music (iPod and iTunes). And he encouraged product managers to rush new products to market in order to obtain market feedback, using White Space teams to rapidly learn what would sell. And he repeated this again and again, agreeing to a joint development project with Motorola before entering into mobile phone testing and launch (iPhone.)
Microsoft's proclivity toward D&E management is putting its future at grave risk. All signs are it will become another fateful, negative statistic. But it doesn't have to be that way. Microsoft can learn a lesson from its resurrected competitor and follow The Phoenix Principle. It can escape from xBox, and other new product, second-tier status if it will get a lot more robust about scenario planning, quit acting like the only game in town and start obsessing about competition. Disrupt its culture and decision making, and start using White Space to rapidly get new products in the market and learn how to match them with market needs to succeed!
I had two more Facebook ignorers this week. First was an old friend who didn't use Facebook, and could not imagine how it would be beneficial to his business. I responded with "that's kind of like the folks who didn't use a telephone saying that they didn't see any value in it for business." When you don't use a tool, it's easy to pretend it isn't valuable. Makes life easy on your competitors who do give it a try.
The second was a business that recruits people under 30. The top marketers at this company are still doing all their efforts with newspapers, radio and typical broadcast forms of media. They said they couldn't use social media to reach their base "because you can't control the message on Facebook." OK, so they don't use social media, and their focus is on message control so they don't intend to use social media. But their target is a population that every month uses less traditional media, and more social media. And these folks are wondering why media costs are up, and their success is way, way down. Uh huh.
At MediaPost.com "Avoiding Social Media Malpractice" Chad Cappellman tells the story of a hospital division that gets more people coming for insight through Facebook than come through the highlighted links on the hospital's own web site! People use Facebook today – a lot. We all would prefer a personal referral when we have a question. Often, a referral is better than 10 Google search hits at pointing you to the service provider or product which really fits your needs. And Facebook is a fast way to generate referrals. As is Twitter. So when you want potential customers referred your way, why wouldn't you try to maximize the use of social media? As the story above discusses, people would rather get info about a hospital (an example) from friends than from about any other source.
As for implementation, social media is part of the more sweeping market shift affecting all businesses. Historically, business people thought in terms of "control." The business had communication walls, internally and externally. More time was spent making sure information wasn't passed around than making sure communication was fluid and accurate. But in another MediaPost.com article "Twitter and Facebook Could Get You Fired" we see that approach simply won't work any more. We live in a "connected" and "networked" world today. There are precious few secrets when everyone has a mobile phone, and most of those have cameras, and texting is ubiquitous, and the vast majority of people under 35 have multiple social network locations.
Today, you can't win by limiting communications. That is a failed approach. Nor is it possible to "control" what is said about your business or its products and services. What you can, and increasingly must, do is monitor the chatter and be part of it. Of course some things will be inaccurate, so its now your role to help move the message in the right direction. Don't think about control, think about helping the message move toward accuracy. And leverage all the chatter to help you sell more stuff!
We live in a fast shifting world. That is not going to change. Slow moving traditional media is gradually dying. No competitor can succeed by avoiding the shifts. Those competitors that win will use scenario planning to help anticipate the shifts, and focus on fringe competitors to learn how to do new things which can create advantage. Success isn't going to come from trying to Defend & Extend the "core" – but rather by rapidly adapting to new market needs even if it means changing your "core." And the best way to stay connected to shifting markets today is through social media. It not only gives great, and timely, feedback but offers everyone the chance to enter into a dialogue with potential new customers at remarkably low cost. And in remarkably powerful ways.
"Strategic Plans Lose Favor" is a recent Wall Street Journal headline. Seems like some big companies, and big consulting firms like Accenture, McKinsey and the Boston Consulting Group are rapidly learning what this blog has been pushing for a few years. That flexibility trumps traditional approaches to strategic planning.
When Office Depot's strategic plan was leading to revenue struggles, the company set up a situation room to track key indicators and adjust to market shifts much quicker.
"Strategy as we know it is dead" according to Walt Shill, head of strategic planning at Accenture. "increased flexibility and accelerated decision making are much more
important than simply predicting the future." (Do you think he's been reading this blog and my book?)
"business leaders will start to rely less on static five-year strategic
plans and more on rough "adaptive" strategies that consider multiple
scenarios" according to Martin Reeves, Senior Partner at BCG. (Where'd he read that – on this site?)
""The rate of change and width of volatility is much wider and faster
than what we would have assumed coming into this," Jeff Fettig, CEO at Whirlpool
McKkinsey has opened a "Center for Managing Uncertainty." Really.
