Driving Miss Daisy in her AMG

This week I had afternoon coffee with a CEO at the Woodside Bakery Cafe. Woodside, with a population 5,352, is home to several Silicon Valley executives, some of whom host fund-raising dinners for U.S. presidential candidates.  After, when I returned to my car, I found this card stuck in the driver's side window.

 

Curious, I held onto the card, and called the number the next day.  I spoke to the owner, Crhis Turner.

 

The Offering

How many of us can really justify having a full-time chauffeur living in the guest bedroom - even if you live in Woodside?  In this economy, it turns out, very few.

Also, who enjoys stepping into one of those dime-a-dozen black Lincoln Towncars airport cars - or, worse, riding in a gaudy stretch Hummer or Escalade, its interior glowing with color-shifting mood lighting?  Certainly, not those who are accustomed to better.

Those who have achieved success and now drive that sleek Mercedes Benz AMG S65 or Maserati Quattroporte, have an option: driver-only for hire.  The residents of Silicon Valley’s tony communities can travel to the opera in the comfort of their own sedan, confident that some 20-year old valet will not be taking it for a joy ride (a la Ferris Bueller’s Day Off).

It’s a nice offering: licensed and bonded chauffeurs who live in your area, arrive early to familiar themselves with your vehicle, get you where you want to go and back, and ensure that no one of thing touches your $200,000 worth of European-crafted sheet metal while you’re off enjoying the good life.  

And, speaking of the good life, you get to enjoy it with the peace of mind.  You don’t have to hail a cab, leave your vehicle unattended in some public parking lot overnight - and you have zero chance of getting a DUI.

But best of all, I liked the first line of the copy:

Gratuities are most easily handled with 15% on the bill.

No wondering what’s appropriate, no embarrassment getting it wrong.  And because it’s likely only you (and perhaps another) traveling home, no worries that “For parties of 6 or more, 20% gratuity is automatically added to the bill.”

Business is good.  It’s been around for 20 years, has over a dozen drivers, and need only advertise every 2-3 years to clients who move out of state or die.

 

What about those evenings when you haven’t made chauffeur arrangements, and find yourself unfit to get behind the wheel?  This company can’t help - but there are outfits that can.  Make the call, wait in the lounge (or under the table), and a driver will soon arrive on a fold-up scooter.  He’ll put you in your vehicle, put the fold-up scooter in its trunk, and drive you home where he’ll be met by another driver who will pick him and his scooter up.

Expensive?  You don’t want to know.  But for those who can afford to drive the world’s finest automobiles, a few hundred dollars shouldn't be a problem.

 

Facebook Still Smiling ... for Now

In a just-released forecast, Facebook ad revenues for 2011 are expected to reach $3.8 billion - a modest drop from the $4.05 billion expected at the start of the year.  Ad revenue is still on track to hit $7 billion in 2013.

Two factors are difficult to assess looking forward.

Competition

First, is the impact of competition from Twitter and LinkedIn (which should be modest as they are not direct competitors) and Google + (which is).  

As of September 20, Google + has been opened up to anyone over the age of 18 to join.  Google has rolled out this introduction in stages to work out the kinks.  In the next stage, teens 13 and older will be able to have a Google + account.  During that 90 days since G+ was launched, Facebook has made 71 changes to its site - a sign that it is not going to permit its chief rival much headway.

Behavior

Second, is the most significant factor of all - adoption by users and advertisers.  That social media as a promotional platform is eating into the revenue of conventional - as well as other online - media, is a given.  What no one really knows for certain is the extent to which users will respond to online ads in their social media spaces.  This, in return, will determine the rate at which advertisers shift their media spend to social networks.

Chicken-and-egg

Will increased advertising accelerate consumer change, or will consumer response drive the change in advertising habits?  Advertisers are beginning to do some bold and creative experiments on social networks to see just what catches on, and if it can be repeated.  Users will vote with their mouse-clicks.

As this economy shows sign of only slow recovery, 2012 could be a year in which a few agencies double-down on social network campaigns, and find some things that really work.

The Netflix Dilemma

The management of Netflix is making one gaffe after another - the most recent one coming with Reid Hastings’ announcement on Monday that the company is being split in two.  Netflix will handle all streaming content, while Qwikster will handle the fading DVD-by-mail business.

I first blogged in July about Netflix’ price increase that had customers up in arms, and then just last week when the company announced that it would lose 1 million subscribers this quarter.  The customer outcry from the July pricing announcement, however, pales in comparison to customer reaction yesterday.

Over 20,000 followers of San Francisco broadcaster KRON logged into Facebook to comment on Netflix/Qwikster.  The majority of comments expressed anger and outrage.  Then, there were the more reasoned criticisms, like those on Mashable and Entertainment Weekly.  

Reid Hastings’ YouTube apology is not cutting it.  Customers - not all of them, but enough of them to create a real headache - are feeling like they’ve been fleeced.

Clayton Christensen’s book, The Innovator’s Dilemma, postulates that otherwise good companies can falter when disruptive technologies emerge.  They place too great an emphasis on satisfying customers’ current needs, rather than helping their customers adapt to the new technology.

Netflix management is likely quite familiar with Christensen’s work - too bad they didn’t interpret his advice as it was intended.  The company is in a real bind.  It cannot retreat.  Yet, its moves to guide customers along the streaming pathway seem only to serve to disenfranchise many of the loyal ones.

Messier times lie ahead for Netflix.  If there’s a bright lining to this cloud, then it is in the offices of Google, Apple and Amazon.

