by Adam Hartung | Apr 2, 2007 | Disruptions, In the Swamp, In the Whirlpool, Leadership, Lifecycle
Imagine this: you’re in an industry that hasn’t changed much in 100 years. For the last 5 years the number of customers has been declining, as have revenues. Your long-time users are aging and younger potential users say they have little interest in your product. User interviews regularly say your business is out of date. And new technology exists which completely obsoletes your product. Would you find the answer to your dilemma in loading your company up with a HUGE amount of debt while selling off your most profitable assets?
That is of course the situation at the Tribune Company (see chart here), owner of The Chicago Tribune, The Los Angeles Times, the Chicago Cubs and 25 television stations. If you ever wanted to know when a company moves from the Swamp into the Whirlpool, this is the time for the Tribune. The Tribune Company has been horribly Locked-in to a failing Success Formula with declining results for years. Now it is going to make any alternatives impossible by cranking up the debt load while selling the Cubs and other assets that are profitable and have potential for future growth. Instead of using White Space to find a new Success Formula, which would require more understanding and success on the web, the Tribune is moving to Defend & Extend it’s dying newspaper business! (See article on company sale here.)
The Tribune’s newspaper business is in decline as readers abandon traditional print news for the web, and advertisers are following the subscribers. So not only is the company selling off the Cubs and its investments in growing targeted television, but it is adding $7Billion of new debt (and yes, it’s keeping all the old debt) in order to buy back all the outstanding equity. Yes, they are ADDING debt almost equal to the entire oustanding market value of the company ($8billion). Shades of Michael Milkin and the Junk Bond craze! What paper equity remains will be in an ESOP. But for $320million (that 4% of the new debt added) billionaire Sam Zell gets a warrant to own 40% of the equity should this ever work out. That $320M is less than 1% of the $39billion Sam just recently got for selling his REIT business – so you could say for him this represents a relatively small portfolio investment in a long shot. If Tribune survives, his $.32B becomes worth $3.2B – or 10x return (see MarketWatch article here).
And of course all of this is for a valuation that is only half what the business was worth in 2000, and only 60% of its value as recently as 2004. But that of course reflects the market Challenges which face the Tribune going forward. Challenges completely ignored in this crazy financing scheme.
Meanwhile, the employees of the Tribune now get to spend all their energy looking for yet MORE cost cuts – after 5 years of cost cutting – in order to service this staggering debt load. Just what you need in a situation where you missed the new technology boat. They now have no resources for creating and managing any White Space to find a new Success Formula. Amidst these financial machinations, the newspapers have turned over the publisher at the LATimes and several leading editors in just the last year (see latest article on editor resigning in protest here) demonstrating the disarray inside the business.
The forecast here is not hard to make. I live in Chicago and read the Chicago Tribune. It, as well as The LA Times and other Tribune-owned newspapers have a great history and many Pulitzer Prizes to their credit. But that was the past. If you are an investor, or an employee, or thinking about being a bondholder in this new enterprise I would be looking for a far better future than is promised at Tribune Company.
by Adam Hartung | Mar 27, 2007 | Defend & Extend, General, In the Swamp, Leadership, Lifecycle, Lock-in
One of the greatest brands in all of marketing is Harley Davidson. One claim to fame is that Harley images are the #1 most tattooed logo in the world. Now, that takes a dedicated customer – or even a non-customer! But Harley is in some trouble, and in fact deeper trouble than many folks realize.
Harley’s latest rise came after being repurchased by family of the founders from the conglomerate AMF in the 1970s. These leaders refocused Harley on its roots as an "outlaw biker" brand, and Harley recaptured the position as the #1 manufacturer of large motorcycles. Today it’s not only the "outlaw" buying and riding a Harley, but in fact people from many walks of life who want the "motorcycle experience." Harley’s problem today is that it has positioned itself so strongly with its big "V-Twin" (referring to the type of engine used) bikes that its appeal is almost exclusively with buyers who are old enough to remember seeing the movie Easy Rider. Every year that’s a shrinking number. It shows in the average age of a new Harley buyer. From about 42 ten years ago, the average age is now 47. These are the people who both seek recapturing the image of "outlaw" and can afford $28,000 for a new motorcycle (about 3 times the price of similar motorcycles made by Honda, Suzuki and Kawasaki.)
