Wednesday, December 28, 2011

Bring Your Dog to the Vet, Stop for a Hamburger on the Way Home

A long time ago at a company meeting I tried to say something positive about productivity.  The revenue generated by each person in the company had grown dramatically over the past few years and I wanted people to know how much we valued their efforts.

In doing so, I made two mistakes.

First, in general terms, we’re all in favor of increased productivity.  In many ways our economic well-being depends on it.  However, what’s admired generally is not necessarily treasured individually, because productivity writ small often means that the value I’m providing you is growing faster than what you’re paying me.   Increased productivity down in the trenches feels like you owe me.

Second, I naively used the word “headcount” during that fateful employee meeting, as in “Our revenue per headcount has skyrocketed in the last 18 months.”  Headcount is a perfectly ordinary word that helps measure labor.  If you work 40 hours a week and I work 20 and someone else works 10, then it's easier to say that we have “1.75 heads” than we have “1.75 equivalent people.”

However, one person’s ordinary measurement is another’s insult.  A few minutes after the meeting a group of employees had gathered in my office to say they were hurt by being referred to as “headcount.”  I explained why I used the term, apologized, and removed it from my public vocabulary.

I know what the problem is, and it’s real: Once we turn something into a unit of measure, especially a unit of productivity, we devalue it.  Sometimes it loses its humanness.  Sometimes it loses its soul.

There was a good piece recently in the New York Times Review of Books about animal rights literature where I learned a new term: speciesism.  In simple terms, it means we value certain species of animals, like our pet cats and dogs, to the point where they become part of the family.  Meanwhile, other equally sentient animals--meaning creatures that can experience pleasure and comfort and fear and pain every bit as much as our cats and dogs--are treated brutally on our farms and in our slaughterhouses.  It’s discrimination based on species.

I bring my dog to the vet and on the way home stop for a hamburger.

What happens to cows?  They become heads of cattle.  Units of measurement.  And pigs?  Pork bellies.  They get traded on a commodities exchange.

If the cows could get together and visit the farmer who just gave the speech about productivity, they’d probably tell him that they’d really rather be referred to as Bossie and Elsie and not “heads of cattle.”  Just look up “head of cattle” on Google and you’ll see questions like “How many head of cattle can you have on an acre of land?”  That sounds an awful lot like a unit of production to me, and an animal that’s just lost its soul.

The great blight on America was slavery, when human beings were measured in terms of their productive value.  Even Jefferson wrote ugly when he realized he could enhance his wealth by having his slaves reproduce rather that acquiring new ones.  "[A] woman who brings a child every two years is more profitable than the best man on the farm."  That’s Jefferson applying a make vs. buy decision to human beings.  That’s a Founding Father illustrating vividly that turning  living creatures into units of production does as much to debase the  measurer as the measuree.

It’s Jefferson’s unintended gift to a world in which we measure everything.  We possess dozens, hundreds, maybe thousands of sensors for every person in America.  A recent McKinsey study concluded that data being generated globally increases by 40 percent annually.  All that data encourages us to measure stuff and make it better.  Be more efficient.  Raise our productivity.  Increase the yield on our head of cattle.  Get more pork bellies for our dollar.  Improve our revenue per headcount, as it were.

It reinforces why “headcount” was so offensive all those years ago.  It also helps me understand why our youngest daughter is an avowed vegetarian.  Two good lessons, I think, to start the new year.

Monday, December 19, 2011

The Changing Christmas Tradition

It's possible this house has an artificial tree because a
live one is "too much of a hassle."
Have you noticed that nothing really stays the same?  Even tradition.  

Christmas Trees.  40% of U.S. households purchased live Christmas trees in 1991 and only 23% last year.  Baby  boomers stop buying live trees as they get older.  The latch-key generation never had a live tree.  Artificial trees from China have grown in quality and skyrocketed in demand.  In 2011, consumers will spend $1 billion on artificial trees and $984 million on real trees.  That's called a "tipping point."

Lights.  Does it seem to you that more and more houses are displaying more and more lights?  And, we've moved out of our white icicle obsession and are now seeing colors again?  Big inflatable snowmen?  Giant electronic candycanes?  Is it the impact of Youtube?  Trans-Siberian Orchestra?  Does it seem strange that we no longer want the hassle of a live tree but will crawl around in our bushes for a week after Thanksgiving stringing lights?

What if I'd told you in 1980 to "invest in companies making cheap plastic lights because every family in America will purchase one for every single window in the their home by 2011."  Would you have believed me?

On-line Shopping.  My wife returned from a shopping excursion recently and said it was busy, but not as crazy as it's been in past years.  The retail numbers this season--projected up almost 5%--are excellent.  My conclusion: We are, for the first time, seeing a visual impact from on-line shopping.  Perhaps the information highway will one day make the mall safe again. 

Traditional Delivery.  If somebody is winning besides Amazon, it would have to be FedEx, UPS, and maybe even the US Postal Service--which will still lose more than $5 billion this year.  As on-line shopping continues to grow, I wonder if the Post Office will begin to look like every other retailer: 40% of its revenue and all of its profit will be made in the six weeks before Christmas?  A thought: Stop raising the price of a first class stamp when we all have email, and dominate the last mile with cheap delivery of my holiday boxes. 

Outsourcing.  Fifteen years ago we ran out of an electronic component because of Chinese New Year and it caught everyone off-guard.  Now, companies have to plan their Q1 inventories around this Chinese holiday.

Cards.  I can't tell what's going on yet.  We're definitely getting and receiving less, but we're still receiving from folks we keep in touch with via Facebook--the very folks I thought we'd lose first.  On the other hand, we're getting more and more mechanized cards, untouched by human hand.  Which is, I suppose, like a Facebook posting.

Like I said, I can't yet divine the trend except that the Post Office is losing, and so is Hallmark.  