Kiwis on the March

Friday evening I attended a mixer at the Kiwi Landing Pad on Harrison, in San Francisco. It’s a home base of sorts for New Zealand tech businesses to enter the U.S. market.

I arrived 30 minutes late, only to find that the 70 or so gathered already had either a bottle of beer or glass of wine on the go - typical Kiwi style.

The Right Honorable Mike Moore, New Zealand’s Ambassador to the U.S. gave an interesting 20-minute talk.  A few takeaways stuck out for me:

• At a population of only 4 million - less than the Bay Area - New Zealand does not have a loud commercial voice.  But they know this, and very cleverly have spent the past 50 years both aligning themselves with larger APAC countries, and strengthening ties with the U.S.
• Where, only a couple of decades ago, perhaps 4 U.S. business leaders would attend a major NZ-sponsored commercial briefing event, that number now reaches 50.
• The government brings serious funding to support export of its technology base, and to help its domestic firms enter foreign markets - especially the U.S.
• With the increase of American travel to New Zealand, coupled (until recently) with a very favorable exchange rate, many thousands of Americans have purchased vacation properties in New Zealand, and expanded commercial networks as a result.
• New Zealand has a strong international association with mountains (where Lord of the Rings was filmed), sailing, and sheep.  It has tended to live in the shadow of Australia.  The country’s politicians (a pragmatic lot) are quite determined to shift that perception, and will likely sponsor an extensive marketing effort along the lines of ‘the NZ you probably don’t know.”

New Zealand is a wonderful little country that I’ve visited several times.  Though small, it has progressed substantially in the almost 25 years since I first visited it.  Kiwis very much have this “little engine that could” feistiness, and a very optimistic outlook on their affairs.

My betting is that the NZ dollar will continue its appreciation against the U.S. dollar during the next 6 - 10 years.  Small and feisty make for an interesting combination.

Welcome to Manland

This month, IKEA Australia launched Manland, and is testing it in its Sydney store.  The concept is simple: it is an in-store man cave where men can hang out while their wives an girlfriends shop.

KCBS San Francisco interviewed a professor of marketing and psychology (didn’t catch her name, or the affiliated university) who had data and anecdotes galore for listeners.  Two of the interesting tidbits of research studies mentioned were these - neither of which is surprising.

• Women prefer to browse, shopping not only for what they want, but also to see what else is in the market that might stimulate their interest.  Men, however, typically shop with a clear objective in mind: they park, find what they want, then get out of Dodge.
• On a scale that measures shopping enjoyment, 80% of women either enjoy - or greatly enjoy - shopping.  The corresponding figure for men: 30%.

My wife only occasionally reads my blogs.  I am keeping my fingers crossed that she trips across this one.

Netflix and the Lessons of Price Elasticity

Following Netflix’s announcement in late July of price increases of up to 60%, I blogged about the situation, offering some recommendations.  Well, I don’t think anyone at Netflix read it or, if someone did, my advice certainly went unheeded.

To refresh memories, Netflix was besieged by a torrent of customer and analyst criticism resulting from its announcement of price increases.  CEO Reid Hastings publicly offered that “We feel bad about having our customers upset with us”, later adding, “We’re feeling great about the decision, tough as it is.”

Somehow I doubt that Netflix management - and its shareholders, in particular - were feeling in a heady mood on Thursday.

Less than two 2 weeks after the price increase took effect, Netflix was forced to alter its prediction that it would grow its subscription base to 25 million by September-end.  Now, management is forecasting a drop of 1 million subscribers worldwide - 4% of its subscription base.  The market, which has been skittish to say the least the past two months, tanked the stock, selling off to a one-day decline of 18.9% of its value.

Price Elasticity Takes no Prisoners

It is generally true that, over a reasonable range, changes in price have a proportionately small effect on quantities sold.  In other words, even though a price increase will see some customers abandon the offering, total revenue will still be higher than it was at the lower price.

The price elasticity of demand for Netflix services probably is inelastic - just not as much as inelastic as management had assumed, though.  That, I’d wager, is leading to some sleepless nights in Los Gatos.

Then there is the matter of Customer Lifetime Value (CLV) - one of the key attractions of the subscription pricing model.  With a churn rate of 4% of customers lost in just one quarter (who’s to know what it will be next quarter) it’s very unlikely that departing customers have sworn off streaming video.  They’ll take their business elsewhere.

What Will Netflix do in 4Q2011?

In the final calendar quarter of 2011, a safe bet is that Netflix management will have its eyes fixated on that churn rate - and new subscription acquisition, too.  If the churn does not level off soon, it’s also a good bet that Netflix will have to quickly come up with something attractive for the fat old man who comes down the chimney to put in his bag.  For subscribers.  And for shareholders, too.

The Importance of Luck

For a long time now I have tried to write the best I can.  Sometimes I have good luck and write better than I can.

- Ernest Hemingway

Luck has a good deal to do with success in business.  Not superstitious luck, as found in baseball rituals, but luck as chance, accident and coincidence.

Though the objective of golf is to get the ball in each hole in as few strokes as possible, a hole-in-one yields jubilant dismay.

Experience has taught us that the farther we are away from the hole, the odds of sinking the ball get exponentially smaller.  Too many things have to go right, all at the same time.

Though some of these things are within our control, the smallest variations in body position, muscle firing, angle of the club face to the ball, geometry of the swing increase the likelihood of a missing the mark.  Distance magnifies the slightest error.