Today’s younger motorcycle riders have been able to avoid Harley’s in droves. They are much more captured by what some people call "crotch rocket" motorcycles. Built off the racing style frames used in high speed racing, these motorcycles are far faster off the line than a Harley, often have higher top speeds, usually require less maintenance and start as low as $6,000 – with the top racers costing only $14,000. Ripping off an old Oldsmobile ad phrase (a brand now retired at GM), my sons look at a big V-Twin and say "Yep, that’s my dad’s motorcycle".
Harley tried to address this problem about 6 years ago by launching what it called the V-Rod. This was a totally new design, using an engine made by Porsche. It was intended to bring in the younger rider. But dealers took one look at the bike and said "It’s not a Harley." They didn’t like the style, and they didn’t like the lower price. They wanted to keep selling the big, old-style bikes with the big, fat profit margins. So they turned thumbs-down on the V-Rod, and Harley let them. And their chance to reverse the trend of a dying off customer base was lost (does this remind you at all of Apple walking away from the Newton – the first successful PDA – because it wasn’t a Mac back in the late 1990s?).
Now Harley’s suffering from a recent strike (see article here). But the word around Milwaukee (Chicago’s neighbor) is that Harley took the strike because it had more bikes in inventory than needed. And some analysts are predicting that tighter credit will hurt Harley sales (see Marketwatch Herb Grennberg blog here.) Harley’s market capitalization is down about 20% in 2007. As more folks realize that the brand is at risk of soon dying off (literally), the risk is that its value will fall further. Like I said, my sons (college and high school) want jackets that say Honda – not Harley.
Locking in on a Success Formula can produce spectacular results. Harley Davidson demonstrated just how long and how powerfully a good Success Formula can operate. Harley, its suppliers, its dealers and its customers have had a tremendous 30 year run, with equity value going up 60x just since 1987. But, like all markets, the market for motorcycles is changing. And Harley is at great risk of once again lapsing into declining sales. The company’s sales of bikes have stalled, and already dealerships achieve between 40% and 60% of revenue through paraphernalia (t-shirts, jackets, and other logo gear). Harley management forgot to Disrupt when they launched the V-Rod, and they let the organization push away their breakout product for the future. Since then, there has been no White Space producing innovation at Harley. The company is horribly Locked-in to its old market position, and the fuse is lit on what is going to eventually be a very unpleasant surprise when the brand starts retrenching.
by Adam Hartung | Mar 26, 2007 | General, In the Rapids, Leadership, Lifecycle, Openness
You probably never heard of Glunz. Profiled recently in The Chicago Tribune (see article here), Glunz is a beer distributor. What makes the company interesting is how this 120 year old family owned-and-operated business has succeeded despite severe market Challenges. And it’s due to keeping White Space alive continuously, not just looking for solutions when problems develop.
Founded in 1888, Glunz has overcome a series of market Challenges. Just imagine facing these:
– in 1930 their business was outlawed by the passage of prohibition in the 13th ammendment to the Constitution. Rather than giving up, the company found opportunities in medicinal alcohol, sacramental wine and home brewing kits.
– After building a business as the national distributor of Schlitz, that brand collapsed in the 1970s due to a raft of articles on production errors and bad quality. But the company had already started distributing Stroh’s – a local beer out of Wisconsin – and they expanded Stroh’s in Schlitz place.
– But then Stroh’s was bought out, and disappeared. Yet again, years of effort had already been put in place to develop a relationship with Coors to distribute their beer and Glunz was ready to move when the Challenge came.
– But then Coors, being a big company, decided one day to drop Glunz and predicted the company would be dead within 6 months. Only Louis Glunz had already begun preparing for such a scenario and he had developed a relationship with Rolling Rock, a Pennsylvania beer with east coast cache but no market in the midwest. And so Glunz rolled out Rolling Rock to great success in stores and bars.