Christmas Music.  Rock artists think that re-recording The Little Drummer Boy is a good thing.  It isn't.  Mel Torme made enough money from The Christmas Song ("chestnuts roasting. . .") that he could have retired on that single song.  "Santa Claus Is Coming to Town" and "Winter Wonderland" are both vintage 1934.  "White Christmas" was 1942 and for the next decade, songwriters invented the modern Christmas canon: "I'll Be Home" (1943), "Have Yourself a Merry Little Christmas" (1944), "Let It Snow" etc." (1945), "The Christmas Song" (1946), "Here Comes Santa Claus" (1947), "Sleigh Ride" and "Blue Christmas" (1948) and "Rudolph" (1949).  The 1950s were fertile as well, from "Frosty" to "Silver Bells" to "I Saw Mommy Kissing Santa Claus" to "Jingle Bell Rock" and "Rockin' Around the Christmas Tree."  Then, things went sideways.  Vince Guaraldi was a bright light in the Dark Ages, but the ages stayed pretty dark with the melancholy "Do They Know It's Christmas" (1984).  Lately, we've had to rely on Mariah Carey.

I saw a chart the other day (pasted above) showing that most of the 20 most-played Christmas songs were all written in the 1940s and 1950s, proof that the Baby Boomers were trying to recreate their childhoods every year.  I say: Write something worth listening to and we'll beat a path to your download!

Sports.  And Christmas.  Christmas and Sports.  Football on Christmas Eve. Basketball on Christmas Day.  How did THAT happen, anyway?  And don't even get me started on the bowl games.

On the other hand, if we were really hung-up on a traditional American Christmas, we'd be roaming the town getting roaring drunk and harassing the rich neighbors, as I wrote about here in 2008.  Maybe Mariah Carey, cheap candles and an artificial tree or two aren't so bad after all.

Merry Christmas!

Sunday, December 18, 2011

Who Cares if a Tablet is a PC?

Ted Levitt identified a central truth in strategy when he wrote that how we define "the business we're in" can create or destroy opportunity.

The drama playing out now is in the personal computer world.  It centers around whether a tablet--like an iPad--is a PC or something else, something entirely new.  

Before his death, Apple’s Steve Jobs said, no, a tablet was not a PC--that, in fact, we were entering a post-PC world.  Microsoft’s Steve Ballmer disagreed, saying that the tablet was absolutely, positively a PC.

On the surface, it seemed like just another Apple-Microsoft spat.

Friday, December 16, 2011

Only My Second R-rated Post

My first post "rated-R for mature themes" was here, back in June 2008.  It was about selling stuff people wanted but weren't allowed to admit they wanted.

My second post, this time "rated-R for holiday violence," is the display window of Town Cutler on Nob Hill in San Francisco.  We were walking by the other day and someone in my group gasped.  And then I heard my wife say, "Just don't put it in your blog."

That's all the encouragement I needed.

Sunday, December 11, 2011

Wednesday, December 7, 2011

Revisiting Swarm Intelligence

I was at a very pleasant business dinner the other evening with three smart gentlemen discussing everything from the presidential election to cold chain regulatory trends.  I mention these topics only because what happened next, and what happens every single time, occurs regardless of the table's combined IQ.

The waitress appeared and asked (what is apparently) the hardest question known to mankind: “Would anyone like dessert?”  In our case this “sudden group decision” turned four intelligent adults into four blithering idiots, twitching and staring at their laps.  Fortunately, one of our number had his PhD and recovered long enough to order a single slice of chocolate chunk pecan pie with four forks--a brilliant solution to an otherwise intractable problem.

I wrote about this phenomenon here in the context of swarm intelligence, the idea that dumb little ants running around in circles can come together in a group that is able to build complex structures, defend its turf, and write monographs about black holes like Stephen Hawking.

Ants.  Bees.  Birds.  Bacteria.  Swarm theory is an accepted theory.  My theory is essentially the opposite: All too often, people who are otherwise smart, ethical, good human beings come together in a group and become absolute jackasses.  Rush hour.  The Kennedy administration in The Best and the Brightest.  Enron.  Ordering dessert.

In fact, I call it “Dessert Intelligence.”

You might think that the falling IQs around ordering chocolate chunk pecan pie are all about politeness and deference.  In Outliers, Malcolm Gladwell informed us that certain cockpit crews are so deferential that they crash their planes.  I call that stupid.

Recently, we’ve had some really menacing, very sad instances of Dessert Intelligence.  A local high school basketball team imploded over a reckless group hazing incident.  Oklahoma State fans rioted after their team’s victory.  Students at Dean College were expelled after participating in a group assault.  Penn State football--need I say more?

I don’t know where this phenomenon falls in academia--economics, sociology or psychology--but having brilliant people study Dessert Intelligence (preferably not in groups) seems to be especially important.  After all, the greatest single technological innovation in the last generation allows us to create and network groups faster and more efficiently than at any time in human history.

Three lessons here: First, guard your IQ in crowds.  Second, the Web really might be the technological embodiment of the great dessert question, making us all stupid. (Think: Flashmob-robbery, singing babies going viral, and Kim Kardashian being the number 1 search term in 2011.)  

Third, it's not such a bad idea to bring a PhD to dinner.

Sunday, November 27, 2011

Thinking Inside the Box

Many years ago we had a shareholder who would visit from time to time to offer advice.  I valued these visits, though I’m not sure I always completely understood the counsel I received.  In particular, I was told on a periodic basis that I should “put it in a sock before I put it in the bag.”

I thought perhaps my shareholder friend, a native Norwegian who emigrated to America after WWII and made his fortune, was simply mistranslating some Old World advice. Maybe the word for “sock” in Norwegian was, well, I don’t know.  But not “sock.”

Anyway, he always said it in such a way, sort of with a wink, that I was embarrassed to inquire further.  I felt by asking I might violate some sacred code of the Sock and Bag Guild.

I was reminded of this advice the other day by none other than Peter Drucker, writing about people attempting to fix problems by innovating in all the wrong places.  

