Cool vs. Fool: The Apple Brand Promise

Steve Jobs does bring a great deal of value to Apple.  He sees into the future with binoculars while we have a hand over one eye.  He sticks to his plan while others cast about.  He has no problem implementing unbelievable measures to keep things secret.  He is an inspiration to his employees and no doubt his enemies.

I submit that above all of these things his greatest value is delivered as the keeper of the Apple Brand Promise.  

As the importance of the salesperson is displaced by a customer's interaction with the social graph, the Brand Promise is more important than ever.  The Brand Promise is the context within which the community talks about a product.  A well established Brand Promise erects boundaries beyond which even detractors cannot go.

What do you think the Apple Brand Promise is?  For a long time it was that Apple products were easy to use.  I do not think that is it anymore.  

I propose this:  You will always be cool with an Apple product in your hand, in your bag, or on your desk.  Steve Jobs upholds his promise that you will not feel a fool for buying his creations.

How else could he convince everyone to pre-order iPads -- a first generation product that no one has even seen!

Love him or otherwise, that Steve Jobs is doing it again.

How Much to Pay the Guy Driving

It is interesting how humans adapt to systems and even more interesting when you consider that humans created the systems.  The idea I outline here has a remarkable parallel in Jaron Lanier’s thoughts about how people react to computers.   It also may translate into thoughts about how much we pay CEOs.

Years ago in sailboat racing there was the International Offshore Rule.  The IOR rule was, like all of the rating rules before and hence, intended to be a fair way to handicap boats that were different so they could race against each other.  And racing rules like the IOR go through a predictable cycle just like businesses and cause people who think they are rational to do the most irrational things.  I submit that the phases for sailboat rating rules are invention, adoption, popularity, optimization, insanity, and retirement; and bear a fair amount of similarity to business cycles.

1. Invention happens about the same time the prior rule is in the insanity phase and one person wakes up one day and says that the current way of doing things is crazy and there has to be a better way.
2. Adoption is when that one person comes up with a better way and convinces others to follow.  Of course a better rating rule is no good to one person because the whole idea is to race against other people and without others – there is no point.
3. Popularity comes about when enough people defect from the old rule to the new rule (in sailing this is usually a process of getting your boat measured so you can get the new rating number, and then switching to sail in races governed by the new rule instead of the old one).
4. Optimization happens as the stakes get higher.  Now that a lot of people are sailing under the new rule and their natural competitiveness causes them to make changes to their boats to improve their ratings.  The funny thing about this is often the changes make the boats slower or more difficult to handle but the rating benefit more than offsets the performance handicap.  That is right, racing sailboat owners voluntarily make their boats slower in order to be more competitive. 
5. Insanity comes at the extreme end of this cycle when people spend hundreds of thousands of dollars to have new boats build with extraordinary shortcomings that could only be induced by the rating rule itself.  Strangely, and presumably for the same reasons that Jr. High boys find the outcome of flushing bleach down the toilet an irresistible attraction, this insanity phase can last for some time.  Eventually though the seeds are sown for next rating rule and usually by someone we usually brand as a geek.
6. Retirement of the old rule happens as the new rule gets to the popularity phase.

Followers of Schumpeter would call this a healthy market and a productive use of resources in the pursuit of higher performance.  And they could be right.  The most insane of the boats under the old rule really cannot convert to the new rule and get sold to outlying markets where the old rule has not yet run its course.  Depending on how insane the insanity was there is a reasonable counterargument that the resources invested at the end of the cycle do not produce anything useful – excepting maybe creating a fertile environment for the new rule.

During the insane period of the IOR era the custom built boats had a distinct hollow section in the shape of their hulls where the measurements were taken that sucked the boat down into the water - so the boats were very squirrelly sailing downwind when it was windy.  This hollow section and other elements of the rule induced the designers to put up massive amounts of sail area downwind with oversized spinnakers.  So here you are going downwind in heavy wind with these giant sails pulling the boat forward while the back of the boat is getting sucked into the water by the hollow section and the combination would induce a death dance of wild rolls from one side to the other - and yes you can put the mast of a 15 ton racing sailboat into the water rather decisively.

