“Instead of shelling out big bucks for lavish trade shows and TV and magazine ads, Amazon pours money into technology for its Web site, distribution capability, and good deals on shipping. … “It is pretty unprecedented that their brand has ascended so quickly without a large marketing budget,” says Hayes Roth, chief marketing officer at brand consultant Landor Associates. “It’s not about splaying their logo everywhere. They are all about ease of use.”
Amazon has done well in the recession for the very reasons that Wall Street lambasted them after the dot com bubble burst.
Wall Street wanted short-term profits, while Bezos focused on the long-term.
When I was looking for yesterday’s quotes, I also found these two and they say it all.
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”
There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.”
It takes enormous strength of character to stay focused on the future when investors are pounding on you to focus on immediate returns.
Too many CEOs sell their company’s future by focusing on keeping investors, analysts and the media happy in the short-term.
I want to share three comments from Jeff Bezos today, because tomorrow’s post is about him.
They all focus on the financial side and point up the great difference between Bezos and many other CEOs when it comes to money and stock.
If Bezos is anything he is pragmatic and real—no BS. And that is just as true when he is talking about entrepreneurial topics as about his business.
The truth in this comment has only increased over the years and will continue into the future. “Good ideas will always get funded, so that’s not going to be a problem. But you will see that it will be harder and harder for bad ideas to get funded.”
“It’s part of the territory with Internet stocks, that kind of volatility. It can be up 30 percent one month, it can be down 30 percent in a month, and a minute spent thinking about the short-term stock price is a minute wasted.” Obviously, Bezos never wasted any minutes on the subject.
If you’ve followed Amazon at all, you know that every time Bezos invested in better technology or added product lines Wall Street predicted its imminent demise. Even today, after a decade of success, the analysts question Amazon’s every move.
Bezos takes it in stride, still focusing on the long term and customer satisfaction, as he has all along.
“No. I’ve taken plenty of criticism, but it’s always been about our stock price and never about our customer experience. After the bubble burst, I would sit down with our harshest critics, and at the end of the meeting they would say, “I’m a huge customer.” You know that when your harshest critics are among your best customers, you can’t be doing that badly.”
Join me tomorrow for a look at Bezos’ approach to nonmarkteing.
Will the energy grid replace existing sources of power—oil, coal, gas, and nuclear—with renewable energy? Currently, our energy is finite and polluting yet highly efficient. And all of the players in the market, producers and consumers, recognize the need to overcome these limitations.
Solar energy accounts for only 0.003% of energy consumption in the US today and that is projected to increase to 2% by 2025. That kind of miniscule percent of the overall energy consumed is not specific to solar energy. Wind, bio-mass and geothermal heat all give a negligible contribution to the US’s power supply.
The players in the market have one requirement of energy: it must be reliable at all times. Oil and coal are reliable. And from what I could see at the AlwaysOn Going Green conference, oil and coal companies are not going to allow their market shares to erode without putting up a fight and having their case heard. Chris Poirier, CEO of CoalTek, emphasized to the audience: coal in particular exists here in the US in abundance; coal companies are developing cleaner versions of this resource.
Much is made of “clean coal” but at the end of the day, clean coal is an oxymoron. Coal is a disaster at every stage of its production.
To mine coal, currently the companies raze our mountains to procure the coal. What they absolutely never want to discuss is that they are a highly subsidized industry: all of the energy used to transport the coal over vast distances is subsidized.
But probably the gravest problem of using coal as an energy source is that it emits more carbon dioxide than any other fuel and those carbons are much more polluting because the carbon molecule in coal is larger.
According to John Woolard, CEO of BrightSource Energy, the only way that we can overcome the limitations of going completely green and clean is if we take a localized approach to integrating the grid. That requires the grid to receive energy locally: solar power from Southern California and the Western states, wind from the Mid-West states, tidal power from the coastal states, etc.
That is a smart way of consuming energy. However, what do cleaner oil and coal have in common? The infrastructure already exists for these products. The grid already runs on oil and coal.
How will consumers and the US government react to the fact that this resource resides in abundance in this country and that we wouldn’t have to pay to overhaul our infrastructure to continue to use it?