In the early 1950s, ocean-going freight was in big trouble.  Costs were rising, ports becoming congested, deliveries slowing and air freight looking better all the time.   The industry was innovating by trying to build faster vessels that required less fuel and smaller crews, all good ideas.

The game-saving innovation was launched quietly enough in April 1956 when a trucking entrepreneur placed 58 containers aboard a ship headed from New Jersey to Texas.  “Containers” means “big metal boxes.”  In took ten years, but in 1966 a Sea-Land ship carried the first international shipment of containers.  By 1975 vessels and ports were being built to accommodate thousands of big metal boxes.

We now think of this as “the container revolution.”  You might think of it as blueberries on your cereal in January, or maybe just an extraordinarily better standard of living.  It all came from metal-benders, guys who were losing jobs and prestige to technology innovators even as they were changing the world.

The secret to the innovation, of course, was decoupling two activities traditionally done serially but, with a simple metal box, now done in parallel.  While the ship was sailing, all of the packing could be done on land.  The result was ships spending 75% less time in port, a 60% reduction in shipping costs, and a five-fold increase in volume over three decades.  

There are some interesting lessons here.  Sometimes the simple solution has the greatest impact.  Low tech can rock.  Look to tough competitors (like truckers) for profitable solutions.  Never overlook process.  Peter Drucker is still worth reading.

The most important lesson for me, however, was finally making sense of my old shareholder’s advice.  Even though I was never, ever sure if I successfully “put it in a sock before I put it in the bag,”  I am now completely convinced that I should always “put it in a box before I put it in the boat.” 

Maybe that's what he meant all along.

Thursday, November 17, 2011

Spare Me Your Vision

If you’ve ever launched a business, you’ve been faced with the task of writing a Vision statement and a Mission statement.  One does one thing, the other does another, and I can never keep the two straight in my head.  But I do know that having a clear idea of what the business should look like three or five years down the road--what I call the “end state,” which I can keep straight--is awfully important to running a successful enterprise.

Now, if you’ve ever run a business, and published a Vision and Mission statement to the team, you have undoubtedly run into this situation: Some consultant will meet your team, perhaps at an offsite training, and report back to you that, regretably, nobody but nobody knows the Mission and Vision of your company.

You can gnash your teeth and beat your breast, knowing that you have been diligent in spreading the gospel.  Maybe, however, there’s something else going on.

I’m a New England Patriots fan, and every Monday Coach Bill Belichick is interviewed on the radio about Sunday’s game.  Belichick is, without a doubt, the worst interview in sports.  He reveals nothing.  When the Patriots play badly he says, “We didn’t make enough plays to win.”  When they play well he says, “We made enough plays to win.”  If you are looking for some kind of erudite exposition of the game, you’ve come to the wrong interview.

But Belichick says something so often it’s almost humorous: “We just need people to do their job.”  It's a kind of mantra for him.  When his players are interviewed they will often deflect a question by saying “Coach just needs me to do my job.”

Just do your job.  That’s what one of the smartest, winningest coaches in the history of football tells his players: Just do your job.  Is there a game strategy?  Of course.  Belichek knows it, as do his coaches.  I assume he discusses it with his team during the week.  But he doesn’t ask his players to memorize the strategy, or be able to recite it.  That’s his job.  When he creates the game plan each week, that’s his job.  And, when his wide receiver runs five steps, cuts left and looks over his inside shoulder for the ball, that’s his wide receiver’s job.

Just do your job.  That’s how the Patriots win.

There’s a reason your team doesn’t know the Vision and Mission by heart: It doesn’t help them do their job.  I promise, if it did, they would know it cold.  It’s not that they don’t want to know it, of course, or be reminded, or recognize that they’re contributing to it.  They just don’t need it memorized to do their job.

In the mid-1980s I was managing cable TV properties in Illinois.  These were the go-go days of cable when we were opening up new neighborhoods and people were chasing the cable TV truck down the street hoping to schedule an installation.  One day I got into it with one of our key suppliers--their fault, no doubt--and they withheld shipment of some important material we needed for installs.  We went from dozens of happy new customers a day to none, and the phones began ringing off the hook.

Finally, on a Friday, I solved the problem and, in a show of support (or punishment, depending on your perspective), asked our management team to be in the warehouse bright and early on Saturday morning to help assemble product for the installers and get them on the road quickly for special weekend installs.

There we were, putting together installation packets, when Jeff, the Warehouse Manager came over.  “Thanks,” he said, “for helping out.”  I beamed.  What a great GM I was.  “But,” he added, “if you did your job, you wouldn’t have to do mine.”

That message stuck, big time.  (It’s 28 years later and I still remember.)

All of which is to say, if you are running a business, your job is Mission and Vision and End State.  Figure it out.  Make sure the team is working toward it.  Go ahead and sell it internally from time to time.  Do your job.

But your Customer Service Manager is supposed to make customers deliriously happy.  Let him do his job.  Your VP-Sales is supposed to sell tons of stuff.  Let her do her job. 

Mission and Vision have their place, but Bill Belichick is right.  One critical secret to success is simple: Just do your job.

Monday, November 14, 2011

Another Kind of Leadership

We've been reading a lot lately about Steve Jobs' leadership style, and for the last generation about guys like Jack Welch, Bill Gates, Richard Branson and even Donald Trump.  In most cases, the purpose of leadership appears to be about creating something useful, maybe beautiful, and inevitably profitable.

Last weekend I attended the girls cross-country banquet at our local regional high school.  The student population at the school is about 1,400.  When the girls run meets, they typically run against teams of 18-22 girls.  In some cases, more like 8-12.  A really big team would have 35 runners.

Our girls cross-country team this year had 127 runners.   They were all at the banquet whooping it up, singing, accepting varsity letters and gifts and saying unbelievably nice things about one another, their coaches and their parents.  And they were hugging.  (There's a lot more hugging in high school these days than there used to be when I attended.  In fact, this is how much hugging I remember: none.)  Today, female high school cross-country runners apparently hug all the time.