– Only to have Rolling Rock acquired by Annheuser-Busch last year – yet another Challenge. But again, Glunz had already started looking at beer imports they could grow as a replacement for Rolling Rock. Now Glunz distributes Stiegl, Stella Artois, Becks and Tecate.
2007 sales are expected to reach $30M, more than double sales of $13M in 1992 when Coors yanked their beer from Glunz distribution.
Any one of these market Challenges could have been a compeny-ending act. But Glunz has thrived because the leadership constantly maintains White Space. Instead of putting all their "focus" on the business at hand, and putting everything at risk on that one business, Glunz constantly maintains openness to new opportunities. Each of these might have grown Glunz into a much bigger business had the setbacks not occurred. But instead, they allowed Glunz to thrive very nicely despite horrific Challenges.
Business of all sizes and ages get Locked-in to their Success Formula. The Lock-in creates blinders have them moving too late when Challenges develop. Glunz is an example that even very old companies with tremendous heritage, and small companies that aren’t sitting on billions in resources, can be open to new opportunities. These small and older companies can, in fact, seek out new opportunites on a constant basis so as to be prepared no matter how the market shifts and turns. By keeping White Space constantly alive your chances for success greatly improve.
by Adam Hartung | Mar 24, 2007 | Defend & Extend, General, In the Rapids, In the Swamp, Leadership, Lock-in, Openness
Readers of this blog know I’ve been a real fan of Motorola. I’ve waxed eloquently about the Disruptions implemented by the new CEO when he came to the company in 2004. And likewise I’ve been an endorser of the multiple White Space projects he implemented (see previous blogs on Motorola for details.) But this week, lots went the wrong direction at Motorola.
Motorola reported that it would have a loss for the first quarter of 2007 (see article here.) That means the clock is now ticking on what might be a growth stall. As previously written here, companies that hit growth stalls have only a 7% chance of really ever growing again. Motorola stalled badly in the late 1990s and early 2000s, and they were rebounding when this loss hit. The risks are great here – and there should be no doubt about it. If the company posts another down quarter next, the odds are getting slim on success.
What went wrong at MOT (see chart here)? Firstly, White Space must be managed toward success. While the company implemented a lot of White Space, and the impact showed in a dramatic turnaround from the situation in 1999, management did not hold White Space accountable for results. White Space is not an excuse to let results falter. Rather, management should have been aware of the precarious predicament in the large mobile phone business and PUSHING White Space to produce rapid results. As recently as this week, the very week that the bad results were reported, Motorola was expected to be announcing plans to buy PALM in yet another expansion of White Space to grow the company. But this looks much less likely now, because leadership opened White Space but did not manage it effectively.
Secondly, Ed Zander failed to Disrupt himself while Disrupting Motorola. When arriving at Motorola he moved fast to Disrupt. Of course, Disruption was "normal" at Sun Micrososystems where he used to work. Chronic Disruptions were part of the Success Formula at Sun, and became part of his Success Formula. But Sun got into big trouble when it became overly committed to a single market in network servers. Unfortunately, Motorola was allowed to be too committed to a dependence on mobile phones. What we now see is that while Mr. Zander was OK with Disrupting and opening White Space, he did not actually Disrupt his personal Success Formula and change the way he believed a business should be managed.
Once confronted with the threat posed by Mr. Icahn, Mr. Zander approved a quick $4.5billion stock buyback. And now he’s agreed to an even larger $7.5 billion buyback (see article here) – representing 75% of Motorola’s cash reserves. And he’s put in place a President and COO from inside the company – a sign of creating distance from the Disruptions and White Space he implemented (see article here) .
These are not good signs. I’ve had high hopes for the White Space at Motorola. If we recognize where the company was just 3 years ago, it has traveled a very successful road. The question now will be does leadership have the will to continue its road of Disruption and White Space to create a more successful Motorola? Will it follow through on the acquisition of PALM, given the current Challenges? If it does, and management holds the White Space leaders to business demands for results, Motorola can become again a great company. If it keeps following its recent trends – retrenching to Defending and Extending its mobile phone business and acting to protect management – then recent gains will be quickly unwound.
by Adam Hartung | Mar 19, 2007 | Defend & Extend, General, In the Swamp, Leadership, Lifecycle, Lock-in
In the early 1980’s Roger Smith took on the market Challenges facing General Motors. (see chart here) In bold strokes, he expanded GM beyond its old Success Formula including the acquisition of a high tech information company (EDS), a high tech electronics company (Hughes Electronics) and creating an entirely new auto company built on a clean sheet of paper (Saturn). These actions created the opportunity for GM to escape its past and become something entirely new.