As this recession has come on, and lingered, businesses are clearly starting to realize that market shifts happen fast, and businesses cannot be slow to change. Adaptability is one of the most important capabilities to compete in the post-2000 business world.
And the real market leaders are incorporating this kind of thinking into their organizations. While the earlier quotes show how, caught on the defensive, organizations are finding new ways to react, the best performing organizations are taking market leadership by being Disruptive. Like Apple. In a Harvard Business Review blog Roberto Verganti, professor at Politecnico di Milano tells us "Apple's Secret: It tells us what we should love."
The good professor of design and management points out that Apple does not ask customers what they want. Instead the company designs products which take customers to new levels of performance beyond what they imagined. Instead of being reactive, Apple uses scenario planning to understand future market needs and create shifts with its products. This approach leads to breakthrough performance, such as the success of Nintendo and its Wii product line.
To be successful businesses can no longer try to Defend & Extend their old strategies. They have to be market focused, and flexible to manage through market shifts. And to earn superior rates of return they have to be market leaders that use scenario planning and White Space to launch new solutions meeting emerging needs which attract customers and grow sales.
One of the biggest business news items this week was the launch of Apple's iPad for $499. Although perhaps overlooked by many big companies, and several IT departments. To some businesspeople, the iPad seems another consumer toy, thus not terribly noteworthy. Some see it as a small-market share sort of oversized iPhone for mobile telephony/data use. One executive commented to me this week "I don't understand why anyone cares, I don't own an iPhone and cannot imagine why I would ever want to download an app," He has a huge investment in Microsoft technology, has never used an iPhone or Palm Treo or even a Blackberry. Hes' never seen an iPhone app, and was amazed when I told him 1 billion had been downloaded. He's comfortable in his traditional IT solution, and doesn't see the importance of iPad.
But the iPad is another step demonstrating a big market shift is happening. With Apple's announcement, Amazon announced that it's sales ofKindle are about twice what most analysts had expected – see "During Apple Week Google and Amazon try to Remind You They Exist" at Fast Company. Further, it appears now that for every 10 books Amazon sells, it sells 6 Kindle books — a substantial number and indications of serious market change. The iPad is half the price most people expected, and now rumors are Kindle's will drop to $100 as competition heats up. It rapidly appears that while there is an emerging battle between Amazon and Apple, the biggest insight is that the market for BOTH is growing a whole lot faster than anyone expected. As are iPhone sales. These devices, and the technology solution embedded within them, are grabbing a lot of buyers, and quickly. The sales, in units and dollars, are growing much faster than anticipated. And new users are flocking toward this technology platform.
Thus, the iPad is likely to be a big winner for Amazon and Kindle – as well as Google. It is expanding the application base, and use patterns, for mobile devices. It is expanding the product breadth and price points. Quite simply, it is helping people do new things they couldn't do before – especially when mobile – that they could not do before. As a result, apps will grow and sales of both hardware and software will grow. And early adopters will gain an advantage as they use this new technology to create advantages for their customers. Apple and Amazon are both "winners" who are driving revenue and profit growth.
And Microsoft loses. Microsoft has never changed its Success Formula. Its Identity, Strategy and Tactics remain as they've been for three decades – to provide a one-stop near monopolistic, integrated (mainframe style – and certainly monolithic) solution. As the market has been shifting, however, this has been less and less successful.
As the chart shows, Microsoft's product strategies, product introductions, acquisitions and management changes have done nothing for growth – or valuation. Microsoft keeps trying to do what made it great in the late 80s and early 90s. But since then, the market has shifted dramatically and the sustaining innovations Microsoft has offered, while meeting customer requests for improvement, haven't really helped growth.
Microsoft has poured billions of dollars into a failed approach intended to Defend & Extend its Success Formula – but to no avail.The market is going a different direction – toward cloud computing with its distributed data, extremely small apps at very low (disposable) prices, easy to use interfaces and greatly lower device cost.
Even as large and cash rich as Microsoft was in 2000, it cannot stop a market shift. And even though this shift has been predictable, with competitors from the fringe like Google, Amazon and Apple bringing to market new products, Microsoft has chosen to try Defending & Extending its Success Formula rather than Disrupt and use White Space to develop new solutions. What can we expect from Microsoft in the future? Unfortunately, more of the same and most likely a dramatically deteriorating value. When the market's shift to these thin devices with a different architecture becomes clear, the inability of System 7 and Bing to make any difference in Microsoft results will be clear. And investors are likely to run for the proverbial hills – letting the stock price drop along with new users. Microsoft will increasingly be dependent upon legacy applications and maintenance – markets with little/no growth. Microsoft could soon be the next Unisys (remember that company?)