The coach of the team is in his 36th year.  There's something about what he does, the way he does it, and the way he inspires the team that attracts 5 or 6 times the number of girls that other, comparably-sized schools attract.  And for a sport that involves running long, hard distances one day, and hills another, and track workouts another, and a 6 a.m. Tuesday workout if you didn't beat your best time at the meet on Monday--these girls are unbelievably happy.

This coach will never be on the cover of Wired, or featured in Business Week.  We will never read about his "10 immutable rules of leadership."  He exercises a kind of leadership that isn't about profit.

But it's the kind of leadership of which, I am certain, we could use a lot more.

It turns out the girls won the state tournament in their division this year.   But even if they hadn't, you just needed to sit through a little bit of the banquet to know that it would have been a very good year anyway.

Thursday, October 13, 2011

Yes, Of Course: You’re a 10

An irksome downside to the Digital Economy we’ve created is the need to keep the data-tanks full.  That means we’re being asked incessantly for our opinions.  At any moment we can be sure that some service vendor somewhere desperately wants our rating.

It’s getting to be one of hidden costs of doing business in what was supposed to be a frictionless world.

For instance, I love Amazon, and I love to purchase things on-line much more than shopping in a mall.  But every time I buy something on Amazon I’m asked to rate the vendor.  If I forget, I am sent a reminder email.  One of the charms of the mall turns out to be that I can buy something and walk out of a store unmolested.

Consider: I need to opine if I use Amazon to purchase two boxes of ink cartridges for my printer.  More than that, what the vendor really wants is my endorsement.  What can I say; you did a marvelous job shipping me two boxes of ink cartridges?

On ebay, I have to rate the vendor.  If I don’t, the vendor writes me to ask if something went wrong.  

Here’s a good rule, my Vendor Friends: If you’re somewhere between a 3 and 8, chances are we’re aok.  I don’t know if I can register much more enthusiasm for a transaction involving ink cartridges than a 5 or 6 anyway.

If you’re a 1 or 2, I’ll contact you. Trust me.  If you’re a 9 or 10, I’ll tell my friends.  Trust me on that, too.

That’s my global rating scheme for the Digital Economy.  You really don’t need to ask me any more than that.

And Amazon and ebay are nothing--and I mean nothing--compared to my local new car dealer.  Toyota, GM, Ford—they’re all the same.  Relentless.  It makes a sham of analytics.  Was my stay in their lounge while my car was being serviced a “10”?  Really?

Well, they did serve little blueberry muffins and hot coffee in the lounge, and if that’s done to get a “10” then I endorse it wholeheartedly.  But truthfully—having little blueberry muffins and watching Matt Lauer on a wide screen TV could only really ever be—what?—a 6? 

Now, if you had offered me a huge morning glory muffin with my name across the top drizzled in icing—in calligraphy—now we’re talking “10.”  But that’s what it would take to get a “10” from me in your service lounge.  You don’t have the money or energy to bother, and I don’t want you to bother.

In other words, the things in my life that rank “5” in importance probably only need a “5” in delivery and I’m happy.  A car service lounge: 5.  Just give me a clean place to work.  A $2.00 cup of coffee: 7.  Hernia surgery: 10.  You see?

One time my local car service manager pulled me aside and said, “You’re probably going to get a survey by mail or phone after you leave.  If I receive anything less than a ‘10’ it’s considered ‘failure’ around here.  I’d appreciate your help.”


OK.   You’re a “10.”  Really.  But please, just stop asking me.   


Wednesday, October 5, 2011

Why San Francisco Is This Century’s Boston

From time to time someone will tell me that Boston and San Francisco are alike.  I’ve been to both and I know the truth.  Each is near water and each has buildings, but after that it seems to me like a pretty weak resemblance.  

In fact, I would call Boston a great national city; people visit to see Paul Revere’s home, Fenway Park and eat lobster.  Then they go home.  

However, San Francisco is a great world city that sucks people in when they visit and holds onto them.  Its gravitational pull is very strong even here on the East Coast; I myself lost two brothers to the belly of the beast.

In fact, I believe that San Francisco is the great, iconic American city of the 21st century.   And it’s all wound tightly into my emerging theory of American Exceptionalism.

Friday, September 30, 2011

Business Writing: What We’ve Lost

I've been involved in a research project for the last eight months that has allowed me to spend time in one of the finest corporate archives in the world.  The documents I've read span the last 110 years, back to the turn of the twentieth century.  The first 40 years are particularly fascinating because they comprise the correspondence, memos and field reports of the seven entrepreneurs who founded the company.
Six of the seven men were college-educated engineers.

After a few months of work in the archives, here’s what struck me most: All seven men were superior writers.  I mean really, truly good writers.  A couple probably could have made a career of it.  Their correspondence with one another and their customers, their technical reports, and their marketing and sales literature were all impeccably authored, powerful, sometimes funny and occasionally biting--and an absolute joy to read.

It took me a couple of months of wading into the material to understand how remarkable this was.   These were not English majors.  They were often dealing with dense, technical topics.  But there was nothing sloppy or short-cut about how they expressed the written word.

It reminded me of a sports radio program I like.  It features two hosts.  Both hosts are knowledgeable, but I realized recently that I found myself gravitating more to the opinions of one over the other.  That’s when it donned on me: The host that consistently offered the more cogent, nuanced arguments also happened to be a long-time columnist for one of the local newspapers.  Two or three times, week in and week out, this “host-columnist” writes a thoughtful piece designed to argue some point of view.  While the “sportscaster host” certainly isn’t dumb, I can hear a clear difference in the way he assembles and delivers his opinion.

The act of writing is meaningful.