There were only a few people on the planet that had the right combination of skill and bravado to drive one of these boats downwind in a breeze.  You had to steer very aggressively and often times at the end of a roll, right before you could wipe out, the rudder would start to lose its effectiveness and the best thing to do was just let go, watch the wheel spin wildly and then decisively grab the wheel to reestablish flow over the rudder and send you down the next wave – if you were lucky.  It was quite a thrill and even with the reverence in the business for accomplished downwind IOR helmsmen, most people were quite glad not to be driving. The strange thing is that the properly designed boats with clean lines needed less sail area, stepped up on a plane going downwind in a breeze, and actually got more stable.  And they could be driven by mere mortals and with very little drama. So, who should get paid more, that crazy guy in the IOR boat driving like a madman while everyone else holds on for dear life, or the guy in the properly designed boat with almost no visible effort and the hearts of his crew beating hard because of the thrill and not the terror? 

Bear in mind that when the IOR boat wipes out the race is pretty much over, and some big checks are going to have to be written to sail makers and the boatyard.  And the boat not designed to the IOR rule?  It would actually be going considerably faster through the water. This is why we pay CEOs so much these days – let’s hope someone invents a new rule soon and makes their skills obsolete.

We’re Out of China, Too

Me and Google.  That’s right – I am pulling out of China.  Ok, we have no operations there and we have no customers there and… well we really had no plans of ever being there.   So, why am I pulling out?  As John Dvorak says:  “This is all PR”.  I am just hoping that someone will find this post and rescue my readership numbers and rocket me into the stratosphere.  After all, I did not get picked by Leo Laporte or Stephen Colbert in the Twitter lottery – so this is my newest strategy. 

You see, GoDaddy did it.  They pulled out of China with Google.  They don’t have any more business there than I do. But I am just lovin’ Danica Patrick and I will do anything she does. She doesn’t have anything to do with the internet, other than being fast, (actually I don’t really know that). But Bob Parsons is a great marketer and so I am with Danica and Bob and I am pulling out of China.

Danica will tell you that in car racing drafting behind the leader will save you fuel and get you in a good position to win later.  This is a strategy employed in marketing too.  Draft behind the big stories and boost your numbers.  When I saw GoDaddy drafting behind Google my first thought was – hey, that’s pretty tricky – do you think anyone will go for that?  Here is a great time to use that word “clever” when it is really not a compliment. 

Really though, this brings up what I call the “Pay or Be Paid” issue.  Would it be better to get paid to speak to people who want to hear you, or pay to speak to people who have never heard of you?  … or sneak in the back door and jump on stage and say “Hey, I want to speak too!”

The Timid Need Not Apply

On the morning of August 7, 1974, the Frenchman Philippe Petit walked across a steel cable he had strung between the twin towers of the World Trade Center.  He not only made it to the other side, but spent 45 minutes going back and forth eight times and even jumping up and down and lying down on the cable.  When asked why he did it he said: “When I see three oranges, I juggle; when I see two towers, I walk.”  Philippe Petit is the perfect profile for someone running a marketing department.  We just do this stuff despite the risks.

Marketing is Not Safe

The volatility in the job markets has caused people to be much more interested in job security.  Gallup just did a poll and 70% of working Americans said that their current job is the ‘ideal job’ for them.  The people in the Gallup poll must not be in marketing.  CMO tenure has been getting better over the past couple of years – but it is still very short at 28.4 months.  How anyone can focus on the big picture with a two year horizon is beyond me.  So it is clear that anyone looking for a safe and secure job need not apply.  Marketing is definitely a fun and vibrant industry but by all measures it is definitely not safe. 

Here are five reasons that Marketing is Not a Safe job:

The Environment is Always Changing: The competition is doing things, other industries are doing things, the tools are changing, customers expectations are changing, and the economy is changing.  There are so many things changing all of the time that it is impossible for anyone to sit still.  To make matters worse, the rate of change is increasing.  So if you thought last year was wild – get ready for next year because it is going to be wilder.

No Clear Measurements: Despite tremendous advances in the tools and tactics for measuring marketing performance, there are no agreed upon standards.  The sales department has revenue and marketing has a mixed bag. And just when it seems like a standard is going to emerge the environment changes.

Exposed to the Blame Game: When things go bad people go looking for someone to blame, with no clear measurements and a constantly changing environment, the marketing department can be as exposed as a Frenchman on a wire.