For argument’s sake, let’s suppose that all renewable energies will have the same level of projected involvement as solar will in 2025, renewable energies would capture about 15% of the market.
Hopefully this is an ineffective way of looking at the situation as nothing is static and clean and green tech companies could possibly improve the amount of energy they generate exponentially in the future.
This all begs the question: can green and clean tech survive and even thrive without national policies to encourage their adoption?
I fear that due to the propaganda of coal being cleaner from the coal companies and the lack of capital investment and political incentives from the government to upgrade our infrastructure we will not replace coal and oil in our grid with renewable energies.
I specifically asked that he provide a look at how this premier Silicon Valley gathering saw their role in the coming economic recovery.
As usual, the AlwaysOn Stanford Summit was a breath of fresh air with industry luminaries, entrepreneurs and venture capitalists interacting intensely. The topic on everyone’s minds was, of course, the Grand Recession that the financial industry had brought upon all of us and what would bring us out of it.
One issue was clear in everyone’s minds and that was that the information and computer industries were some of the leading forces that would turn the negative situation into more positive territories. From my point of view as CEO of a software company and leader of a foundation that works with disadvantaged kids, it is clear that innovation and problem solving will be a core factor to bring the US, and the rest of the world, out of recession.
Technology is a two-edged sword and information technology helped create some of the problems.
The efficiency with which trades are executed in the financial markets;
the ability to seamlessly package, re-package and syndicate debt; and
the borderless nature of global finance is all based on computer technology.
As such, tech was a facilitator, not only in the creation of the bubble, but also the in the speed with which it spread from mortgage backed securities to the rest of the economy.
One way or another most people are experiencing the fallout on a global level.
In the same way, it will be due to the possibilities and flexibility of technology that the world will ascend out of “darkness”.
But facilitators are neutral and play both sides, so just as the downturn and bubble were helped along by technology, so the turnaround will happen with the help of technology.
This is what many of us discussed at the AlwaysOn Stanford Summit and I would like to share with you the varied thoughts of three entrepreneurs, Lorenzo Carver, CEO of Liquid Scenarios, Jason Seed, CEO of CVSdude and Renee Blodgett, CEO of Blodgett Communications, on how technology will aid the recovery.
In essence, these three have different takes on the value that technology brings and why tech will facilitate the turnaround.
The first CEO I interviewed was Lorenzo Carver, who has extensive experience in the technology, finance and accounting industries, among others. He has founded several companies, as well as having participated in raising billions of dollars in funding for other companies. He is often sought for his strategic advice by both company leaders and venture capitalists.
At present, his major endeavor is Liquid Scenarios, which minimizes uncertainty for investors in different ventures. They provide the various hardcore financial scenarios that an investor needs to calculate—investment amounts, rounds of financing, time to exit, etc.; the different aspects of modeling the future of an investment beyond what spreadsheets can take you. They have major venture capitalists and other investors as clients.
Lorenzo’s comments on how technology would play a part in the economic recovery were quite insightful. “Tech has already had an effect on the recovery, just like it had in the downturn at the end of the dotcom era. In fact, tech has led us out of the doom and gloom mentality with earnings from Google, Adobe and others being significantly better than expected. This has provided people with hope that organizations are continuing to invest. These are important signals, considering the leadership position that the technology industry has in this country.”
I agree with what he is saying, however, I remain a bit skeptical of the significant optimism that exists in the market today. Considering the significant job losses and the continuing trend of more jobs lost, in addition to the continued credit freeze for both consumers and corporations, it is difficult to imagine that we are as close to a recovery as people believe. A slowing downward trend is not the same as an upward trend.
When I asked Lorenzo about this, he said “Of course, as a business leader I am planning for continued hard times and am finding ways of doing more with less; I believe that this will continue for some time.”
In short, technology has played and will continue to play a significant role, but we are still experiencing a downward trend.
Everyone I spoke with at the Stanford Summit recognizes this and manages accordingly. In this environment it is all about cash management and to the extent technology can aid in this it will continue to be a winner.
Last year I met Guy Marion, Executive Vice President of CVSDude, an enterprising and innovative version control platform, who had traveled all the way from Australia to attend the Summit. CVSDude is the leading worldwide provider of Subversion hosting and developer solutions to distributed teams.