But Roger Smith did not change the Lock-ins at GM. He did not Disrupt the organization and attack Lock-ins based on old biases related to what many employees thought GM should be. He did not change the company’s decision processes, its core metrics, its information architecture, its dependence upon a common prototypical GM manager, its relationship with labor nor its hoarding of knowledge in isolated silos. As a result, the White Space projectes survived only a few years after his retirement. EDS and Hughes are once again stand-alone companies, and Saturn has been "integrated" into GM causing it to lose its cache and much of its early loyal fan base.
As a result, GM today is much like it was in the 1970s – and much to our chagrin. (a look at the referenced chart will show that the company today is worth what it was in 1971). The company is a perennial low-player on the return-on-capital pole. It’s market share has steadily lost ground in the traditional auto market to imports. And P&L losses have mounted to the point that in 2005 and 2006 some questioned the very survivability of GM.
Similarly, a decade ago Jack Greenberg took on the market Challenges facing McDonald’s (see chart here). In the early 1990s he began acquiring Boston Market, Chipotle Mexican Grill, Donato’s Pizza as well as equity interests in Fazoli’s and Pret-a-Manger. Some of these were breakout performers, not only doing well in restaurant sales but even in the frozen food case at the grocer (particularly Boston Market). But Jack Greenberg did not Disrupt McDonald’s, nor did he attack its Lock-ins. Then he retired.
In January, 2007 executives at McDonald’s told the leadership of Boston Market they intend to sell the company (see full article here.) Once completed, this will completely reverse the White Space projects previously implemented. McDonald’s will once again be a "focused" franchisor and operator of hamburger establishments. The company is pinning its future hopes on yet another hamburger – the $3.99 Angus Third Pounder (see full article here). The old Success Formula – sell sandwiches -is once again dominating all activity at McDonald’s.
In the short-term, management is bragging about how its back-to-basics "Plan to Win" campaign has improved profits at McDonald’s. In reality, management has captured huge gains from the earlier diversification moves, in operating profits and in one-time gains from selling the businesses, which have all been booked to the bottom line in support of Defending & Extending the old McDonald’s Success Formaula.
But long-term, we know what to expect. This is the GM story, only with ketchup on it. Within a few years McDonald’s will be back again to fending off predators in its "core market." McDonald’s is in fact late with this latest burger, coming over 2 years after Burger King launched its Angus Steak Burger and after more than 8 variations of such products have been launched at Hardee’s and Carl’s Jr. since 2003. And the company is still vulnerable to the kinds of Challenges which sent them spiraling downward 6 years ago – potentially a renewed Mad Cow illness, or another attack on trans-fats or other health concerns, or franchisees complaining about no growth, or simply from the in-kind competitors it recently sold off grabbing a larger share of market.
We can’t predict the issue that will next stumble Big Mac. But we can be sure that the old Success Formula has already proven it has hit diminishing returns – and the future for McDonald’s looks a lot like GM’s. And that should scare a lot of people.
by Adam Hartung | Mar 15, 2007 | Defend & Extend, In the Swamp, Leadership, Lifecycle, Lock-in
No sooner had I posted the last blog on Ford than the company announced its sale of Aston-Martin. My goodness, the ravages of Lock-in are moving swiftly at Ford! (see chart here)
Ford is in deep trouble. The company has announced billions of dolars in losses, and it has had to arrange billions of dollars in financing to cover costs of its "turn-around plan." Ford expects to burn through $17billion during turnaround. What is the turn-around plan? It is to build multiple models worldwide on the same platform. Let’s see, how new is this idea? Oh yeah, that’s been the plan at Ford and GM for the last 2 decades! That’s not a turnaround plan – that’s a disastrously broken Success Formula that hasn’t made any money! (see full article here)
Aston Martin is a much smaller business than the Ford brand. It sells only 7,000 cars. But, let’s see, from total cars sold of 46 in 1992 that represents a growth of 152X (or 15,200% or almost 40%/year for 15 consecutive years). (see article here) While the Ford brand is losing billions, Aston Martin is profitable. What is Ford doing here? Selling a business that works – to support one that clearly doesn’t? As an analogy, isn’t this a bit like selling your child (or at least their labor) in order to purchase some medicine for terminally ill grandpa? We’d never do the latter, so why do the former?
