by Adam Hartung | Apr 8, 2007 | Defend & Extend, General, In the Swamp, Leadership, Lock-in
March auto results came out last week. (See article here)
Toyota sold 12% more than a year ago. Honda’s U.S. sales rose 11%. Nissan’s rose 8%. Hyundai and Kia also posted increases. GM sales fell 4%. Ford sales fell 9%. Chrysler sales fell 5%.
What’s interesting is the comments made by the U.S. manufacturers. GM said sales were off because of "planned reductions in sales to rental fleets." Ford said they also suffered from declining rental fleet sales, but they are dependent upon big-vehicle (SUV and truck) sales and the F-Series saw a 15 percent sales decline. And, of course, last year saw record sales for these vehicles so this month should be ignored. They also seemed to miss that sales of Toyota’s full-size truck sales quadrupled (that’s 4x) in the month.
Defend & Extend management reacts to problems by pretending the problems don’t exist, or saying that there’s an explanation indicating the problem isn’t real. Avoiding the problem is a common reaction to problems for D&E managers.
GM, Ford and Chrysler are loaded with D&E managers more intent upon prolonging the Success Fomulas than dealing with the market Challenges. Meanwhile, Toyota, Honda, Nissan, Hyundai and Kia are selling more cars. When a Success Formula no longer produces positive results it needs to change. But Defend & Extend managers are unwilling to admit it. And until they do, it makes competing much easier for the small market players.
by Adam Hartung | Apr 8, 2007 | Defend & Extend, General, In the Swamp, Leadership, Lock-in
There are lots of ways to Lock-in a Success Formula, and one of the best is compensation. If the Board of Directors, or management, wants to make sure that Defend & Extend management flourishes, all it has to do is compensate people to do what they’ve always done.
We’ve seen this tactic executed well at the Tribune Company (see chart here). As I’ve blogged recently, Tribune has done nothing for shareholders for years (check the chart if you have any doubt). And now it’s moving forward on a leveraged buy-out that’s sure to leave it no cash for any new initiatives, despite incredibly fierce market Challenges from new internet players. As was recently stated by the soon-to-be Chairman Sam Zell, he doesn’t even care of if cash flow goes up, he just doesn’t want it to go down (see full quote here.) Well, he can hope for that unlikely outcome – but it’s not the point of this blog.
Rather, this blog is about the compensation for the senior team at the Tribune. According to the Chicago Tribune newspaper (see article here), top management is being rewarded very healthily for this deal. The Chairman is getting not only his $1M salary, but a bonus almost 5x his previous. And, he’s getting big guarantees of future pay and bonus for 3 years. Most of the management team will, in fact, get huge severance payments no matter how the future turns out for the business.
Tribune Chairman FitzSimmons is a lawyer by training. So what did his personal Success Formula tell him to do when the market shifted and the internet started driving down revenues and profits? Instead of trying to fix the business, he opted to sell it! For a lawyer, a legal solution seems lots better than a business one. And, to make sure he got everyone on board to do a deal, he tied compensation to creating one. As the article points out, for the last year his bonus was largely tied to increasing cash flow – not to finding new revenue sources, or finding new advertisers, or developing a strategy to compete. No, it was tied to generating cash. So, he and his team kept up the pressure to CUT COSTS. And through that, he pumped up the cash flow in order to make an acquisition more palatable and find a buyer. The compensation wasn’t tied to dealing with market needs, but rather to Defending & Extending the broken Success Formula, and finding a buyer to take it over.
Now we can look to the future. The vey top management of Tribune will share in approximately $650million of bonuses if the company can pay off the $13billion of debt the company will hold post-transaction (see article here). Once again, compensation wll drive the Lock-in to doing nothing new, and instead continue the cost cutting to D&E the failing Success Formula.
Suppliers, shareholders, bondholders and the consumers of newspapers in Chicago, L.A. and elsewhere will all suffer as the Tribune continues to be raided for more cash to dig out of this new debt avalanche. But the people who made the decisions are getting hefty sums. And it just goes to show the power of compensation as Lock-in. No risk was taken of possibly saving the business – only cutting costs from a horribly broken Success Formula. Good luck Mr. Zell. And to all of us who have depended on the Tribune Company.
by Adam Hartung | Apr 4, 2007 | Disruptions, General, In the Swamp, Leadership, Lock-in
The Chicago Tribune on-line published an interview with new owner Sam Zell. You can see full article here, but parts are worth repeating:
Q: How do you get your information? Do you read newspapers? Do you read online?
Zell: I’ve never read online. I don’t have a Blackberry. I read five newspapers a day, Chicago Tribune, Wall Street Journal, New York Times, LA Times, Financial Times. And I read everything. I read Forbes, Fortune, Business Week.
The new leader of a business who’s very viability is threatened by a new technology does not use it. And we’re to expect he’s prepared for the Market Challenge facing Tribune?
Q: Is it OK for a (top) manager to say, ‘I don’t want to do what you want me to do?’
Zell: No. He has the opportunity. He has the job. Whatever the terms of the job are, he has to live by them. All I can tell you is that, I am your boss and I tell you to do something that is not unethical, but is in line with some big corporate program or directive or philosophy, you’ve got a choice. You can play or you can go work for somebody else…Everybody’s entitled to an opinion. But once you’ve chosen to work with somebody and the lines of the story are clear, I don’t know how you could operate a business if you lay out a strategic plan and then have 20,000 people opt out.
Does this sound like a leader prepared to use White Space in order to find a solution to the thorny market Challenges which have led the Tribune into a 5 year slide?
Q: In the newspaper business, raising revenue means either raising advertising rates or raising circulation or a combination of both. At first blush, which of those makes more sense. How do you do that?
Zell: This is for sure an amateur guess at this point. But I would think the biggest single issue is circulation and circulation penetration. And I think the issue is what if, how do we do this, what’s our cpm? And how can we lower that cpm to make us more competitive with other forms of media. Those are the kinds of questions that I think are relevant. I think the answer is probably we have to find ways to increase circulation and to increase penetration.
Let’s see, the biggest issue is circulation, and that is down because more people, especially young people, are getting news from places other than newspapes (especially the web). And the new leader doesn’t use the web, or even a Blackberry. So how’s he planning to increase circulation? Does he think Tribune has been ignoring this problem the last 5 years? Is he aware of some "silver bullet" for newspaper circulation problems that isn’t known to people at Chicago Tribune, Los Angeles Times, New York Times, Washington Post, et.al.?
Q: But the ESOP isn’t going to have a seat on the board. Why not?
Zell: The idea was that two of the independents would be run by the ESOP. But in the end, it was all about alignment of interests, and nothing else matters. I’m putting $315 million into this deal, cash.
Sounds pretty clear who’s in charge here. The 65 year old guy that reads 5 newspapers a day (how many people do that? how many under 40?) and doesn’t use the web. And he’s not exactly open to ideas from the employees, who ostensibly own the company but have no representation.
Sam Zell has hooked his wagon to the Tribune management team that has not addressed the market Challenges for the last several years. He is comfortably blind to these Challenges. He’s going to use $7.2billion of other people’s money (bond holders) to try and get a return on his $315million. As a real estate magnate, such use of leverage fits his personal Success Formula. But the Tribune is not just a building on Michigan Avenue. Customers and revenues are falling, and there’s not a limited amount of news availability – like there is land.
Defend & Extend Management is planned at Tribune Company. And that means more cost cuts and further erosion in the business. Where’s Steve Case (former CEO of AOL) when you most need him? At least he knows how to use the internet.
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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 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 | 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.