So, what is your company doing? Are you moving forward with new apps which will grow your revenues and profits? Are you looking forways to use these devices, and the underlying mobile computing architectures, to offer your customers better solutions? Are you bringing out new approaches that are potential game changers, bringing new customers to you and accelerating growth? Or are you trying to Defend & Extend your old processes, approaches and products? Are you planning a future that will be PC/laptop centric, and delivering traditional web pages? Are you following the laggard, Microsoft, or are you Disrupting your business, and market, with White Space projects that will change market behaviors using these new technologies and positioning you as the market leader? In 2015, will you look like Microsoft – frozen in place as the market shifts – or will you look more like Google, Amazon and Apple with new solutions that create excitement and new sales?
Have you tried a Kindle yet? iPad? iPhone? Do you have any White Space wher
e you are trying these new things? Have you Disrupted any of your organization and challenged them to apply this technology? Exactly what are you waiting on?
Most businesses have multiple analysts who spend day after day accumulating, analyzing and displaying data. Financial analysts, marketing analysts, IT analysts – they are all over the place. Then businesses will hire consultants who bring their own analysts to further find and review data – then present yet more charts and data summaries. When I worked for The Boston Consulting Group we used to say "the data will set you free!" And we believed that if we dug up more data and did more analysis than anyone else we would offer insight to change businesses everywhere.
Yet, more of our clients didn't take action than did. When I moved on to other firms, the results weren't really different. And when I was in corporate America at huge companies, like PepsiCo and DuPont I found that the army of analysts and mounds of data really had almost no impact on how decisions were made. or what decisions were made..
Once a business is prosperous, its Success Formula drives behavior. Its Identity is set, its strategy is in place and tactics are predetermined. Things don't change just because someone shows the leadership data. No matter how synthesized or analyzed or elegant, the data really makes little (if any) difference. It's easy for leaders to simply ignore data that is troubling, and highlight data which confirms previously held beliefs. And even if insight is created, insight has nothing to do with what people will do next. Insight doesn't change the decision-making processes, or any of the other Lock-ins keeping the Success Formula in place. Even though managers claim that they want to see "the data," in reality the data makes no difference.
Last night the U.S. President Barack Obama referred in his State of the Union address to the data which confirms global warming. This drew significant snarky laughter from some of the joint congressional attendees. And even though there are regular reports, like the recent New York Times article "Past Decade Warmest on Record, NASA Data Shows," there are regular polls showing an enormous amount of the population, at all income levels, who simply don't believe the earth is warming. The data, in the end, is ignored or discounted. It simply doesn't matter. And no one is going to change the opinions of anyone who doesn't think the earth is warming by trying to show more data.
Data leads to debates. Who's answer is right? Who's forecast is more likely? Debates about data can go on forever. An old business joke says if you strong all the econometric modelers together end to end they'd still never reach a conclusion. But you'd get a lot of debate.
Instead of data and debate, realize the limitations and move on. If we spent 1/10th the time digging for and analyzing data, we'd do just fine. Rather, we should spend the other 9/10th of the time building scenarios. Instead of debating a topic like global warming, we could build scenarios that ranged from global cooling by 5, 3, 2 or 1 degree to no change to warming by 1, 2, 3 or 5 degrees. The issues isn't which is most likely – but rather that we think through the implications of ALL, and prepare. What strategies would allow for success given that any of these are possible?
Business analysts, strategists and leaders spend a lot of time trying to guess the future. But their crystal ball is just as foggy as everyone else's. Their guesses are mostly wrong, because a dynamic marketplace is very hard to predict. So they plan to do something, but then shifts make the returns lower because the world/market didn't turn out as planned. Given that we KNOW that we're more likely to be wrong than right, why the fascination with trying to pick the future?
Those who win more than they lose develop a lot of scenarios. They don't try to pick a scenario. They try to think through the many possibilities and prepare for as many as possible. And they develop mechanisms to track the market so they can keep an eye on the multiple scenarios and anticipate things as time passes. It's never the things you expect that really hurt you, it's the one you didn't think about. To be prosperous for a long time you have to build the ability to think very broadly about the scenarios that can happen, and prepare.