The new Ford CEO said "The sale of Aston Martin supports the key objectives of the company, to restructure to operate profitably at lower volumes and changed model mix and to speed the development of new products." (see full article here) If he wants to accomplish the goals of profits at lower volumes, changing the model and creating new products he should be trying to emulate Aston Martin – learn from it – not sell it. Aston Martin is doing things much more right than Ford is.
Dave Healy, an analyst at Burnham Securities stated "Aston Martin was a prestige item that was a management distraction." (see article here) A distraction? The only way you can take that point of view is if you’re so locked into saving the old Ford Success Formula that you’re willing to do anything, even sell your only and most profitable business, to get 5% of the cash you’ll need in that vain turnaround endeavor.
Aston Martin has been a great success. Growth has been good, profits exist, and the brand has a positive reputation. The company has been a successful White Space intitiative. What Ford needs to do is get more of Ford (including money-losing Jaguar and other brands) to migrate toward the new Success Formula at Aston Martin. Management needs to migrate forward, but instead it is selling what works to try and regain the glory of the past. Ford management is not willing to admit that its Success Formula is seriously broken, and uncompetitive against much more formidable and successful competitors such as Toyota, Honda and Kia. Too bad. Without learning from White Space Ford has practically no hope of surviving this latest competitive onslaught.
by Adam Hartung | Mar 11, 2007 | Defend & Extend, General, In the Swamp, Innovation, Leadership, Lifecycle, Lock-in
When companies Lock-in they quit looking at the marketplace, instead focusing on running their Success Formula. In a very real way, if markets were highways and companies were autos we could say management starts driving the car looking in the rear view mirror rather than looking out the windshield.
A great example of this is at Ford (see chart here). Ford has been Challenged for several years. Like GM, Ford sales have struggled as the marketplace has shifted away from their great trucks and large SUVs (top sellers, and considered great products in their categories) toward less expensive to operate vehicles. Several years ago customers found higher mileage vehicles preferable, and began looking at hybrids and other innovations rather than more size and more towing capacity.
During this market shift Ford "retired" the Taurus. In the early 1980s Ford was swimming in red ink (much like today) when the company launched the revolutionary aerodynamic Taurus. The design changes, in body shape as well as transverse-mounted engine, front wheel drive and high-mileage overdrive transmission met customer desires and the Taurus became the #1 selling car in the world (right – not just hte U.S. but the world.) Ford had to open new plants to meet demand, and losses turned to substantial profits.
But as time passed Ford Locked-in on its #1 selling, and very profitable F-Series trucks and the SUVs spun off that platform. Few enhancements were made to the Taurus, and as the Toyoty Camry grew in sales eventually Ford stopped the Taurus. The car had a great 20 year run. But ,of great importance, Ford did not replace the Taurus with another revolutionary passenger car. Instead, they remained Locked-in to their trucks and SUVs.
Then the market shifted, and Ford was caught flat footed. Sales dropped, and the fortunes at Ford turned as bleak (possibly worse) than GM.
Now Ford has announced its solution. The company will rename an existing vehicle, the Five Hundred, the Taurus (see article here). The company hopes that better name recognition will sell more cars, and help turn around the struggling auto company.
Never has there been a better case of driving the vehicle by looking in the rear view mirror. Ford isn’t competing for the future, they are firmly trying to recapture the past! Management is hoping that somehow a name associated with past success will create future success. Managment isn’t even redesigning the Five Hundred. They are just renaming and re-launching it. Instead of looking at the direction the market is going, and driving the company toward future market needs, Ford is looking at what worked 20 years ago and hoping miracles will happen to produce that result again. Even though the market and competition has completely changed.