Public: Scientists can do their experiments in a lab, marketing people do not have that luxury.  By definition marketing activities are public and therefore the wins are exposed to be copied and the losses are spectacular crashes in plain view.

Requires New Ideas: The half life of a successful marketing idea is even shorter than the tenure for CMOs so a constant stream of new ideas are required.

So, if you want to exist in a world where there is no job security, no agreed upon measures of success, where you can get blamed for other people’s screw ups, where you regularly fail and sometimes succeed in public, and you have to come up with new ideas all of the time – marketing is the job for you!

Wait! There is More

If you can bear to read on you already know you are well suited for the marketing business.  Here are three things successful marketing people do to not only survive, but thrive in this environment.

Set Expectations Properly: We have all been in countless meetings where the expectations ascend into the rafters – you know, go viral, a Cadbury moment.  There is no question it would be awesome, but it does not happen very often.  So any plan has to be built around a realistic expectations.  If the plan does not make sense with a the laws of gravity applied then come up with a new plan.  There is a big difference between leaving an opening for serendipity and counting on it. Pros don’t get caught up in the hype and set unattainable expectations.

Talk About One Measurement: Measure everything, but only talk about one measurement.  In the end there should only be one measurement that counts and talking about all of the other (contributing) measurements just sounds like excuse making.  You and your team can use all of those other measurements to learn fast and learn a lot, but in the end the one key measurement is the only thing that matters.  Remember, this one key thing should be the thing that your marketing department’s client (the sales department) is expecting to get.

Fail All of the Time: So much has been written about failing and failing fast that it seems we sometimes forget to do it.  Even previously successful campaigns can fail as the environment changes.  Make sure you know what failure looks like and don’t talk yourself into re-casting a failing campaign as a winning campaign by picking out one good looking number and putting all of your weight on it.  Make sure to set expectations properly and that means describing in advance what a failing campaign looks like and agreeing what will be done.

So Marketing is Awesome

Anyone still reading is already converted.  We should remind ourselves more often that marketing is an awesome business and we are all lucky to be in it.  Philippe Petit truly enjoyed his high wire act.  He was in his element, he had done his homework (he had been planning since 1968), he was a professional, and it was obvious to everyone who witnessed the event.    

Book Review: The Box by Marc Levinson

Sure a book about the shipping container is a little obscure, but this really is a good story and I recommend it for anyone interested in economics or longing for a tale about creative destruction.

The life of Malcom McLean, a larger than life character from North Carolina who started with a single $120 truck and ended up building ships too big to go through the Panama Canal, is enough to fill at least one book.  

Any writer as dedicated to meticulous research as Levinson is exposed to the tug of war between tedium and readability.  Thankfully a great deal of the content can be found in the dozens of pages of notes and references at the end of the book, making the thing readable by both casual observers of economics and true students of the craft.

Here are my take aways:

1. Dewitt Clinton changed everything by digging the Erie Canal and lowering the cost of moving a ton of goods from the heartland to New York from $100 to $6.  That meets the 10X improvement often set as the bar for real innovation, and the change brought about by containerization was 10X that.
2. The laws of economics, specifically prices seeking equilibrium, might be slowed by labor unions and government regulation, but cannot be stopped.  Eventually the market will set the price.
3. When it comes to building infrastructure, the market participants will likely get off to a slow start, then build like crazy to catch up, and invariably overshoot the mark.  From railroads to fiber optic cable, we have seen this over capacity from overly enthusiastic investment many other times.

Here are some other reviews:

Princeton University Press

Business Week

Here is a link to the book on Amazon.

Changing the Game

Years ago I met a guy who was in economic development.  Every town, city, state, region, and country has someone working to make sure they get the biggest possible slice of the economic pie.  He was that guy for one town in Texas.

Everyone in this business is working the same levers. They highlight their low costs, high quality of life, great workforce, cooperative government, and cap it off with some tax breaks or plain old cash -- all to get companies to move to their town.

This guy was different though.  He decided that all of these factors were insignificant when compared to the motivations of CEOs that wanted to make big changes in their companies.  He had found a study that showed how changing a corporate culture took seven years -- and the only way to speed it up was to replace at least half of the employees.