Then there are the things beyond our control.  Temperature, humidity, and air currents all seemingly conspire to thwart our best efforts.  Even if we could make instantaneous physical adjustments as we swing the club, conditions can change as the ball takes flight.

So, we bring our skill and experience together at one moment, make our best guess to adjust for conditions, go for it, and hope for the best. 

It is no different in business planning.

By the time the final version of the plan has been written and approved, its shelf life is already nearing the stale date - if not past it.  Most of the decisions that underpin the plan - things we’d like to be sure of - are unknowable.  We know what they’re likely to be over a range, but we can’t pinpoint them.

So, we bring collective managerial experience and know-how to bear.

Assumptions, representing the best, rational outlook we can assemble on future conditions and the uncontrollable forces in the market, are laid out.  “What-if” scenarios are drawn up and scrutinized.  Sensitivity analysis is performed.

When we are sufficiently satisfied that we have applied our skill, knowledge and resources as best we can, we tee up the ball and take a swing.  Our competitors likewise take their swing - it’s no easier for them, either.

Most times, the result will be “acceptable”.  Even with experience, though, sometimes we’ll hit a poor shot.  Yet, occasionally, everything come together magically, and the ball stops inches from the cup - and once in a great while may land inside it.

Sun Microsystems had the E10K server (acquired from SGI when it was unable to purchase all of the assets of Cray Computer) and Java (originally intended for TV set-top boxes).  Apple had the iPod (sorry, Sony Walkman) then parlayed that into the iPhone and now the iPad.  Likewise, Google and Facebook have turned promising products into game-changing, paradigm-shifting, runaway successes.

Each of these companies wanted - and planned for - their product to succeed.  But none of them counted on the results that were achieved.

How did they get everything right?  How do they repeat it?

As in golf, there are many things that must go right, all at the same time - more than can be reasonably managed.  But, we do get better at understanding - and hence, managing - a few of those things.

Malcolm Gladwell’s excellent book, The Tipping Point, offers numerous examples of luck lending a helping hand.  He puts a face on some of the forces that create luck, too.  So does Chris Anderson’s The Long Tail, which illustrates how the internet, social networks and viral marketing have led to unexpected good fortune for those products that don’t make the best-seller list.

Good companies become students of those factors that could swing the advantage to their side.  They experiment.  They try.  They take risk.  They find something that works.  Then they practice, practice, practice.  Until they get it right.

Luck typically favors persistence and diligence.  Those who stay in the game, pick themselves up by the bootstraps when things fail, and who keep swinging until they get it right are usually the ones whom luck favors.

 

Striking a Customer Chord

Price is what you pay.  Value is what you get.

                                        - Warren Buffett

 

 

Many managers - especially in SME firms - confuse the meaning and use of the terms Positioning and Value Proposition.  A related concept, Competitive Advantage, often becomes an innocent victim as a result.

 

Getting a grip on the meaning and distinction between these terms is easy.  Putting them into practice effectively in a manner that sets your firm apart from its competitors in the minds of customers is hard and exacting work.

 

To begin, if you’ve been looking for the short answer to what these are, this should help.

 

Understanding a Value Proposition

A value proposition profitably matches the company’s offering to the particular needs of target customers better than competitors can.  If that reads very much like the description of marketing, it is no accident.  At the heart of marketing lies the creation of customer value; at the heart of good strategy lies the way of creating value profitably.

 

A few words and implications lie in this definition.  They are important to understand:

• An offering is more than merely the product and price.  The offering encapsulates everything about the company that creates value: distribution channels, brand, retail presence, return policies, how 1-800 calls are handled, etc.
• While a value proposition can be captured in words, it is about delivery.  It involves action.  Distilling a value proposition down to a memorized sentence or two that is parroted by the sales organization misses the point.
• Identifying target customers is the close cousin of the value proposition - one leads to the other.  This is why identifying target customers - and developing a value proposition that fits them snugly - is a repetitive process.
• Customer need ≠ Company need.  Common sense, right?  I’m not so sure.
• The customer is the judge of whether your offering is superior to the competition.
• It is easier to insert profit into the sentence above than it is to earn one.

 

There are a few different - yet good - frameworks for developing value propositions.  There are many more that are bad and that, unfortunately, readily show up on web searches.

 

Understanding Positioning

Positioning creates the perception and image of a company, or its offering, remembered in the minds of customers that differentiates it from competitors.  

 

When you think about cars, Volvo wants you to associate safety with its name.  BMW hopes that you associate “ultimate driving experience” with its brand.  Toyota will likely spend enormous sums of money to ensure that the market once again associates reliability with its marque.

 

Of note:

• Positioning is always derived from a value proposition.  It involves the heady task of choosing one component of a value proposition that you want to stick in the market.  Hence, positioning can only be as good as the value proposition that it starts with.
• According to Jack Trout and Al Ries, who coined the term, there are 22 ways to differentiate oneself.  (Leadership is one of them; however, based on usage, category leadership seems to be the only one known among Silicon Valley tech start-ups.)
• Positioning is about the company creating a memorable perception - not the market.
• Positioning must set you apart from competitors in a legitimate and compelling way; otherwise, it buys you nothing.

 

Understanding Competitive Advantage

Competitive Advantage represents the actions that convert competitive differentiators into superior customer value.  Competitive advantage is always derived from possessing superior customer value - not simply claiming to possess it.