That’s what Lock-in to an old Success Formula can do for you. Make you so fixated on what previously worked that you quit looking forward and start spending your time dreaming about the past. Bill Ford, Jr. is a young guy. But he keeps looking at the past – the Mustang, the F-Series truck and now the Taurus – to try and save the company his family founded. Too bad. Instead of ripping off the Taurus name he would be better served to capture the spirit of the Taurus by developing and launching a new car that meets new market competitive demands.
by Adam Hartung | Mar 4, 2007 | In the Rapids, Innovation, Leadership, Lifecycle, Openness
About 6 months ago I blogged on White Space at Anheuser-Busch (see Surprising Juxtaposition here.) This last American-owned large brewer has had its stock go nowhere for the last few years (see chart here) as it has battled fierce competition in a consolidating and changing marketplace. Anheuser-Busch found it had slipped into a price war for volume. But more recently the compaqny has turned toward White Space to improve performance.
Anheuser-Busch has just taken another stepped up its White Space efforts by deciding to enter the beer market in India (see article here.) An important White Space project for several reasons:
- Moving offshore gives Anheuser-Busch more diversity of competition. The company will learn from new competitors about everything from product options to distribution and pricing alternatives.
- India, in particular is a great markt to learn. Competition is FIERCE. Prices are universally low, the currency is low (giving no break to mistakes), distribution is highly fragmented and much of the demand comes from poor people who have severe limits on what they can spend. Ninety percent of shampoo sales are made in single service sachetes which sell for less than $.01 each at thousands of small retailers. In consumer goods it’s been said "if you can sell at a profit in India you can make a profit anywhere." Now that’s a great place to learn.
- India is the fastest growign middle class in the world. While the American middle class is growing at 2-3%/year, rising economic prosperity in India is creating a growth rate exceeding 10%/year. And this is augmented by the fact that over half the population is under 30 years old, creating an expanding market for Anheuser-Busch products.
- In India beer = Kingfisher. Many of us who travel to India avoid all drinks with ice or from a fountain because of sanitary concerns and poor water quality. So the universal call for fluid refreshment, in a country that is constantly hot, is "give me a Kingfisher." Thus, India provides a great market in need of competition against a dominant product.
I’m sure the path to succes won’t be easy. In addition to the daunting distribution and competitive challenges mentioned earlier, Anheuser-Busch must learn to deal with terrible infrastructure (intermittent electric power, bad water treatment, terrible roadways, poor refrigeration), complex government bureaucracy overseeing business, hierarchical government entities that too often have corruption, strong Communist and Socialist government participants and districts, distrust of American interlopers, a vast array of advertising channels to a highly heterogenous media environment, 30+ languages in a single country, a propensity for unending negotiation as a culture and a completely dysfunctional legal system.
But the important thing is that none of this stopped Anheuser-Busch. And that’s what White Space is all about. Phoenix Principle companies identify a market opportunity and then jump in to learn. Not just for what can happen in that new market, but what it can teach the company overall. Possibly even how to develop a new and better returning Success Formula.
by Adam Hartung | Feb 17, 2007 | Disruptions, General, In the Swamp, Leadership, Lifecycle, Lock-in
Dell Computer has had a rough go the last couple of years. They’ve had some batteries catch fire – not good for marketing. And they’ve had some SEC investigators looking through their books – not good for investors. But neither of these problems are really that unusual or monumental for a company the size of Dell. The big problem has been that the company isn’t making the money it once did, and it’s sure not growing like it once did. That has stripped the company of 40-50% of its value, or about $43 billion in market loss for investors (see chart here.)
So what’s the response? At the beginning of this month the Chairman and namesake, Michael Dell, announced he was removing the CEO and taking back the reigns (see full article here.) Should we now expect a turnaround?
Michael Dell pioneered the Success Formula that made Dell Computer famous. Simply put, Dell sold directly to customers, outsourced everything they could, used other people’s technology (no R&D), focused on the supply chain to shorten manufacturing and distribution cycles and kept prices low. And anything that wasn’t part of that Success Formula does not exist at Dell. This Success Formula produced great results, and Michael Dell locked it in with every conceivable software product, metric and decision process he could. There was/is no variation at Dell, just execution.