So the next time you feel the urge to "get more data" think about global warming. Has all this data changed the debate? Has it helped any country to better prepare? Has anything really happened, as the mountains of data on the topic have been assembled, analyzed and distributed? Does anyone think the data will cause a change in policy, or behavior? If not, then maybe you can start to spend more time creating multiple, wide scenarios that will help you prepare – and possibly help you to develop new behaviors to protect your business from a range of potential outcomes.
We all love awards and lists. Who doesn't like being rewarded for their accomplishments. At the same time, we have acquired a strong taste for lists "The best…" Another verification of success. But both can be harbingers of potential problems – and even destruction.
Ben Bernanke became Time magazine's "Man of the Year" and now he's at some risk of losing his job (see 24/7WallStreet.com "In Not Bernanke, Who?" Think about the list of Great Companies that appear in books, like Good to Great, only to end up in big trouble – like Circuit City and Fannie Mae. Why does it seem those who top awards and lists end up shortly struggling?
Too often businesses, and business people, "win" by doing more of the same. They work hard to optimize their Success Formula. They get really committed to practicing what they do (remember Outliers by Malcolm Glaldwell and his recommendation to practice, practice, practice?) They get better and better. And in fields like sports and music, where the rules are well understood and the approach is clear, this often works. And as long as they keep practicing top athletes and musicians often remain near the top of competitors.
But we have to recognize that most of the time those "at the top" in business have emerged within a given market. Then they are knocked off by a shift. Like Ed Zander of Motorola being named #1 CEO in 2004, only to be fired within 2 years as RAZR sales toppled. Like Sun Microsystems perfecting Unix servers for an emerging client/server technology market that became saturated and shifted to PC servers. Like Michael Dell (and Dell Corporation) which emerged when lower cost made supply chain efficiencies critical for PCs, before the PC market became saturated and iPhones plus Blackberries started dominating the landscape. Or WalMart which also used a new supply chain to grow the emerging discount retailing sector, only now it is laying off 10,000 employees as it shuts Sam's stores across the country. These companies created a Success Formula and honed it quarter after quarter to maximize performance in a high growth environment. But the market shifted.
In business the rules are not "set". There is no written music to
perform. Instead, the market is highly dynamic. New competitors
emerge, new ways of competing emerge, new technologies emerge and new
solutions emerge. The market keeps changing. Suddenly, what worked last year isn't successful any more. When the market shifts, the previous winner becomes the new goat. That optimized business starts to look like the world's best wrestler, only to be obsolete when a flood occurs making swimming the new, necessary skill. Being last year's best is impossible to repeat because the market shift makes the old approach less valuable – possibly obsolete.
"Best practices" are usually little more than copying last year's list topper. In the 1990s everyone wanted to copy product development practices at Sun, and supply chain practices at Dell. But both led to horrible returns when demand for servers and PCs diminished. Best practices are almost guaranteed to be a solution developed to late, and applied even later, to solve previous years' problems. They aren't forward looking, and not designed to meet the needs 2 years into the future.
Business success isn't about topping a list. And, to a great degree, the Outlier approach (as is a hedgehog concept) is very risky. If you spend 10,000 hours doing something, only to see the value for that something go away, what good was it? Remember when Cobol writers were in demand? Being the world's best at something in business can cause you to be optimized on the past and inflexible to market change.
Business success requires adaptability. And that requires a focus on future markets. It requires the ability to constantly Disrupt your approach, to build capability in many different areas and markets. It requires skill at establishing and operating White Space projects to learn about new markets and shifts – the ability to know how to test and then understand the results of those tests. In business adaptability trumps optimization, because you can be sure that things will change – markets will shift – and the highly optimized find themselves behind the shift and struggling.
Most people misunderstand evolution. They think that changes happen slowly. Imagine an animal with a 12 inch tail. Every generation or so it's imagined that the tail gets a little shorter, then a little shorter, then a little shorter until after some very long time it simply disappears. But that's not at all how evolution works.
Instead, most of the animals have a long tail. Some small number of animals are born each year with very short or no tails. For the most part, this matters little. If the tail is valuable – say for warding off parasites – those without tails may suffer and die off quickly. And that's the way things are, largely unchanged, for decades. But then, something happens in the environment. Perhaps the emergence of a predator able to catch these animals by the tail and hold them in place to let the pack kill it. Within one generation almost all of the tailed animals are killed by the predator, and only the no-tail animals survive. Some of these have developed an immunity to the parasite. So then this "evolved" animal becomes dominant. No-tail animals replace the tailed animals. That's how evolution really works. It happens fast, with drastic change (and this time of change is referred to as a punctuated equilibrium.)