• Competitive differences are not necessarily competitive differentiators.  Most, in fact, aren’t.  A differentiator must be both relevant and important to the customers.  It must create customer value.
• Value creation is not merely what the firm would like the customer to accept and believe, but what the customer chooses to accept and believe.
• The ultimate test of superior customer value is acceptance of the offering in the market - purchase, and share relative to competitors.
• The weaknesses of your offering (they really do exist) represent potential competitive advantage to your competitors.

 

During the next month I’ll delve into these three topics further, offering some principles to follow and simple techniques to use.  You can attempt this in your own home - trained professionals are not required!

Striking a Chord with Customers

Price is what you pay.  Value is what you get.

                                        - Warren Buffett

 

 

Many managers - especially in SME firms - confuse the meaning and use of the terms Positioning and Value Proposition.  A related concept, Competitive Advantage, often becomes an innocent victim as a result.

 

Getting a grip on the meaning and distinction between these terms is easy.  Putting them into practice effectively in a manner that sets your firm apart from its competitors in the minds of customers is hard and exacting work.

 

To begin, if you’ve been looking for the short answer to what these are, this should help.

 

Understanding a Value Proposition

A value proposition profitably matches the company’s offering to the particular needs of target customers better than competitors can.  If that reads very much like the description of marketing, it is no accident.  At the heart of marketing lies the creation of customer value; at the heart of good strategy lies the way of creating value profitably.

 

A few words and implications lie in this definition.  They are important to understand:

• An offering is more than merely the product and price.  The offering encapsulates everything about the company that creates value: distribution channels, brand, retail presence, return policies, how 1-800 calls are handled, etc.
• While a value proposition can be captured in words, it is about delivery.  It involves action.  Distilling a value proposition down to a memorized sentence or two that is parroted by the sales organization misses the point.
• Identifying target customers is the close cousin of the value proposition - one leads to the other.  This is why identifying target customers - and developing a value proposition that fits them snugly - is a repetitive process.
• Customer need ≠ Company need.  Common sense, right?  I’m not so sure.
• The customer is the judge of whether your offering is superior to the competition.
• It is easier to insert profit into the sentence above than it is to earn one.

 

There are a few different - yet good - frameworks for developing value propositions.  There are many more that are bad and that, unfortunately, readily show up on web searches.

 

Understanding Positioning

Positioning creates the perception and image of a company, or its offering, remembered in the minds of customers that differentiates it from competitors.  

 

When you think about cars, Volvo wants you to associate safety with its name.  BMW hopes that you associate “ultimate driving experience” with its brand.  Toyota will likely spend enormous sums of money to ensure that the market once again associates reliability with its marque.

 

Of note:

• Positioning is always derived from a value proposition.  It involves the heady task of choosing one component of a value proposition that you want to stick in the market.  Hence, positioning can only be as good as the value proposition that it starts with.
• According to Jack Trout and Al Ries, who coined the term, there are 22 ways to differentiate oneself.  (Leadership is one of them; however, based on usage, category leadership seems to be the only one known among Silicon Valley tech start-ups.)
• Positioning is about the company creating a memorable perception - not the market.
• Positioning must set you apart from competitors in a legitimate and compelling way; otherwise, it buys you nothing.

 

Understanding Competitive Advantage

Competitive Advantage represents the actions that convert competitive differentiators into superior customer value.  Competitive advantage is always derived from possessing superior customer value - not simply claiming to possess it.

• Competitive differences are not necessarily competitive differentiators.  Most, in fact, aren’t.  A differentiator must be both relevant and important to the customers.  It must create customer value.
• Value creation is not merely what the firm would like the customer to accept and believe, but what the customer chooses to accept and believe.
• The ultimate test of superior customer value is acceptance of the offering in the market - purchase, and share relative to competitors.
• The weaknesses of your offering (they really do exist) represent potential competitive advantage to your competitors.

 

During the next month I’ll delve into these three topics further, offering some principles to follow and simple techniques to use.  You can attempt this in your own home - trained professionals are not required!

An Amazing Secret Finally Revealed

Yep!  It’s a cheap and dirty trick.  I know better.  So do you.  But it works.  As the evidence shows, we prefer to suspend common sense on the off-chance that maybe - just this once - we learn something unknown to others from which we will benefit.

Def: Secret: Not known or seen - or meant to be known or seen - by others.

“The secret(s) to ______” (fill in the blank as desired) is a promotional artifice that has been around for decades.  Yet, anyone who has worked in the mail order or publishing business will tell you that it works just as well today as it did when Adam and Eve tasted the forbidden fruit from the Tree of Knowledge.  In fact, in economic downturns it takes off.  It sells books, CDs, videos, food supplements, and week-long retreats, jus tot name a few.

Of the 142,000 books offered on Amazon that have “secret” in their title, fully 1/3 of these - over 45,000 - purport to let the reader in on the goods.  The top 5 categories, shown in rank order of number of published works, gives a good indication of which secrets indeed sell.

• Professional and Technical
• Spirituality
• Health, Mind and Body
• Business and Investing
• Romance

If we’re keen to know anything, then it had best be about health and wealth - we can satisfy our love-making curiosities later.  

A year ago I would have been surprised to see Professional and Technical offerings ranking at the top of the list.  Not anymore.  Week - sometimes daily - I am offered a white paper or a webinar that suggestively promises to impart one of more business secrets.  

There are secrets about things both familiar and new (some so new, one wonders how the secrets were discovered so fast).  SEO, online advertising (the kind that “really works!”), CRM, Google Ad Words, online marketing, social media marketing, Twitter advertising, yada, yada.  Just Google “online marketing secrets” and you’ll have a choice of gems to choose from like this one.