I was at a presentation last week that relied on a set of PowerPoint slides.  It was a very strong deck and accomplished what was intended. Still, I wondered what we may have lost in the transition from business memo to PowerPoint over the last ten or twenty years.  Maybe just a slew of needless conjunctions?  Certainly a bunch of atrocious English.  In fact, perhaps PowerPoint, email and text have leveled the playing field so that the entrepreneurs of 1911, forced to give up their memos, would sound very much like the entrepreneurs of 2011.  Good ideas would win out, undeterred by poorly concocted prose.

I’d be the first to admit that I like PowerPoint because it’s a whole lot easier than writing a full business memo.  There’s no part of me pining for the days of quills and penmanship.  But my sense is that we’ve lost something by not forcing ourselves to lay out ideas and to build arguments in prose.   I can’t prove that, but I don’t think anything has come along to replace the disciplined thinking that we’ve given up.

I suppose, too, that I’m expressing future sympathy for the business historian of 2111 who will, a century from now, try to paint a picture of the fortunes of the successful company launched in 2011.  Instead of the beautiful prose I found in my archives, he or she will be left with a thousand mind-numbing PowerPoints, 100,000 terse emails, and a million ungrammatical text messages.

Tuesday, September 13, 2011

Sometimes It's Marketing, But Sometimes It's Just Plain Reality

It’s hard not to appreciate and occasionally even quote from Ted Levitt’s 1960 Marketing Myopia, in which he challenged leaders to define their businesses around the customer, not the product.  Levitt led his essay with a classic example of the railroad, saying:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented.
I have long taken this critique of the railroad as a matter of faith.  Yet, even now as I write it, I wonder: the very industry that taught the rest of the world how to operate a successful big business apparently did not understand it had to compete with autos and planes for passenger traffic?

Could it be, as Levitt suggests, after decades of dominance that the railroad was suddenly asleep at the switch?

The other day I was thumbing through a couple of early-1950s editions of the Saturday Evening Post and was struck by what I saw.   Here, for example, was what Pullman was advertising:

Yes, it’s stereotypical to the point of being racist—welcome to the good old days.  But, what does the Executive Secretary of the National Association of Oil Equipment Jobbers say?  “Recently, I had to go to St. Louis for a meeting.  Instead of flying, as I had been doing for the past four years, I decided to take an overnight Pullman.  It happened to be raining when I left.  No matter. The train was exactly on time, and what’s more, I didn’t get drenched before boarding.”

Our Oil Equipment Jobber goes on to admire the big, comfortable seat, the ability to get work done, the privacy, the great night’s sleep, the wonderful breakfast, and the unwrinkled suit.

How could an ad be any better defined around the customer?  Pullman seemed intent on fighting for its share of passenger traffic.

(By the way, sorry the images are clipped.  I tried to define my home scanner as a “full-sized Saturday Evening Post color delivery solution” but, alas, it insists on being a simple home scanner.)

But that wasn’t all.  Next, the Southern Pacific, “America’s Most Modern Trains,” invited passengers to see the Pacific Coast while dining in a car fashioned after Timberline Lodge on Mt. Hood, viewing scenery through oversized windows and walking through feather-touch doors to their reserved Chair Car seats.

Are you confused?  Isn’t this the industry maligned for fifty years because it wanted to haul freight, not passengers?

Here’s another clue as to how competitive the railroad was: watch how it gets positioned in competitive ads.  In fact, there appeared to be a rock-em sock-em, three-way battle going on among the train, auto and plane industries for passengers.  The babies were booming and everyone wanted a piece.

Here’s a great example from a 1953 Post. The top panel of this ad is incredibly effective.  It shows a scene from 1911—the distant past—and a gleaming Pierce-Arrow.  Even then, the Ethyl Corporation suggests, the automobile was king.   In fact, that old plane has crashed, which undoubtedly played on a widespread public fear of 1950s airline travel.  And in the background?  That’s a train nearly consumed by its own smoke, a dirty, wretched beast of the Old World.

Today, of course (glance down!), there’s only the auto to consider, and “it isn’t unusual for a motorist to drive from New York to California in seven or eight days.” 

The airplane was no shrinking violet in this battle.  This 1950 ad shows motorists stuck in the snow while (top left) the American Airlines plane flies “above ground-level weather.”

And just to complete this wonderfully vicious advertising cycle, here United Air suggests that the poor old train is a topic of humor because “you can look down and laugh at icy roads, drifts of snow and long-delayed ground transportation.”

The truth is, the battle for passengers was fully engaged, with the railroad pitching as hard as the automobile and the airplane.  And, I no longer buy Professor Levitt’s assertion that the railroad defined itself poorly.

Sometimes, the limits are simply not in the definition but in the reality.  From Boston today I would take a car to Portland, Maine, a plane to San Francisco, and a train (if there is any way to avoid the airport) to New York City.  Each industry may define itself anyway it likes, but the reality is that there’s more definition being provided by schedules, body searches, cellphone access, weather, time and traffic than most anything Marketing can offer.

We might as well argue that the Rolodex would still command a huge market share if leaders has defined it as a networking solution.  The phonograph would be competitive with the iPod if marketeers had only thought of itself as an "entertainment delivery system."

Sometimes it's Marketing, but other times its just plain reality.  In any event, I’m done beating up the railroad.

Saturday, September 10, 2011

10 Years After: How We Remembered

10 Years After, 2011: New York City will commemorate the 10th anniversary of the Sept. 11, 2001, terrorist attacks with a ceremony at the World Trade Center site on Sunday, when the nation pauses to grieve for the dead and reflect on the decade since terrorists toppled the Twin Towers, damaged the Pentagon and crashed a jetliner in rural Pennsylvania.  President Barack Obama and his predecessor, former President George W. Bush, will be among the eight current or former elected officials to deliver readings at the ceremony, which is set to begin at 8:35 a.m. with the sound of bagpipes and drummers. Mr. Obama, the first sitting president to attend the annual ceremony, gave the green light earlier this year for the military mission that killed Osama bin Laden, the mastermind behind the deadliest foreign attack on American soil.  While most of the attention will focus on New York's ceremony, there will also be events at the Pentagon and in Pennsylvania, plus many smaller observances in communities across the country, from a stair climb in Seattle to a 9/11 memorial dedication in Sarasota, Fla. (September 10, 2011)

Saturday, August 27, 2011

Living the Incandescent Life

I enjoy the march of technology as much as the next person.  That doesn't mean, however, that when some treasured object is obsoleted, I don’t experience a pang of regret or nostalgia.