He also learned that if you move your company far enough, less than half of the employees will move with you.  So he decided that he was not going to pull the same levers as everyone else.  He decided he was in the business of helping CEOs make dramatic changes to their businesses.  He decided to change the game -- and his town won big.

Third Party Payer Systems Under Siege

The passage of the Obama Health Care plan establishes a crack in one of the most dysfunctional third party payer systems that plagues us.  It is interesting to note that some other third party payer systems are also threatened.  Could it be that we are seeing the end of this business construct -- even though it has been in place for so long?  Here are some examples:

Health Insurance:  By far the largest and most complex.  With employers paying premiums to insurance companies, insurance companies paying for services, and employees as the "customer" getting market rationality into purchasing decisions seems hard to even imagine.  Add to this the prospect of insurers pursuing reimbursement from the government, new layers of taxation, doctors and hospitals sending bills to both insurance companies and the customer -- and we have alot of cleaning up to do.

Advertising:  Pretty simple.  Advertising pays the newspaper, magazine, radio, or TV production company and the "customer" gets the content for free or close to it.  Most attempts to get the customer to pay directly for content fail but we pretty much all agree the media industry is in decline. 

Mortgage "Products" and other Financial Derivatives: Get extra money out of your house and use it to go on vacation.  Seems like pretty simple finance until the terms of the mortgages were so easy to get that the money was free.  Here the third party structure was fragmented and hard to identify -- since it was really a general injection of cash into the economy.  On a larger scale you had firms that called themselves banks making big bets on synthetic financial inventions to the extent that the business we all thought they were in was a footnote on their financial statements.  It would be great if this was behind us, but there are already signs that the banks are back at it already.

Public Education System:  We believe in the importance of education just like we believe in national security, so we fund it through tax revenue.  Today it seems that anyone with the means moves out of the public education system and into private schools. By virtue of the tax system however, they private schoolers are still paying for the public system, so we have a significant and growing third party payer system here too.

All types of Agency:  Travel agents, real estate agents, and many other intermediaries that deliver services to customers while getting paid by someone else, are in decline as transactions get more and more direct.

So are we on the verge of a world where customers will pay directly for the services they value?  It might actually be easier to sort some of this stuff out if we gravitated back to making rational purchasing decisions and paying for the products and services we get.

Make A Difference

The other day I was talking to a hedge fund friend and he said he was doing his part to efficiently allocate capital in the biggest and most vital economy in the world.  Not surprising really because this is often the value statement I hear from Wall Street types.  Someone has to kill the inefficient market participants and fund their replacements.  I suppose the comment struck me this time because I had just come from a lunch where two women were being recognized: one for her work stopping the cycle of domestic violence and the other for her work on a cure for cervical cancer.  

Pretty hard not to think about the value I contribute to the world when presented with these bookends in close succession.  In the 25 years since I graduated from school, when the entries in the ledger started to be written in ink, I have spent a decade brokering real estate deals and the rest running an outsourced sales and marketing firm.  I have done my best to try to live up to the incredible example set by my dad, who is retired now, but in his career as a Presbyterian Pastor built four thriving church communities and changed thousands of lives.  I have volunteered for some worthy organizations, tried not to waste the money the universe trusted to me, put my heart into my wife and my kids, and been the best friend I know how to be.

Sure, that is nice, but how do I know if I am making a difference at work which is the biggest chunk of time that I spend?  If I was to back up a bit for some perspective could I honestly say that what I do for a living makes a difference?  With any luck I have some time before the final measurement.  Until then my plan is to do the very best I can possibly do every day, ask myself the hardest questions I can think of, find the best possible people to work beside me, and hold my colleagues to high standards.  I have a friend that likes to say "hey its not like we are curing cancer!"  Nevertheless, I have to believe that by living this way I will make a difference in the world.

So that is it?  Just those four things?  Actually no.  I think it is really just the first one.  I am going to get up every morning, look myself in the mirror and when it is just me and my reflection I am going to figure out how to do the very best I can possibly do -- right then, that day, all day.  The rest will take care of itself.

Our Healthcare Story

My hat is off to the Obama team for getting the healthcare legislation rolling.  I admit I have spent less time than I should following this because I did not give it much chance of getting off of the ground.  Frankly, I really do not know how this is going to impact our business or our employees, but at this moment I am willing to give the thing the benefit of the doubt and assume this is a step in the right direction.  In thinking about what value I may be able to bring to the dialog, I thought I would post what I learn as I learn it and therefore provide one real world data point for people to follow.  