The secrets gambit raises two logical issues:

1. If it’s being told and sold massively - for that matter, at all - it’s no longer a secret.
2. If it’s that valuable, why is it either being given away or sold cheap?  (The price paid for Nortel and Motorola patents alone suggests that there’s no fire sale on trade secrets or IP.)

When Newspapers Were King

Remember that thing that was tossed on your driveway every morning?  The newspaper.  When newspapers ruled, an enticing ad ran in the Classifieds section.  It would run for a month, disappear, then return months later.  It promised that for $19.95 + S&H, it would send you the secret technique to making hundreds - even thousands - of dollars guaranteed.  Simple to do, all from the comfort of your home, no special skill required.

Harry, we’ll call him, can not resist the urge to mail his check for $29.95 (inclusive of Shipping & Handling - S&H).  Two weeks later (after Harry’s check clears) he receives an envelope containing a few nicely printed pages.  They describe how and where to place a particular ad in the Classifieds of his daily newspaper.  An image of the ad that attracted Harry is included ... just in case he forgot.  

Happily, I can say that I never sent away for the technique (though I will confess to being tempted).  But I did know Harry.  He could have mailed to the PO Box number provided for a refund of his $19.95 (the person placing the ad kept the $10 S&H fee).  But, in the rendering of his story years later, Harry admitted that he chose to eat the whole $29.95.  He was simply too embarrassed to seek a refund.  Hell, what if he had to pay S&H to get it?

I imagine many of those who responded to the same ad were like Harry, and simply wanted to put the matter behind them.

Yet, the scheme was legitimate.  Technically, that is ...

The Thrills and Spills of Multi-level Marketing (MLM)

Secrets are especially the rage among MLM-ers.  They regularly tweet about secrets in their possession that promise health, wealth, happiness and prosperity.  Many actually despise the term MLM as it’s suggestive of pyramid selling - which, legally defined, it isn’t.  They prefer to use the sobriquet “relationship marketer” to imply something positive, warm ... and even cuddly.  

Of all the secrets they are happy to share, though, none of them seems willing to share the biggest secret of all: that the vast majority of MLM participants don’t make a damn cent.  The profitability rate (generously defined as income minus out-of-pocket costs) is typically less than 5% of participants.  Sometimes it’s as high as 10% (Amway) and sometimes less than 1% (as contained in Mona Vie’s 2007 financial disclosure statement - and then, only 0.1% earned commissions in excess of $100 a week).

If anyone approaches you about about an MLM opportunity, after they have shown you the brochure photo of the smiling faces of upstream distributors sipping champagne on a private beach with a Maserati parked in the background, ask them two questions:

1. What proportion of participants show a profit after one year?
2. What proportion of money is typically earned from selling the MLM’s product compared to recruiting more participants?

If your friend is unable or unwilling to furnish an answer or, worse, tells you that the information confidential, then clutch your purse or wallet tightly and don’t let go.  

If your friend is a good sport, though, she/he won’t mind if you Google the names of the senior management of the MLM.  Eighty percent of the time they’ll come up showing a prior association with a prior MLM (hey, if this guy’s so good then why isn’t he still running that one?).  Don’t be surprised if you find that one of the names comes up as having been investigated by the FTC, fined, indicted, or served a prison sentence (I’ve scored a 100% hit rate on the searches I’ve done for friends).

Back to White papers and Webinars

I’ll admit, MLM schemes and “The 7 secrets of Successful Social Media Marketing” are not cut from the same cloth.  But they very much come from the same mill.

Roland Whitsell, who studied MLMs for forty years, observed, “The primary product is opportunity.  The strongest, most powerful motivational force today is false hope.”

The economy is tough, so doing business is tough (unless you’re Apple).   At best, it’s annoying to see an increase in the use of tactics that serve only to pander to buyers.  It gives marketing a bad rap, and discredits the potential value of what’s between the covers.  At worst, it’s a deception by decree: it promises the reader or viewer something that, by definition, simply cannot be true.

“The Seven Effective Methods of Successful Social Media Marketing” may not have the catchy ring that satisfies one’s craving for hope in a muddied world, but at least it plays credibly to one’s sense of value.  It may not “move” as many copies or attract as many attendees, either.  But it’s very unlikely to leave anyone feeling ripped off.  Like my friend Harry did.

39 Hours in 2001

Monday - 9/10/2001: 9:00 PM PST

Susan and I had been invited by our friends, Barry and Kathy, to a charity event at Nola’s Restaurant in Palo Alto.  Both floors of Nola’s were filled to capacity early as guests stood with their drinks sampling hors d’oeuvres.  The drawing card that Monday evening was the attendance of the San Francisco 49ers, together with their cheerleaders.  

Perhaps eight 49ers attended.  They sat by themselves at a couple of tables drinking beer, talking shop, and doing their best to ignore their surroundings.  Having run many events to which I’d invited sports celebrities, I knew this to be typical.  Athletes are gently pushed by the front office to make these appearances, and do so reluctantly.  They are bored by the familiar questions and unsolicited advice, keen to fulfill their obligations and depart.

The cheerleaders were an entirely different matter, many of whom attended.  Each was dressed identically: revealing red and white halter with sleeves, mini skirt in red with white accents, white boots, and stockings that give the appearance of legs turned copper brown from hours in a tanning salon.  Each carried gold pom-poms.  For reasons unknown they each wore heavy camera makeup, giving each of them a decidedly Fellini-esque appearance.  It was not flattering.