For example, I love my scheduling software, but I also miss the New Year’s Day ritual of sitting down with my old Day-Timer and manually moving lists, birthdays and important phone numbers from the old beat-up book to the pristine new.  It was a right-of-passage into the new year.  Now, everything I do follows me magically, whether I ask it to or not.

Tuesday, August 23, 2011

The Machine in the Garden, 2011

Over vacation I read Leo Marx’s 1964 The Machine in the Garden.  It’s not exactly light reading but I needed it for a project I’m working on, and I accidentally missed the reading assignment for this specific book (something about a party after a Brown football game) in 1978 so knew I would one day have to pay penance.

Marx is a professor emeritus at MIT and this is a wonderfully researched, profound book.  His narrative is, at least my version: Beginning in the 1840s, our best American storytellers began describing the same scene over and over again.  Hawthorne experienced it on a July morning in 1844 when he sat in the woods to write and suddenly heard the “long shriek, harsh, above all other harshness” of a steam engine rumbling through nearby Concord, Massachusetts.  It happened to Melville, or more specifically, Ishmael, in Moby-Dick when he was exploring a beached whale and the skeleton suddenly morphed into a New England textile mill.  It happened to Huck and Jim in a dire moment as they floated along peacefully in Huckleberry Finn, only to have their raft smashed by the sudden appearance of a steamboat.

Monday, August 8, 2011

All Guns (No Ballast)

I've sometimes heard the term "all sail, no ballast" when applied to a certain type of business executive.  It's the same thing a cowboy means when he says someone is "all hat, no cattle."

Today in Stockholm I was fortunate to visit the Vasa, a Swedish warship that launched in August 1628, sailed about a mile, sunk and lay at the bottom of Stockholm Harbor for over three centuries.  Needless to say, this was not a story of great success.  To the king's credit, however, no heads were lost, and to the Swedes' credit they managed to salvage the vessel in one piece and have turned an embarrassment into a national treasure.

The best theory on the sinking is that there were too many cannons on board for the ballast, meaning the ship was top-heavy and fated to tip over, no matter who sailed it or under what conditions.

"All guns, no ballast," so to speak.  Different from "all sails, no ballast," but the identical result.

I suspect you and I have met a few business executives of both types.

Sunday, July 10, 2011

Does Anybody Really Know What Time It Is?

In 1826 Eli Terry installed a $200 clock in the town hall of New Haven, Connecticut.   All went well until townspeople noticed that the Terry clock was falling further and further behind the nearby Yale College clock.  At first the Terry clock lagged, gradually losing some 15 minutes.  Then it began to gain, eventually racing ahead of the Yale clock by 15 minutes before, over the course of weeks, gradually falling behind again. 

Broken?   Not likely.  Terry was arguably the most distinguished clockmaker in America and among the earliest practitioners of uniform, interchangeable parts.  Meanwhile, Yale’s clock had been designed by the talented Simeon Jocelyn, another favored son of Connecticut, and had been telling seemingly reliable time for years.

The difference—and it’s one we rarely consider today—is that Terry’s clock offered mean time—solid, consistent hours that reflected an average of the sun’s daily variation—while Jocelyn’s clock followed the sun itself.  As Michael O’Malley writes in his book, Keeping Watch: A History of American Time, the question among the puzzled New Haven community was not “what time is it,” but “what is time?”

Wednesday, July 6, 2011

Hoodies and the Point of No Return

When I was 30 years old I was playing a fair bit of tennis.  I was not very good, so decided to take some lessons.

I met my instructor one morning and we hit for about 10 minutes before he walked up to me and asked, “How old are you?”


“Well, if you were 20,” he said, “I’d force you to learn a two-handed backhand.  And if you were 40 we wouldn't even bother-- I’d just work on improving the one-handed backhand you already have.”

“But,” he continued, “since you’re 30, I’m going to give you the choice:  Which would you like to do?”  Of course, that was his way of saying my backhand was pitiful and needed reconstructive work.   He was also asking me, in a sense, if I’d reached the point of no return.

Next month, Starling Lawrence will step down as long-time editor-in-chief of WW Norton, the largest and oldest employee-owned publisher in the United States.   He joined Norton in 1969 and became the top editor in 1993.

Lawrence, who is 68, commented, “I have certainly enjoyed this job. . .[but] I’m not particularly knowledgeable about electronic publishing. . .And frankly, if I were 20 years younger, it would be imperative that I understand and educate myself on those issues.”  Then he added, “But that has seemed less important to me because I’m frankly not a consumer of e-books myself. It’s not something that touches me personally.”

This was Mr. Lawrence essentially saying to his tennis instructor, “You know, Bjorn, I think I’ll keep my one-handed backhand.”   He’d reach the point of no return.

It's something that happens all the time, especially as you get older.  I suppose for women there's that moment when they decide to cut their hair short, or maybe to stop dyeing it.  For older folks there's the time when they stop pretending they're just "resting their eyes" and just 'fess up that they like to nap.

It seems everyone in techland is wearing a hoodie these days, thanks to Facebook and Mark Zuckerberg.  Investors in Silicon Valley even have cashmere hoodies.

I was in a Bob’s Store the other day looking at a rack of hoodies thinking, hmmm, everyone who’s anyone wears a hoodie these days.  Maybe I should get one.