This year I had the pleasure of sitting down with their CEO Jason Seed, who, over this past year, has driven significant progress, including opening offices in Silicon Valley. When asked about how the tech industry is/would contributing to the economic recovery, he was very clear on the major factor technology brings.
“The major benefit of the technology industry is the efficiency it delivers to all organizations. Clearly both efficiency and effectiveness will be the major drivers of an eventual recovery.” Clearly Jason is correct in mentioning this. Since the inception of technology, efficiency and effectiveness have been the drivers of innovation. Clearly, what we are now seeing in the economy is a retrenchment started by finance, but continued by the search for efficiencies and doing things more effectively using technology.
Many of the people laid off in this recession will have their jobs replaced by technology. They and many more will find that to regain employment some level of retraining will be necessary. This is certainly true for many in Detroit, the epicenter of employment losses.
Jason’s company focuses on delivering these efficiencies to global teams of developers, whether they are distributed across large geographic areas or who work in the same office. Regardless, being able to have scalable, reliable, secure systems to manage version control and other software issues is a core enabler of effective development.
Finally, I discuss the role that technology will play in the economic recovery with Rene Blodgett, CEO of Blodgett Communications. I kidded Rene that maybe she was the sister or wife of Henry Blodget, the infamous dotcom stock market analyst from Merrill Lynch. In fact, she’s not related in any way to “Hype” Blodget, despite her involvement in promoting technology companies.
Blodgett Communications partners with clients, getting to know their business in an intimate fashion, in order to differentiate and create thought leadership. Their core expertise focuses on the absolute fact that revenue and sales are always at the forefront of each management team’s objectives, so they develop media strategies that minimize cash outlay while enhancing cash generation.
Rene believes the way technology will lead us out of the recession is through enabling better decision-making. She says, “It is clear that technology enables analysis of data and acquisition of information in a way that gives companies the tools to understand options and reach conclusions in ways that were previously impossible. This is especially true about business intelligence and predictive analytics; companies, like EMANIO, will be at the forefront.”
Thank you, Rene. It is absolutely true that EMANIO is at the forefront of the information and analysis revolution and I am in complete agreement when you say, “It is only through improved decision-making that we will be able to get the economy on an even keel again.”
Lorenzo believes that tech is already leading us out of the recession and that the “green shoots” that we are seeing are due to the performance of technology in companies or technology stocks’ effect on general sentiment.
Jason believes that effectiveness and efficiencies driven by technology will lie at the base of a robust recovery.
Rene’s conviction is that it is better decisions enabled by technology that will differentiate winners from losers and lead us out of the doldrums.
All our sentiments are valid and interesting, but we’ll have to see how it develops going forward before we can judge how accurate we are.
Vinod Khosla, the co-founder of Sun Microsystems and now a venture capitalist, considers himself a pragmentalist (pragmatic environmentalist) and his investments reflect that attitude.
“And I’m a firm believer, technology is the real solution. The world will not go backwards. Human beings aren’t made that way. And so you have to come up with different solutions.”
All well and good, but he goes on to say that leaders need to hold opinions based on their own belief system and that if you believe strongly enough you can lead confidently.
The examples he mentions are Steve Jobs and Larry Ellison and therein lies the problem.
It’s a common attitude, cite one of the “good guys” to illustrate so-called leadership qualities and ignore all the bad examples of the same action.
Ellison and Jobs are known for forging ahead based on their own opinion and convictions and damn the torpedoes and analysts. Fortunately, they’ve both been right far more often (not always) than wrong and so are held up as examples of the need to hold to passionately to one’s beliefs.
But what about all the leaders who follow their own belief system and blow up their companies when they damn the torpedoes?
Robert Nardelli at Home Depot; Richard Fuld at Lehman and the rest of the Wall Street CEOs who passionately believed in derivatives and minimized the risk; John Thain at Merrill Lynch; Al Dunlap at Sunbeam; the list is endless and timeless.
Khosla is interesting and obviously successful following his own advice, but I suggest that you look for more than confidence based on a personal belief system when choosing someone to follow.
I came across an old article I’d saved and thought it would be of great value during these trying times.
Thinking about and understanding risk is important whether you consider yourself a risk-taker or not.