By 8:30 the football players were long gone, and we had grown weary of cheerleaders making an obvious point of passing by tables so that they could be admired.  We finished our meal and left for home.

Tuesday - 9/11/2001: 5:30 AM PST

San Francisco’s KCBS 740, the all news station, came to life on the clock radio.  I liked to listen to the news before getting out of bed, so just lay on my side snoozing as I soaked in the updates.  Having drifted back to sleep, I woke up to hear Stan Bunger report a breaking story: a small (sic) aircraft had just crashed into one of the towers of the World Trade Center.

As I lay there I recalled see photos of the B-25 that had lodged into the Empire State Building in 1945, and imagined a similar event.  Having flown privately I thought to myself: how could a single-engine aircraft even get close to a building in Manhattan without ATC stepping in to alert the pilot? 

Seeing that it was 5:50 on the clock, I knew I’d miss my 6:30 start time at the office, so quickly got out of bed, then went into the bathroom to shower and shave.  As usual, I closed the bathroom door so that I wouldn’t disturb Susan.

After showering, I opened the door to better hear the 6:00 AM news that would soon come on.  I immediately picked up on the reporting by a mildly excited Stan Bunger who was now confirming that a commercial airliner had struck the North Tower of the WTC, and done a devastating amount of damage.  Bunger told listeners that he was watching these “horrific images” live on television, inviting us to turn on our sets.

I woke Susan and told her.  My hair still wet, I quickly dressed in my sweats, went downstairs, and turned on the television.

9/11/2001: 6:02 AM PST

The black smoke from the North Tower, taken from a closely positioned camera, is much larger than I expected.  As I click through the channels, I can see the coverage on all the networks.  I stop at one, and within moments hear the anxious voice of the at-the-scene reporter, “Oh my God, there’s another plane coming!”

The TV camera, probably a few hundred feet from the WTC, is pointed at the North Tower, as nearby screams come through the set’s speakers, followed by the approaching roar of jet engines.  At 6:03 AM PST, the doppler effect from the engine noise abruptly ceases.  I can’t see what is happening as the camera is fixed on the blaze from the NorthTower, but I hear a muffled explosion.

The camera shudders, then more screams, and panicked voices competing to be heard.  “Another plan has hit the Trade Center,” yells the on-scene reporter.  Within seconds the operator jerks the camera away from the scene of the North Tower, sets it on the South Tower, roughly adjusting for wider angle.

One airliner can have an accident.  But, two?   At the same building?  Impossible.  This is something neither I, nor the broadcast commentators, can readily explain.  I surf one kaleidoscopic image after another, staying moments before clicking the remote to the next channel.  Then I hear the words, “There appears to be an attack on the WTC.”

I hear and understand the words.  The reporter is frightened and confused, I think to myself.  Herbert Morrison’s tearful account of the 1937 Hindenburg disaster, “Oh, the humanity,” unexpectedly enters my mind.

Processing information on autopilot, I become consciously aware that my fight-or-flight response is squeezing me.  I don’t like the feeling, but choose not to ignore it.

In moments I take the stairs two at a time, yelling to my wife, “Susan, a second plane’s just hit the World Trade Center.  You’ve got to go downstairs and see this.”  I awaken both my boys, aged 12 and 14, and excitedly tell them to get downstairs and join their mother, that terrible catastrophe has just occurred in New York.

9/11/2001: 6:09 AM PST

The family is soon fixed on the images on the television screen.  My wife is seated on the edge of the couch, leaning forward.  Beside her is my older son.  The younger one is curled up on in an overstuffed easy chair, his blanket wrapped around him.  I can’t remember which of the boys asks, “Dad, what’s going on?”.

I answer with what I know: two planes have flown into the WTC, and people are trying to figure out how this has happened.  Increasingly, as I scan the channels, the “unexplained attacks” theme dominates the coverage.  The speculation on the networks - who, what, why - is entering overdrive.

Images of the 1953 War of the Worlds movie with Gene Barry, and Orson Welles' 1938 radio broadcast suddenly - and surprisingly - appear in my mind.  But I know these are simply impossible.  I dismiss the thoughts, disturbed that they are entering my mind uninvited.  I think to myself: Who’s behind this?  Is it Russia?  China?  Why aren’t they using nuclear weapons?  Are those coming next?  Why don’t California homes have basements?  Would it matter?  None of this makes sense.

Then one of my boys, anxiety in his voice, asks, “Dad, is the United States at war?”  He is frightened.

I’m caught off-guard.  Why would he ask this now?  How can I possibly know?  I’m immediately aware that I am powerless to answer, unable to put minds at ease, and mightily concerned that some unfathomable event - a thing of fiction - could conceivably be true.  I simply cannot process the information and assess the situation.

I try to respond matter-of-factly, but hear the gravity in my voice when I answer, “I don’t know.  Just keep watching the TV.”

Forty-five minutes later the unthinkable happened as the South Tower collapsed.  The event was awesome in a visual sense, yet sickeningly transfixing as thoughts emerged of the hundreds of unseen lives that are now being lost.  The war, if there was one, was being waged on the east coast.

I recall a distinct feeling - a mix of awe coupled with resigned acceptance to events I was now beginning to comprehend.  I craved normalcy, and the ease of a knowing routine.  I announced that I had better go to the office, checking that Susan was ok.  She thought it a good idea, suggesting that the boys, likewise, should prepare for school.  