The last time I wore a hoodie, I think, I was about 9 years old and fishing with my Dad.  The hoodie I have in mind would have had a Boston Patriots logo and some combination of quahog juice, fish slime, and Almond Joy on it.  (Thanks, Dad.)

Unlike Mr. Lawrence, I’m a big fan of electronic publishing--but I get his point.  Sometimes you have to leave the kids stuff for the kids.  I walked away from the hoodie rack, picked out a couple of polo shirts instead, and went on my way.

Ditto with tennis.

After a few seconds of slightly offended contemplation, I decided to stick with my one-handed backhand.  To prove his point, I guess, my instructor then hit about 100 balls to my backhand, most of which I wafted into the net.

Shortly after that I fixed my backhand when I stopped playing tennis altogether.   I already possess a horrendous golf game, and there's no real need to stink at two sports.

That’s a point of no return from which I have never looked back.

Thursday, June 23, 2011

Marketing Myopia on Ice

1960, Theodore Levitt’s “Marketing Myopia” was published in the Harvard Business Review.  It became an instant classic by reminding leaders to focus on the customer instead of the product.  

This challenged CEOs to properly define their business: Railroads should have discovered they were in the transportation, not railroad, business.  When TV appeared, Hollywood should have found itself in the entertainment, not movie, business.  And oil companies should have defined themselves as being in the energy, not oil, business.  (Except for those that went into the nuclear energy business, and then they should have stayed in the gold old oil business.  Every concept has its limits.)

Anyway, that was in 1960, a long time ago.

The other day I stumbled upon a November 1928 (even longer time ago) letter from George B. Bright of George B. Bright Co., Refrigerating Engineers and Architects, of Detroit.  Bright found himself uncomfortably straddling two sides of a great divide, with his old ice manufacturers on one precipice, and the new mechanical refrigeration guys on the other.

In 1928, ice was clearly on the backside of its lifecyle.  An important growth industry for a generation, there had been 35 commercial ice plants in America in 1879 and 2,000 by 1909, while ice consumption tripled to almost 15 million tons annually.  Clever men like Frederic Tudor made a career of sawing pond ice and delivering it mostly intact to faraway places.  The ice wagon became a familiar sight on city streets, the “Ice Today” sign in windows.  Every home had a wooden icebox, and a water pan that had to be emptied daily.

Then, out of the slaughterhouses and breweries came a singularly disruptive consumer technology, mechanical refrigeration.  Ice wagons became a thing of the past and the Ice Man didn’t cometh.  In the 1920s, the household refrigerator became an essential piece of kitchen furniture: In 1921, 5,000 mechanical refrigerators were manufactured in the US; in 1931, over one million, and six years later, six million.

That’s the impossible situation where George B. Bright, refrigeration engineer,  found himself in 1928.  And, in the interest of preserving the peace and cultivating all of his clients, he wrote them a letter:
Things have been and are moving fast in the entire refrigerating field.  Three years ago we saw the ice industry ‘run down at the heels’ while its new competitor the mechanical refrigerator was in the first flush of exultant prosperity.  The old established order of things seemed doomed and the extremes of optimism and pessimism were on every hand. . . 
Today much of the chaff of competition has blown away and tho there is a never-ending group of newly hopefuls entering the mechanically cooled refrigerator field---those most firmly entrenched have settled down to a steadier gait, both as to production, advertising, and ethics.  Much good has already come out of it all.  The mechanical group has learned a healthier respect and a certain tolerance for the older order of things while he in the ice industry on the other hand is learning to become a business man—a merchant if you will—finding curiously enough that there is room enough for everybody and that the other fellows advertising is doing more good than harm. . . .

Now comes the line that Ted Levitt might have referenced, but 32 years later: “On every hand is a growing appreciation of the fact that what we all have to sell is ‘Refrigeration’ and not Ice as a commodity nor even a machine as such.”

Cool, eh?  George Bright, refrigeration engineer from Detroit--when Ted Levitt was just three years old--already had it right.  Nah, he didn’t say it like some high-falutin academic.   But he understood a central truth of Marketing in a crazy time of rapid change: His old clients weren’t in the ice business.  And his new ones certainly weren’t in the mechanical refrigerator business.  

What they were selling to consumers was refrigeration.

Bright seems to have been successful in his chosen field, and with that kind of calming wisdom, you might understand why.  He could well have closed his letter with the Eskimo proverb which says, “You never really know your friends from your enemies until the ice breaks.”

Sunday, June 19, 2011

Daddies Don't Let Your Babies Grow Up To Be Entrepreneurs

Some ruminations on Father’s Day, in three Acts.

Act I

Many years ago when I was a second-year MBA student, I made a little extra coin by working a couple of afternoons a week in Admissions.  My job was to provide informational interviews for prospective students, telling them about the school, the admissions process and my own experiences.

On a typical afternoon I might see three or four college juniors and seniors, each for an hour or so.  Occasionally, however, I would be visited by a high school sophomore or junior being towed in by his or her parents.  The four of us would settle into a room already claustrophobic for two and then, inevitably, the father would look me in the eye and ask, “How do we get into Harvard?”

Now, at 25 years old I did not yet have a finely honed sense of irony (“We?  Do you have frogs in your underwear?”), nor did I possess the full firepower of my current passive-aggressive arsenal (“So, young man, how long ago was your father rejected?”).

The truthful answer to the old man’s question, “How do we get into Harvard,” was: First of all, we don’t.  And second, quit worrying about it.  If your kid has some ability, and more interest, and a boatload of luck, and really wants it, and it’s four years later, there will be a chance.  Yes, he can go to a good college and work hard and start a student laundry business or a campus computer business or work for P&G or Goldman Sachs afterwards.  All that helps.  But even back in the good old 1980s when grad school competition was less intense, the folks in Admissions could still receive10,000 applications in a season, struggle to winnow them down, and still have about 2500 great candidates for a class of 800.  So, even great candidates only had a 1 in 3 chance.