Once we know how evolution really works, we can start to better understand business competition. A Success Formula works for a really long time, until something changes in the marketplace. Suddenly, the old Success Formula has far poorer results. And a replacement takes over.
Consider newspapers. They played a very important role in society for at least 100 years (maybe 200 or 300 hundred years.) But with the advent of the internet, their role is no longer viable. Printing and delivering a daily paper is too expensive for the value it can provide. So think of newspapers as the long-tail animal. And digital news delivery is a short-tail animal. The internet is the attack pack that kills the newspapers. And within short order, the world is a different place – in a new equilibrium. And everything about the surrounding environment is shifted. Regardless of how much you enjoyed newspapers, they simply cannot compete and new competitors are a better fit in the new marketplace.
Now consider Netflix. Netflix played a major influence in obsoleting traditional movie rental shops – like Blockbuster. Netflix was a winner. But markets – new attack packs – keep emerging. And the latest shift are products like the Kindle and Apple Tablet (as well as other tablet PCs.) These products make Hulu and YouTube a lot more viable. Suddenly, Netflix is the long-tail animal, and the short-tail animals are doing relatively better.
According to The Wall Street Journal, in "Apple Sees New Money in Old Media" Apple is close to a deal with several newspapers to deliver their content to readers via their internet device. They also are negotiating rights to deliver movies and television (small format) entertainment. Simultaneously, Amazon keeps marching forward as MediaPost.com reports in "Take That Apple: Kindle Introduces Apps." We see that there are a LOT of potential different versions of the short-tail animal. Tablets, phones, netbooks, etc. Which will be the biggest winners? Not clear. But what is clear is that the old long-tail competitors (newspapers, print magazines, network television, traditional PCs) are not going to flourish as they once did. The market has permanently shifted. Those competitors are in the back end of their lifecycle.
Simultaneously, this market shift causes ripple effects through the environment. The market shift affects ALL players – not just the one most visibly being attacked. So, as SiliconBeat.com reports in "Looks Like Netflix is Dead, Again" this change suddenly imperils Netflix which has mostly counted on postal delivery rather than digital. And it provides a boost to short-tail players like Hulu and YouTube which could see much larger revenue given their digital-based delivery models.
And this affects you. What do you print, or say, that could be better handled on a mobile device? Could you deliver user instructions via an iPhone or Kindle app? If so, why aren't you doing it? Are you still working on traditional web pages, with embedded text in graphics that can't be seen by a mobile phone, when most people are likely to find you first on their mobile device? Are you busy working on your web site, while ignoring having a Linked-in or Facebook account? Are you advertising on television, or in newspapers, and ignoring Facebook ads – or YouTube links? Do you have a YouTube channel with short clips to instruct users on your product, or how to install an upgrade, or even why to buy? Are you still competing with a long tail, while the pack is rapidly killing off the long-tail species?
Market shifts are happening fast today. If you don't react, you just may find yourself deep into the pack with declining results. Or you can shift with the market to keep your business competitive.
Over the last week everyone has heard stories about how Facebook, and Twitter, became primary communication conduits for people with connections in Haiti. Telephone and slower communication vehicles simply have not been able to connect family and friends in this crisis like Facebook. When shift happens, it accelerates as new uses come to the forefront quickly. For everyone trying to connect with employment candidates, suppliers and customers this shift has immediate and important impact on behavior.
For advertisers, the impact is significant. Where should ad dollars be placed? On a traditional home page and search site – like Yahoo! – or on Facebook?
And it's not just the sites themselves, but how long people are on these sites. From an advertising point of view, you can start to think about Facebook – and YouTube – almost like a "channel" from early television days. Where the audience comes back again and again – offering you not only a large audience, but more opportunities to reach them more often. Facebook and YouTube are beginning to dominate the "user views."
Of course, the impact isn't just regarding the web, but how any business would use media to reach a target audience. Most advertising agencies, and ad people, are still focused on traditional media. But, as we can see, that WILL shift — even more than it traditionally has.
Anybody investing in newspapers, expecting a resurgence in value, is pretty foolish. Newspapers are going to lose ad dollars – not gain. Relatively, newspapers already are getting too much of the ad spend. Talk radio has growth. And clearly the web. Since we can expect that newspaper and magazine readership will continue recent downward trends, and television is fragmenting as well as stalling, the big growth is on the internet.