With that in mind, here is a condensed overview of the current healthcare situation at CSG.  

Current Situation:  We are in our fourth year of what some people would call self insurance, and I call a do it yourself healthcare plan.  With the help of a broker, an administration service provider, and two reinsurance companies, we have assembled our own healthcare solution.  We struck out in this direction with two stated goals:  1) get control of costs and 2) prevent our benefits from sliding back any further.  Our costs (equivalent of a premium) are $414.04 per individual and $1,182.99 for a family, and we use a preferred provider network that gives our people access to a good number of doctors for a reasonable co-pay and a manageable deductible of $500 per individual and a maximum out of pocket of $2,000 per year per individual.  For this we require individual employees to pay 25% or $103.51 per month (and the company pays $310.53).  We also offer dental at $40.91 total with an employee contribution of $10.23.  For families we require the employee to pay 75% -- which is quite a burden on the employee, but we do it that way because the cost to the company is the same as for an individual.

When I started the company in 1997 we paid $129 per individual and had lower co-pays, lower deductibles, and lower max out of pocket.  We never had a year with less than double digit premium increases (by percentage) and by the time we bailed out of that system in 2004, our premiums were up over 3X to $496 per employee per month.  Our benefits were diminishing every year and our people were fighting with the insurance company over far more claims than we thought they should.  

We offer healthcare coverage on these terms to every employee that has been with the company for 90 days or more.  We do not require our employees to purchase healthcare and some elect not to because they get coverage elsewhere or perhaps they go uncovered.  Because of these variations in the number of employees electing coverage, the company's portion of the cost of healthcare has ranged from a low of 4.09% to a high of 7.40% and an average of 5.92% over the four years 2006-2009.  Because of the mix of individuals to families, the company only pays 67% of the total cost, making the average total cost as a percentage of payroll 8.83%.

I will do my best to share how the new healthcare laws impact our company.  Feel free to post your experiences.

Book Review: The Big Short by Michael Lewis

Michael Lewis just put out another book about Wall Street - the topic that originally made him famous when he wrote Liars Poker in the '80s.  Readers of this blog know that I am already a fan (see Moneyball and The Home Game) and The Big Short does not disappoint.  

Knowing that I am not going to get another new work by this author for a year or so, I did my best to pace myself, but it was hopeless and three days later I was done.  Even though I am familiar with the story (see Too Big to Fail) I was not tempted even once to skim.

In a strange way the book restored some of my confidence in our free market system because the people that the author chooses to follow in the book are small time outsiders who were able to figure out very early what was going to happen in the market for mortgage bonds. Simultaneously however, Lewis reinforced my view that the Wall Street game is rigged and only a fools expose their money to parasites like Goldman Sachs. 

Here are my take aways:

1.  The people at Goldman Sachs really are the best and the brightest -- and they really are amoral.  They invented the complex instruments that caused the problem, made the fees, and promptly offloaded the risks to others -- like AIG.  They did their very best to conceal the truth by influencing everyone from the ratings agencies to the government -- which permitted the problem to get very big before it blew up.  I can't help but wonder how many other times the economy got wobbly and was prevented from behaving like a self correcting rational market because Goldman and others like them were madly pulling all of the levers to maximize their winnings.
2. Our government has no idea what to do about it.  Clearly the regulators are being deceived and worse yet they don't know it.  They were nowhere to be found while Bear Stearns, Lehman Bros, AIG, and others were placing gargantuan bets with other people's money and, amazingly, enough of their own money to blow themselves up.  When it came time to assess the situation and decide about TARP there was not a single government official that really knew what was going on.
3. The author makes an effort to get to a root cause and drills to the Solomon Brothers conversion from a private company to a public company and therefore shifting the risk of their activities away from themselves and to their shareholders.  Everyone of John Gutfreund's peers considered it a betrayal at the time, but they all eventually followed suit.  Once they had suckered others to bear the risk -- they cranked the compensation models in their own favor and the RTC/Junk Bond blow up, the Long Term Capital Management blow up, the latest melt down, and the next catastrophe were set in motion.