We had all dressed and returned downstairs to the family room.  Minutes later, at almost 7:30, the North Tower collapsed.  Within minutes we were all rushing to capture the normalcy of the morning routine we had only yesterday.

9/11/2001: 7:45 AM PST

As I drove to the office - an easy drive as traffic on CA 101 was uncharacteristically light for that time - I listened to the radio.  Two planes had crashed into the WTC, eventually collapsing both towers.  Another had hit the Pentagon.  A fourth, suspected of being a highjacked airliner, had crashed in somewhere in Pennsylvania.  Announcers were trying to connect the dots for the public as best they could.

Minutes from the office, a special report came over the radio: another airliner was suspected of being highjacked, and was believed to be headed for Camp David.  This was like a spreading, unstoppable plague.  As my car speakers deliver news of unimaginable and impossible things, I briefly considered whether I should take the next exit and return home.

9/11/2001: 8:00 AM PST

A few of the staff had arrived.  I saw some looking conspiratorial as they talked among themselves - they were relieved that a manager had arrived at the office.  Other, working in isolation at their desks, were going about the day as if it was any other.  I could tell they wanted to focus on their jobs and push the thoughts of the morning’s events far away.  I said, “good morning” as I passed by each, the same way I would any other day.  They simply wanted the comfort of familiar routine, as well.

My operations manager was very upset.  Her close friend worked in the WTC, and could not be reached.  Asking what else she should do, I offered that there was nothing, and asked her if she wanted to go home.  As she wasn’t sure, I suggested that she do whatever felt right to her, and that she was free to leave at any time she wanted.  I chose not to tell here that, before entering the building, I had decided to leave myself should bad news continue.

Those with radios listened to broadcasts while the rest of us regularly checked online.  The day continued like that for a couple of hours.  Camp David was a false alarm.  No other planes crashed.  No further buildings fell.  Things at Sun Microsystems began settling into something approximating its normal rhythm. 

Wednesday - 9/12/2001: 8:30 PM PST

We had finished dinner.  The boys were now both watching something mindless on television, happily distracted from events of the day before.  My wife accepted my invitation to share a glass of wine in the side garden.

As we stood there, I asked, “Can you hear that?”  She replied that she could hear nothing.  

Here we were, I said, at the intersection of flight approaches to airports at Moffett Field, Palo Alto, San Jose and San Francisco.  It was one of the business areas for air traffic in the United States - one that had taken us a year to get used to when we had first moved to Mountain View.  At any time you could hear some aircraft making its approach.  Tonight, nothing could be heard.  No slowly flashing red and green lights crossing the sky to their approaches - the FTC’s suspension of air traffic was indeed in effect.

We both listened again.  Dead silence.  It was the absence of sound you become aware of during evenings in the woods, far from the city.  But, it was not a restful silence.  We talked about explanations of the prior day’s events we had learned, and speculated about what might unfold tomorrow, next week, next month.  We simply didn’t know.  Life does not travel in straight lines.

Sometimes, even when I am traveling out of the country, I’ll find myself some place where I become aware of the night’s silence.  I’ll think back to the glass of wine in the side garden, reminding myself that the straight line I traveled on today may change course abruptly when I wake up next morning.

The Go Like Hell Strategy

The problem with most plans is this: they’re aren’t any.

This is the case among many technology SME companies operating in Silicon Valley.  To be sure, every one of them has spreadsheets that depict the rise (nothing seems to fall) of sales, resources, share and profit over time.

But, when a CEO is asked, what are you doing that will cause sales to increase by 25% next year?, the response - to this, and follow-on questions - often points to a familiar theme: the “plan” is what results if the quantitative assumptions embedded in the spreadsheet hold true.  The spreadsheet is the embodiment of assumptions that the sponsoring VCs deem both reasonable and achievable.

(It doesn’t take insightful questions to arise at the core problem.  The fact that a CEO has me in her office suggests that a well thought-out framework is either not in place or, if it is, then it isn’t working.)

Don’t get me wrong.  These CEOs are not unintelligent people.  They are sharp, skilled, and committed.  But they are often required to be so focused on the financial numerics of the enterprise that the underlying raison d’être of the firm, and the things that cause markets to respond, receive second billing.

Assumptions ain’t all they’re cracked up to be

Alas, assumptions do not plans make.  Assumptions are merely statements about future conditions that, for the purpose of simplifying planning, are held constant over some reasonable span of time.

To really understand what’s at the heart of a plan is to talk to those who have to implement it.  Get two levels down from the CEO, and the answers to the request, please describe the company’s plan in your own words, typically span a range of diversity that covers most strategies one could imagine for an industry.

When in doubt, Go like Hell towards all points of the compass

The most succinct rendering of a plan I’ve yet heard - yet typical of what many employees often convey - is this: our strategy is to go like hell in as many different directions as we can manage, figure out the ones that pay off, then focus on those.  No kidding.  There is no exaggeration here.

The numerics serve as both goal and yardstick.  There is always an underlying sense of how people will go about getting there, but seldom does one get an impression of it being orchestrated, rehearsed, and executed.  Yet again, it is typical.

I often imagine it as people in boats trolling for fish in a lake.  Dozens of boats with motors quietly humming as they troll, fishing lines in the water, waiting for a strike.  Someone yells, I got one.  Upon hearing this, the rest of the boats crank up their engines full throttle and head in that direction.  Within minutes there are dozens of boats trolling in the same area, at risk of fishing lines crossing, yet all joyously confident that their odds of catching fish have increased.