The market shift is really pretty clear. We aren't speculating about the market direction with this data. The question becomes, will you be an early adopter of these new media channels or not? Given that the web and mobile have the lowest ad rates of all media, why wouldn't you? Over the last 2 months Pepsi has decided to NOT advertise on the Super Bowl, instead putting the money into social media. And after introducing the Granite Concept car at the Detroit auto show, even behind-the-times GM is now considering a launch of this vehicle, intended for buyers under 35, using only web advertising.
So what are your plans? Do you have scenarios where Facebook and YouTube are integral to your marketing? Do you have pages, groups and channels on these sites? Do you post content? Are you using them to interact with potential customers, vendors and employees? If not – what are you waiting on? Do you need a Disruption to create some White Space and get started? If so – isn't it time to get going?
Many people think the best way to grow is by setting big goals – even Big Audacious Hairy Goals (BHAGs). But increasingly we're learning that goal setting is not correlated with success. At AmericanPublicRadio.org there's a partial text, and MP3 download, of a recent interview between General Motors leaders and a University of Arizona Professor titled "It's not always good to create goals."
The story relates how about a decade a go, with market share hovering at 25%, GM set the goal of moving back to 29%. It became a huge, multi-year campaign. Lapel pins with "29" were made and all kinds of motivational programs were put in place. The GM organization had its goal, and it was highly aligned to the goal. But it didn't happen. Despite the goal, and all the energy and talent put into focusing on the goal, GM continued to struggle, lose share – and eventually file bankruptcy. The goal made no difference.
Worse, the interview goes on to discuss how goals often lead to decidedly undesirable, sometimes unethical – even illegal – behavior. Instances are cited where goal obsession led company employees to falsify documents, even ship bricks in place of products to meet sales targets. No executive wants this, but goals and goal obsession – especially when there is a lot of reinforcement socially and monetarily on the goal – can become a serious problem.
Results are exactly that. Results. They are an outcome. They are the way we track our behaviors and activities – our decisions. When we focus on goals – usually some sort of result – we lose track of what is important. We have to focus on what we do. And for most organizations a big goal merely leads people to try working harder, faster,better, cheaper. But when the Success Formula is mis-aligned with the market – even when the whole organization is aligned on maximizing the Success Formula results will still struggle – even falter. Goals don't help you fix a Success Formula returning poor results. Just look at GM.
In fact, it can make matters worse. In "White Bears and Other Unwanted Thoughts" (available on Amazon.com) the authors point out that when you try to turn a negative (a problem) into a positive (a challenge, or goal), you often achieve a rebound effect making people obsess about the problem. Tell somebody not to think about a white bear – and it's all they think about. When your company has a problem and you try to tell employees "hey, don't think about the problem. Go do your job. Work harder, increase your focus, and all will work out. Sure share is down, but don't think about lost share, instead think about the goal of higher market share" frequently the employees will start to become obsessive about the problem. It will reinforce doing more of the same – perhaps manicly. Instead of becoming innovative and doing something new, obsessive devotion to trying to make the old methods produce better results becomes the norm. Goals don't produce innovation – they produce repetition.
So what should you do when facing a problem? Disruptions. GM didn't need a big goal. GM needed to Disrupt its broken Success Formula. GM needed to attack a Lock-in (or two). GM leaders needed to admit the market had shifted, and that competitors were changing the game. GM needed to recognize, admit and encourage employees to engage in attacking old assumptions – and recognize that market share would continue eroding if they didn't do things differently. Setting a big goal reinforced the old Lock-ins and even an aligned organization – working it's metaphorical tail off – couldn't make the outdated Success Formula produce positive results.
Only a Disruption would have helped save GM. After attacking some Lock-ins, like the desire to move all customers to bigger and more expensive cars, or the desire to focus on long production runs, GM should have set up White Space teams to discover new Success Formulas. Instead of putting all its management energy and money into growing volume at Chevrolet, Cadillac, Buick and GM nameplates, General Motors leadership should have revitalized the innovative Saturn and Saab to do new things – to develop new approaches that would be more competitive. Instead of pushing Hummer to have 3 identical cars in 3 sizes, GM leadership should have unleashed Hummer to explore the market for truly unique, limited production vehicles. GM should have allowed Pontiac to really take advantage of the design breakthroughs happening at the Australian design studio – to change the nameplate into a performance car segment leader. By attacking Lock-ins, Disrupting, and using White Space GM really could have turned around. Instead, by creating a BHAG GM reinforced its focus on its Hedgehog concept – and drove the company into bankruptcy.