That is right, we have not fixed a thing and just as the insiders are on their way to their next really big payday, the rest of the country is on its way to another "surprise" on Wall Street.  If you have a hard time believing this, check out this article in the Guardian about David Tepper.  Tepper decided he was not being fairly compensated at Goldman Sachs -- so he started Appaloosa Management that bet big on the government bailout of the banks.  His fund is up $4.5 billion and he gets $2.5 billion of it.  I wonder what is going to happen when the size of the problems created on Wall Street exceeds the financial capacity of our government to pay the bill.  Will we call that financial armageddon?

Here are some other reviews:

The New York Times

The Washington Post

Reuters

Here is a link to get the book on Amazon.com.

Lipstick on an Excel Pig

A really smart MBA with a spreadsheet and proper motivation can make just about any idea look good and we have all seen campaigns, ideas, and even entire companies get funded in this way.

One of the things that often impresses me about the people I meet at Microsoft is their ability to be self critical.  Some would argue that at times it goes too far.  I think it is a characteristic other companies should try to emulate.  

Last year at the Monaco Media Forum, Darren Huston, Microsoft's VP in charge of Consumer and Online, gave a great presentation and one of the things he said was: "average creative gets way over measured to try to prove it was great creative.  Great creative -- we don't spend weeks measuring."  The "we" at the end gives away that in addition to making this great observation, he was showing how Microsoft can be its own greatest critic.  I believe this one corporate personality trait is Microsoft's biggest asset.

Whether or not the criticism is self directed, he was making a very good point, and we see it played out often in the technology marketing industry.  Marketers get so attached to their ideas that they lose the ability to call a pig a pig.  

This disability is self inflicted.  By recognizing in advance that many ideas will not produce the desired results.  And that no matter how experienced your team is, marketing is dominated by experimentation.  You can in effect leave the door open to honest self criticism and ensure that there is a safe way to kill ideas that fail.

Immigration Numbers

To answer those that say immigration is at an all time high, here are the numbers.  The immigration numbers are from the Migration Policy Institute and the population numbers are from the US Census.  I am sure there are immigration numbers in the census, but I could not find them.  If anyone wants to point me to them I will remake the charts.

The short story is that annual immigration hit 1.285 million people in 1907 -- which at the time was 1.5% of the population, and then declined all of the way down to .02% of the population in 1933 and did not exceed the 1907 number until 1990 when we hit 1.535 million people.  By then the country had grown enough to make that only 0.62% of the population.  In 2002, the last year for which I found data, we settled in at about 1 million people per year or .37% of the population.

Importing The Desire to Win

There is one common thread that runs through the three main problems with our public education system.  The three main problems are: the administrators, the teachers, and the students.  The common thread is the desire to win. If we could just change this one thing, we could actually reform our public education system and establish some momentum on the path back to worldwide competitiveness.

The enemy of the desire to win is entitlement.  Our students feel entitled to a good life without having to work for it, our teachers feel entitled to their jobs without performance measures, and our administrators...well they are so deep in their own goo that they have not thought about actually fixing education for over a decade.

We can do this the easy way or the hard way.  The easy way is to open the immigration floodgates and import the desire to win.  Sure the contra argument is that freeloaders would come in with the tide -- just to get our awesome healthcare.  But they will be a tiny minority.  The rest will be energetic, motivated, people with the desire to improve themselves and their position.  This is not an original thought and it worked for our country for its entire history -- save the last 50 years or so.  

Thomas Friedman's column today absolutely nails this point.  In it he cleverly lists the names of the finalists for the Intel Science Talent Search - which even the most ardent anti race profiler cannot help but admit hail from points east from here.  

These amazing people all share two traits -- they came to America to change their stars, and they have an insatiable desire to win.  If we could only get more of them.

March Madness is the Perfect Story

If you asked 100 people to describe me not a single description would include "sports fan".  I do like the big events though and yesterday, while explaining how amazing the NCAA tournament is to my daughter, I found myself describing the perfect story.  By this I mean a story we are naturally drawn to.  March Madness has all of the good stuff and none of the bad stuff.  With a good conflict, clear winners and losers, dates certain, interesting characters, and rules we all know and understand - what is not to like about this story?  I imagine this is also why political races are so fun to follow. Add a dose of celebrity and you have the Oscars or American Idol.