That’s a roll of the dice.  In fact, that’s a roll of the dice to which you should not aspire in high school.  Most of all, that’s not a thing a Dad should do to his child.

Act II

Now, want to know something far more of a crapshoot than getting into an elite business school?   Being a successful entrepreneur.  We can quibble about success, but you know what I mean:  Launching a product or service that truly disrupts the status quo, creates jobs and customers, and builds value for investors.

If you have children, you’ll be able to understand this next scene:  Your toddler wants to put his finger in the electrical socket.  Or maybe stick a toy in it.  Or maybe he just wants to lick it.  In any case, the electrical socket is the most fascinating thing in the world.  You move him away once.  Then twice.  You distract him, but about five minutes later he’s at it again.

Hold that thought.
I read with interest the recent Wall Street Journal article, “How to Raise an Entrepreneur: Tips On Putting Your Kids on a Path to Running Their Own Business.“  This, of course, takes my old MBA loco parentis interview to a whole new level.  Now, it seems, we’re going to shape our child’s entrepreneurial success not from high school, but from birth.  

There are, the author writes, “crucial psychological traits an entrepreneur needs to succeed. . .and parents should help kids develop them at every opportunity.”  The attributes turn out to be: adventurous (“parents should urge kids to explore their environment”--like on vacation: try different restaurants!), dependable, conscientious and emotionally stable (urge children “to take steps such as waiting to respond when they lose their temper), observant,  team play (ah, sports can be great for entrepreneurial values), and leadership by example.

Frankly, this doesn’t pass the smell test for me. There’s nothing particularly entrepreneurial about any of these traits.  Said another way, aren’t these good things to teach your kids in order for them to be successful at most anything?  Butcher, baker, candlestick maker.  Cowboy.  Fireman.  Teacher.  Fortune 50 accountant.  Entrepreneur.

Do you want an emotionally unstable dentist?  How about a bus driver who is undependable?  

I keep coming back to this simple idea that classifying entrepreneurs as a particular kind of personality type is just plain misguided, especially when the list is entirely anecdotal in nature like this one.  I can show you an entrepreneur with great observational powers, and one with severe tunnel vision.  I can show you entrepreneurs whose egos are so large they can’t possibly be team players, at least for long.

I have seen exactly one academic study on the topic--highlighted in this post--which came to a single and powerful conclusion: The overwhelming trait of successful entrepreneurs--far above anything else--is persistence.  

The study does not disambiguate the quality.  It can be persistence because an entrepreneur sees the world more clearly than others, or because she is smarter.  Maybe, though, it's because he won’t listen, or because he’s blinded by other factors, or because he is desperate and has no other choices.  Persistence comes in many flavors.

And, while everything else is secondary to that quality, the author of the study fully acknowledges that persistence might also be the number one quality of the failed entrepreneur.  In other words, persistence may give your child  the very best chance of being a successful entrepreneur, but is clearly not enough.  Some of those other skills listed in the WSJ article surely come into play, as does sheer horsepower under the hood, great networking, available capital, a good business model, sleepy competition, and copious amounts of good timing and luck.

My theory is this:  An entrepreneur is not defined by some Freudian analysis, or by being exposed to new restaurants as a child,  but by what he accomplishes. An entrepreneur creates value by disrupting a traditional business cycle.  That’s all.  The proof is in the doing.  Some of those entrepreneurs who have been successful doing this have very few of the qualities we admire.  Except,  I’ll bet you dollars to donuts, they are persistent.

So, the fourth time your persistent toddler tries to put his tongue in the electrical socket, and you’ve run out of those safety plugs and you can’t distract him or her, be aware that you are forming a little entrepreneur.  

After all, what says “entrepreneur” better than the third time your 18-month old daughter  throws her Cheerios on the floor?   Or the persistence with which your youngest daughter waits to go to the bathroom until she’s placed in the bathtub with her two older siblings.

Encourage that kind of activity.  Persistence is, after all, the one true quality of future entrepreneurs.

A joke there, Dad.  Sort of.

Despite 54 kid-years of experience,  I don’t profess to know all that much about bringing up children.  I do think, though, that there are two really important things dads can do for their kids: keep them safe, and help them find the thing they love.  It could be software, teaching, automobiles, the outdoors, stars, biology, writing, accounting, history, bugs, physics or comic books--whatever.  One day, after they’ve left home and they’ve done what they love for long enough to truly get it, they’ll also begin to understand where and how it can be improved.  Or disrupted.  They’ll understand the real pressing problems of their craft or business.  They might even spot a breakthrough.

That is the best time to become an entrepreneur.  Maybe the only really good time.  Knowing a little about the world before launching a company keeps young folks from trying to solve a problem that doesn’t exist with a solution nobody cares about--a core disease of the twenty-first century entrepreneurial economy.

Kids.  Keep em safe, Dad.  Help them find the thing they truly love.  It’s from that place the happy and gifted entrepreneurs come.


In 1965 my father gave my mother a beautiful Seth Thomas, 8-day clock for their anniversary.  He wound it every Sunday evening, somewhere between Mutual of Omaha’s Wild Kingdom and The Wonderful World of Disney, when the hands allowed access to all three keyholes on the face required to keep the time, chimes and hourly gong going. 

The clock sat on their fireplace mantle for decades, chiming every fifteen minutes all day and all night--a marvel at first, then a distraction, and finally a part of the rhythm of our home.  I remember lying in my bed in junior high and high school, unable to sleep in the wee hours of the morning because of a big test the next day or some other adolescent angst, with those comforting chimes keeping me company.

We lost my parents--both way too young--and our home inherited the clock.  Now, every Sunday morning, I take the key and wind the clock.  And for the minute or so it takes me to make sure everything is in order, I have a conversation with my dad.  I give him a quick update on life, he gives me a little good advice, and maybe we laugh about something one of the kids did.  Then I slide the key back under the clock and go about my business for the week.

It’s one of my favorite moments of the week.

Happy Father’s Day, Dad!