Last year, Bill Buxton, researcher, professor, and author wrote a great column on risk in Business Week.
“Entrepreneurs, like ice climbers, are often said to risk their necks. But there are ways to cut danger to sane levels—and some very good reasons to try.”
People often comment that both groups are, politely speaking, nuts.
After offering up a detailed explanation of ice climbing Buxton says, “…the four considerations employed by the ice climber are exactly the same as those used by the serial entrepreneur or the effective business person…”
They are training, tools, fitness and partners.
But to me, the most important thought is found in the final four sentences.
“The most dangerous way of all to play it is so-called safe. Safe leads to atrophy and certain death—of spirit, culture, and enterprise. There is not a single institution of merit or worthy of respect in our society that was not created out of risk. Risk is not only not to be avoided, it is to be embraced—for survival.”
It is risk without evaluation that helped get us where we are today.
Evaluating risk requires not the best case analysis of which Wall Street is so fond, but also worst case analysis wherein you think about the absolute worst results if the risk is taken.
Then think through whether and how you would deal with the results. If they can be handled go forward; if not revise the action.
don’t hesitate to tell a client they’re wrong when you know they are;
don’t just focus on what you’re doing for customers now, but what you’ll do for them in the future; and
They’re all wrapped up in a story about Intel’s new advertising plan and Venables Bell & Partners, the agency that’s doing it.
Lesson 1: In a nutshell, Intel’s concept of the branding effort was “we’re so important to your everyday life. Imagine a world without Intel. Your lights would go out. The world would stop revolving.” That’s arrogance.
Lesson 2: In a second nutshell, “Venables Bell said, ‘You got that wrong.’” Telling an account the size of Intel they’re on the wrong track takes guts.
In Silicon Valley Intel is a cultural icon renowned for its technical brilliance, innovative R&D and decidedly quirky culture.
Lesson 3 & 4: VB did an in-depth study of the company and hung out with its engineers; you’ll be seeing the results starting next week. The campaign’s tagline is “Sponsors of Tomorrow,” and the ads highlight achievements of Intel engineers in a humorous way.”
Share the ideas with your team; then work together and tweak them to sell your company, department or team to those for whom you perform, whether your customers are external or internal.
Innovation drives the sacred P’s—productivity and profit.
For the smartest companies in this economy innovation didn’t stop with the economic crash; it’s still a hot topic and not just for products and business processes, but through every nook and cranny across the organization.
Innovation isn’t always earth-shaking or about the next big thing, but large or small, the outcome is always focused on better. Many companies spend big bucks on innovation assistance, hiring top consultants, going on special retreats, etc.
Aside from the fact that spending is more difficult these days, consultants and retreats typically tap only the higher levels of the company ignoring one of the best sources of innovation you have—your own people, all of them.
Assuming you’d like to turn on this innovation faucet, what do you do?
Set up an innovation wiki. Just be sure that the CEO (or top person in the department, group, whatever) support the effort or it’s unlikely to go anywhere.
You want to involve all your people because at all levels they’re the ones who are constantly dealing with your products, processes and customers; who know them intimately and frequently have innovative ideas or are in a position to ask creativity-provoking questions that are just as valuable. What they usually don’t have is a way to get their ideas noticed.
Here’s what to do.
Create an innovation wiki either on your intranet or at a free host (there are dozens).
Write a brief description of the wiki’s purpose: That you want to create a “field of dreams and innovation” for all your people to play in to take the organization to the next level.
Add some basic ground rules tailored to your own organization:
All ideas are welcome, no matter how outrageous or revolutionary they seem.
No idea is too small; no subject too minor.
Good ideas have nothing to do with position in the company hierarchy.
Recruit “early adopters,” those people who love to be on the bleeding edge of what ever is going on. Then create a major internal PR effort encouraging everybody’s participation. Keep the topic high in the company’s consciousness with constant references.
Finally, the most important ingredient to making your innovation wiki a success is to use the ideas!
If you don’t use them people will know it’s a scam and quickly lose interest.
Whether you use them directly or as the springboard to something else, it’s crucial to publicly credit them to the originator.
If you’re in a position to add some kind of incentive or award for each one used (even if the use is indirect) that’s great, but it’s most important to offer major, public appreciation.