It Doesn’t have to be this Hard

Good planning is hard work.  But it saves even more hard work in its execution.  Successful companies that grow large and profitable understand their markets, their competitors, the environment in which they operate, what is in their control and what is not.  They commit resources long term, i.e strategy, purposefully and with the knowledge of the outcomes that will be yielded.

Spreadsheets are merely quantifiable expressions of what the business sets out to do as a result of its plan.  Spreadsheets are to a business plan what sheet music is to a composer.  They capture the product of intellect, but they are not a substitute for it.

Given the Chance, Would You?

A great many articles and blogs have been written about the removal of Carol Bartz as CEO of Yahoo!  While half of them have been written about why she was and what it means for Yahoo!, the remainder have focused on how the termination was handled.  Both by the Yahoo! Board, and Carol herself.

Carol Bartz ran the worldwide sales organization at Sun Microsystems when I first worked there.  As several articles have alluded, I can personally confirm that her manner could be abrasive and, yes, that if you liked salty language you certainly enjoyed a warm comfort in Carol’s presence.

On one occasion, following a day of meetings with her, two dozen of us dined privately at MacArthur Park in Palo Alto.  At its conclusion, Carol shook everyone’s hand as they exited, smiling and saying to each, “Make your number.”  That was Carol.  Business first and last.  Fun in between.

Carol was not out to make friends.  If you made your number, you were good in her books.  If you didn’t, you were still in her books.  But listed on a different page.

I’ll confess to being surprised to read that she was terminated via a phone call.  Barring extreme grounds for cause, or imminent notification by the Board as is required in some CEO’s employment contracts, notice by phone is not a class act.  (I’ve had to do it a few times in my career due to unique circumstances - though once because a boss refused to grant travel approval.  Terminating anyone is unpleasant business.  Having to do it by telephone has always lingered with me as an indignity to the person whose position is being terminated.)

Though, I wasn’t at all surprised to read Carol’s response in the Forbes interview, referring to the Board as having “f___ed me over.”  Sour grapes?  Perhaps.

But who among us did not smile just a bit when reading it?  It is seldom, if ever, that voice is given to our most visceral and personal thoughts. On that score, Carol Bartz is no shrinking violet.

You Just Killed My Dog

In 1973, National Lampoon kicked off the new year with this cover:

The staff at National Lampoon - many of whom would later join Saturday Night Live - liked the dark side of humor.  Both the photo and its warning, If you don’t buy this magazine, we’ll kill this dog, were a cultural shock almost 40 years ago that sent circulation soaring.

The stuff of National Lampoon was parody and satire.  What I am writing about, however, is not.

In working with several non-profits this year, I’ve examined the online practices of other non-profits operating in the same field.  It doesn’t take long to conclude that most of them are hurting in this economy.  Some more than others.  Donations are down.  And, more than a few are showing how anxious they are about it. 

I only had to observe the marketing of 20 non-profits, and sign up for email from a half dozen of them, to see examples of how the difficulties facing some non-profit managements are affecting how they market to their donor base.  

The Tactic of Fear

A typical email I receive (monthly, sometimes more often) follows a now-familiar formula.  I won’t crass and call out names, or charitable objectives.

1. The beginning paints a picture of imminent disaster.  Someone - or thing - is going to do without (and sometimes, die!).  All usually laid out in one sentence.
2. The middle both describes the calamity if funds are not raised, and (compassionately, for the reader’s sake) what the world will look like if tragedy is averted.
3. Not unsurprisingly, at the end the choice is mine: donate and save the dog, or risk having the poor bugger shot.
4. A conspicuous Donate Now button - usually in amber yellow with black letters - sits close by.  Occasionally, there’s a Donate Now button near the top of the email (presumably so that one can spare oneself the torment of reading any further).

As a tactic, all of this would be fine if it worked.  But it usually doesn’t.

Numerous research studies (among them, Ray and Wilkie, 1970) have shown that the use of fear (more typically, threat or anxiety) walks a mighty fine line with an auidence Too little is boring; too much is a turn-off.  Both end up being ineffective. 

How much fear is the right amount to use?  It turns out that it all depends on how familiar an audience is with the subject - or issue.  The general finding is this: the more familiar the topic is to an audience, the lower the optimal level of fear appeal required to work.  In other words, if the audience is sensitized to an issue, a little goes a long way.

So, if I was to learn that the demise of a beetle I’d not heard of would eventually have a devastating effect on the food supply, an amped-up appeal would be in order.  But, as I’m already sensitized to the plight of starvation in some third world countries, it’s careful-does-it on the anxiety control knob.  

Accentuate the Positive

Most non-profits take enormous risk with fear marketing.  It’s hard to do well.  Most aren’t skilled at it.  And also, their email programs typically are directed at an audience that is already knowledgeable about the issue - their donor base.

Their managements may feel their gut churning over the decline in funding, but they do themselves a poor service by carrying that angst into their appeals.  

The best advice parallels that of Seth Godin: lead with benefit and value, and you'll never go wrong.

The best non-profit appeals out there (some are very well-crafted) go the extra mile to construct an appeals around what is accomplished via the good works they do.  Progress made.  Smiling faces.  Happy puppies.

People are more willing to contribute to a cause that makes them feel good inside about what they’re contributing to, than one that shows the glass half-empty.

I’d rather see a photo of a happy dog, than one with a gun pointed at its head.