So if we want people to pay attention to things that we care about we need to figure out how to tell better stories about them.  What is more interesting to you: the Final Four or Education Reform?  I care a lot about education in our country and even I would rather follow the Final Four.  How do we make these other stories, that are so critical for us in the long term, just as interesting? 

Crowd Vindicated

A couple of days ago I posted that the most emailed article on the NY times was about dishwasher detergent -- and how that disqualified the crowd from picking the most valuable stories. Well today the pendulum swung back towards the crowd as David Brook's column hit the top of the list.

It is quite a good column by the way.  I know I am not alone thinking that our country is in a bad way, and I would argue that one of our biggest problems is that we are still a considerable distance from rock bottom.  

We are smart and creative problem solvers.  We just don't think the problem is big enough yet.

The Most Expensive Marketing Program Ever

As an outsourced provider of marketing services to technology companies we find ourselves in conversations about how much marketing programs cost just about every day.  These are very important discussions that have a wide ranging and long term impact on a company.  Every company should do everything it can to execute its marketing plans for as little money as possible.  Value achieved is the result of two factors:  the outcome, and the cost.  Driving down the cost is an effective way to improve the value achieved.  The strange thing to me however is the reluctance to drive the cost all of the way to zero.  

That is right, we are the outsourced provider, making us the company that gets the money associated with the cost in the Value = Outcome / Cost formula, and I just said our clients are often reluctant to reduce the cost of their marketing programs to zero.  I am not saying however that we are willing to work for free -- I am saying that the most expensive marketing programs are the ones that should not happen in the first place.  The only way to have an infinitely expensive marketing program is to have zero outcome.  Bad ideas cannot be changed into good ideas by doing them for less money.  Bad ideas should be killed off and replaced with other better ideas.

So the next time you find yourself talking about how you want to do the same thing you did last year, but for less money:  make sure you are also asking if the program is worth doing at all.

Resisting Overproduction

Everyone with a DVR knows that there are only 40 minutes of content in every hour of TV.   When you hear the host say "Stay with us" or "We will be right back" or "We are taking a break" what comes to mind? These and other conventions from radio and TV, fade in and fade out music for example, are often viewed as signs of professionalism.  I propose they are overproduction and reduce the value of the experience.  Begging the viewer/listener to endure a commercial is a dead giveaway to old media does not seem fit our new media reality.

Here are three podcasts that I listen to that range from new media to old media.  How much content do you think there is in each one of these podcasts?  

The Advertising Show

Cranky Geeks

Rebooting the News

I admit, this is not really fair because Rebooting the News does not have any advertising at all -- so it is 100% content (and an amazing podcast).  Cranky Geeks would be next -- 3 short breaks for ads at one minute each -- but they are not that intrusive and I don't even hit the 2X button on my iPod.  27 minutes of content out of 30.  I am a big fan of John Dvorak.  I was following him before there even was a world wide web and I am still not tired of him.  I suspect that all of us are more than happy to sit through the adds -- just for John.  The advertising on Cranky Geeks works -- I use both Go Daddy, and SquareSpace because I want to do my part to keep Cranky Geeks going.  On The Advertising Show -- well you make your own determination, but I leave my iPod on 2x for as long as I can last -- and even then I rarely make it through the whole thing.  It has to be at least half filler and advertisements.

So if you are going to put ads in your podcast -- pick advertisers that will resonate with your audience -- and resist the pull of overproduction.

PS:  Ira Glass says "Stay with us" on This American Life -- and I just don't get that.  His content and production quality are legendary and he holds my attention the whole way through -- not sure why he says it.

The Privacy Stack

Leo Laporte and Jeff Jarvis are two of the most public people on the internet.  For those of you not familiar with their disclosures, Leo tweets his weight and Jeff gives regular updates on his experience with prostate cancer and that is just the start of it. This week on TWIT, as they were extolling the virtues of living in public, Jeff asked Leo where he would draw the line on privacy.  The question went unanswered at the time, it was a great show recorded at SXSW with a lot going on and I think Leo may have just missed it.  Either way it is an interesting question that we all should consider.  What is your comfort level with privacy?  I searched for privacy and found several articles about how to keep your data private, the dust up over Buzz and Facebook, but did not see a privacy hierarchy list, or what I have called here the Privacy Stack.  So here is my shot at building a it.  I have started with the stuff that most people would agree to open to the public -- so I guess the stack is up side down -- but you get the idea:

1. Job Details (things on your business card)
2. Job or Educational History (things on your BIO or Resume)
3. Past Performance (Grades, job reviews, details of professional separations)
4. Identification (Name, address, phone number, email, social security number, birth date)
5. Transaction (What did you buy, how much did you pay)
6. Location (Where are you now, where have you been, where are you going to be)
7. Relationship (Friends, family members, business associates, group affiliations -- past and current)
8. Interaction (Who did you talk to and what did you say)
9. Intellectual Property (Writings, images, thoughts, plans)
10. Contractual (Anything professional or personal covered by a legal document including legal instruments for contracts, divorces, payment plans, agreements of exclusivity)
11. Financial (Income level, net worth, credit rating, assets, liabilities)
12. Health (Records of doctor visits and lab tests)

Clearly this idea needs expanding -- including turning it into a matrix because there are degrees to each item.

My though with this privacy stack is that people would be more willing to share the things at the top and less willing to do so with the things at the bottom.  My question to guys like Leo and Jeff is -- where do you draw the line?  

All of this gets much more complicated when you start to think about what information could be made public as a result of your interacting with a person or system that has not drawn the line across the privacy stack in the same place you did.  This is fundamental to the current Facebook / Buzz debate.  If a person thought their email inbox was private, and then found out that it was not, it presents a big problem.  

Item number eight: Interaction, is where this was already an issue in the pre-social media world.  One person (a third grader even) tells another person something with the idea that it would be kept between them and the other person has a different idea about privacy and... well you know the rest.

Google got in trouble because they beta tested Buzz inside the company.  Privacy in a work email environment is much different than otherwise.  If you have an email with a business contract attached that is going back and forth between people at the office, it is much different than the email going back and forth between a client and an attorney with a divorce settlement attached.  Everybody is on the same "friend list" inside a company -- it is called the company directory.  So any issues associated with sharing lists of work friends does not translate to the real world because at work everyone has access to everyone else's work friend list (the same company directory for everyone).

So how much of the stack would you share?  I have to say I start to get out of my comfort zone when I hit number 4-Identification, can't see doing 5-Transaction or 6-Location, and am dabbling in 7-Relationship with Linked In and Facebook, but I am clearly not all in like Leo and Jeff.

Why We Need Editors

The first time I saw it I thought it was one of those funny flukey things that just happens every so often.  Then I came back the next day and it was still there!  The number 1 most emailed article on the New York Times web site was about how much detergent to put in your dishwasher.  It is a good thing we are not in charge of picking the stories that go above the fold.  Digg does a better job but not by much.  Their top 3 today are:

Let's hope that as we recreate the news business we figure avoid crowd sourcing the selection of the most meaningful content.

Respecting Followers

True leaders respect their followers. I have always been struck by celebrities that disdain their audience members.  "Followers" has an updated meaning now that we call the people that follow us on Twitter followers.  

Maybe David Letterman started it, but the number of celebrities that are plainly complaining about their fans really makes me scratch my head.  If fans or followers make the celebrity, wouldn't the celebrities customer be the fan?  Without customers...

Politicians are really the neediest of celebrities when it comes to followers because they need their followers to vote. Another thing that struck me about Game Change (see my review yesterday) was the way some of the candidates do not respect their constituents at all.  At times they plainly showed how little respect they had for them.  John Edwards really took the cake in the book when we went from saying "They love me!" to his staff after a good speech to "They looooove me!" with an eye roll.  

The idea with a brand is to build a relationship with a customer that is larger than a single transaction.  Brands have followers just like celebrities and politicians and just as strangely, some customers continue to buy from brands even when they are showed no respect at all.

Yesterday I was listening the Advertising Show podcast where Rose Cameron, Euro RSCG Strategy Chief, was asked about the difference between the US and British advertising markets.  Her answer?  In Great Britain advertisers have a "real respect for the intellect of their audience".  In America we continue to buy from companies that have little or no respect for us or our intelligence.  

When it comes to politicians, celebrities or brands there are plenty of strange things to marvel at, but for me the strangest is how people continue to follow those that clearly have no respect for them.