Last Monday I laid out a do-it-yourself plan for mangers to juice growth among their people. Beth Miller asked why I didn’t include coaching; I responded that I believed that line managers needed to take responsibility for professional development, especially in the current economic climate.
Beth asked,“So what holds back managers from coaching?”
My response is what I want to focus on today.
“I think it’s partly language. I know a number of managers who have implemented what I described in the post, do a terrific job developing their people, but don’t consider any of it coaching or even mentoring. One even scoffs at “coaching,” yet he’s known for building his people.
In working with my MAP coaching I’ve found that what holds many managers back is terminology. If they relate to the descriptive terms there’s no problem, but if they don’t relate they can’t implement what they’ve learned. I change the language and bingo, they take off like a rocket.”
People are far more word-sensitive than most realize. They’re more aware of it in politics, religion and advertising, but less so in general business, even less when talking to their team and it’s almost non-existent when it comes to their own ‘hearing’.
The nice thing, as I said, is that it’s an easy fix once you notice. Noticing is easy, too. Just keep an eye out for a blank look when you’re talking. It’s that look of incomprehension that is the key to repeating, but in different words. There’s nothing that drives people nuts faster than having the same thing repeated over and over; if it wasn’t understood the first time repeating it or saying louder isn’t going to help.
And don’t start the change with ‘what I mean is…’, because many people will tune out at that point focusing on figuring out what you already said.
Instead, wait a bit (depending on context) and then present your thought from a different angle or change the phrasing of the thought that accompanied the blank look.
This isn’t about dumbing down what you say (or write); it’s about presenting it in a wholy different way; a way that the other person can hear.
The manager mentioned above detested the word ‘coach’ as some touch-feely new-age notion, nor was he enthralled with the term ‘mentor’.
To him, he was just doing what any manager worth a damn did—make sure that his people developed new skills and used the ones they had fully to the benefit of both the company and themselves.
As he once said to me, “developing people is part of a manager’s job, not something extra“—and his employer paid him to manage.
Gee, if I could bottle his MAP I could probably retire.
“After years of celebrating wealth, celebrity and the vapid excesses of youth, MTV is trying to gloss its escapist entertainment with a veneer of positive social messages.”
According to Stephen Friedman, MTV’s general manager, for Gen X “the humor was more cynical, the idea of community seemed earnest and not cool. It’s the opposite now.”
I don’t care that it’s driven by the bottom line, it’s also a recognition that the youth market is changing. And if MTV thinks that the Millennials have a different attitude they probably do—hopefully one strong enough to outweigh its entitled mindset and need for constant praise.
Viacom, MTV’s corporate parent, even has a new deal with the Bill and Melinda Gates Foundation to make shows more supportive of education, which is truly amazing.
Jumping to the older part of that generation, the current economic downturn is taking many newly minted MBAs in new directions.
“There was a real herd mentality to get into investment banking, noting that prestige, peer pressure and parents often channeled students to Wall Street. But because of the crisis, “there was suddenly permission to pursue something you were interested in that your parents three years ago would have said absolutely no to.” –Jessica Levy, Wharton senior.
“Some students now acknowledge that they were pursuing investment banking jobs largely to placate parents who, having invested nearly $200,000 in their children’s educations, were eager for them to earn top dollar — and some prestige too.”
I find it interesting that the supposed cream of the talent pool, highly (and expensively) educated, our future leaders with supposedly outstanding independent/critical thinking skills succumbed not out of personal desire, but from outside pressures. Nope, they didn’t really want to work on Wall Street with its gargantuan salaries and over-the-top, masters of the universe mentality. Who woulda thunk it.
All sarcasm aside, I do hope that this is a bit more of the silver lining the banking meltdown. It’s not that Wall Street is always bad, but that there are many ways and places to contribute.
“It’s always been about the brass ring and it’s always been about the brand recognition, and for a lot of students that meant jobs at Goldman Sachs,” Emanuel Sturman, director of career services at Dartmouth College. “It’s premature to say the bloom is off the rose totally, but I think students are starting to look at a wider array of brass rings.”
And who knows, maybe working in other industries will enable them to contribute to the common good in ways more meaningful than just writing a check.