Unfortunately, this Success Formula was not impossible to copy. Competitors not only matched the supply chain expertise of Dell, but added onto it with product innovations, credit terms for corporate buyers, and enhanced peripheral products that expanded the total customer purchase. They matched Dell, and did the company one better. So customers migrated to these competitors. Dell didn’t suddenly lose its Midas touch. Execution hasn’t faltered. Competitors just kept getting better in this dynamic market, and execution wasn’t enough to maintain sales growth and margins.
Now the king of execution is returning. What can we expect? More of the same, of course. The implication, and stated objective, of Michael Dell’s return is to get Dell "back on track." That’s back on track to what they did a decade ago. Is that likely to turn around their fortunes, in a more competitive marketplace with yet more competitive variables?
Dell doesn’t need more Dell. They need more innovation. There are no Disruptions at Dell. And this change of leaders will not create an internal Disruption demanding change. There is no White Space at Dell. I blogged on this previously, and a PR employee responded (you can read the comment by going to that blog) that Dell is a great company. But even he could not identify any White Space in Dell. Despite my emails to him asking for any examples of White Space he could provide — any at all. Without White Space, how is Dell to develop a new Success Formula to produce results in 2009 like they had in 1999?
Michael Dell and his company was a fantastically successful pioneer. His vision helped create a Success Formula that greatly assisted putting a PC on nearly every working desk and in nearly every home, not to mention in the hands of most students, salespeople, and other mobile worker in America. But that Success Formula has already passed the point of diminishing returns. Unless Dell learns to Disrupt and implement White Space, look for the future to be more of the recent past. Results included.
by Adam Hartung | Feb 12, 2007 | Disruptions, General, Innovation, Leadership, Lock-in, Openness
Is a Tattoo art? Can a tattoo style drawing sell a product? These are two questions I really never asked myself before, but now I’m asking them a lot.
Sometimes we can’t see what’s right in front of our faces. We all suffer from BIAS – Beliefs, Interpretations, Assumptions and Strategies – that we carry around in our heads. As we develop our Success Formulas, we Lock them in with our BIAS and we often start missing things. And some of these can be really big trends.
The Chicago Tribune ran an article in the Business Section (yes the Business section) about the use of tattoo art in mainstream ads (see full article here). Now, I have to admit that tattoos are not something I think about at all. But this article pointed out that they are getting to be pretty much everywhere, on everybody. And, as importantly, the artists are downright cheap compared to typical graphic artists used in ad production. That really caught my attention.
Then I started to notice, and think. The images of Anna Nicole Smith all over the TV following her untimely death showed a tattoo on her leg. Many (maybe most?) of the performer’s at this week’s Grammy award seemed to have visible tattoos. Then I realized that I see tattoos increasingly on the young people that associate with my high school and college age sons. I had "seen" these tattoos before. But my mind hadn’t "seen" them. Why, it was startling how popular tattoos are. I noticed last weekend going to run errands that I identified at least a half dozen tattoo parlors within 10 miles of my northwest suburban Chicago home. No matter what I thought, or better said what I didn’t think, about tattoos they are a lot more popular and part of popular culture than I realized.
My Success Formula had never thought about tattoos. I have held the top marketing job in a $3B manufacturing company, and worked at PepsiCo a top marketing company, and I am heavily involved in advertising graphics with clients today — and from that I had developed a Lock-in about commercial graphics. And that Lock-in left me completely BIASed to ignore tattoo art as a commercial graphics product. The Tribune article showed me a market Challenge – a new art form that is growing in popularity and cheap. And as a result I’ve had to Disrupt my Lock-in. Now I’m looking for White Space to explore the possibilities this might open up for advertisers. (As long as it doesn’t include putting ink into my 50 year old white, less than menacing forearms – lol.)
We all have Success Formulas, and we Lock them in. We develop a BIAS around them that can blind us to opportunities. That’s why it is critical that we use external stimuli to help identify market Challenges we otherwise will completely miss. Don’t become BIAS blinded to opportunities.
