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28 Mar 2011

Letter From NY Times Publisher

Love this letter to readers from NY Times publisher Arthur Sulzber. Money quote:

We are grateful for your feedback and, most of all, for your commitment to The Times.

Then he continues to demonstrate that they are ignoring all the feedback. I think this post demonstrates that the NY Times completely doesn't get the social media and internet revolutions that their industry is facing.

Not sure if this subscription thing is going to work. I side with other wise observations:

price discrimination by medium of consumption (different price for tablet?) +
cost greater than online subscription to WSJ and Economist =
Not a very compelling offering

I like the NY Times and wish them luck, but I won't be subscribing.

14 Dec 2010

Excellent Software Company Metrics Article

I love solid metrics! Not for the sake of metrics (a common problem), ones that drive real business decisions. Clate Mask guest posted an article on Venture beat that outlines his Top 5 metrics for software CEO's. It is really worth a read to learn what they are and why he thinks they are important.
The list:

Cost Per Acquisition (CPA) - He includes sales and marketing costs and takes into consideration the sales cycle in his metric (love this idea)
Revenue Per Employee - Good rule of thumb that a strong business will eventually hit $200K/employee. The climb up to this number is worthy of an article of its own.
Customer Loyalty - More of a qualitative metric from survey data like Net Promoter Score. I like using this as an early indicator of potential problems.
Lifetime Customer Value (LCV) = Average Revenue Per User/Churn - A great metric to keep in perspective 1) the value of your current customers and 2) other ways beyond new sales to increase the value of your company (increase ARPU or reduce Churn)
Usage - This is an interesting metric that will take some time to properly define for your business (it will be different for each business). I agree that if your customers actively use your solution this bodes well for a company, but wonder if just focusing on a customer loyalty metric is enough?

Great list and I encourage you to read the article.

13 Dec 2010

NY Times Praises The Atlantic's Transformation to Profitability, Then Demonstrate How They Don't Get It

I love stories about traditional businesses in the middle of significant disruption that respond by reinventing themselves in alignment with the disruption. The New York Times piece on The Atlantic finally turning a profit after a decade of losses is one such story. Desperation breeds change and The Atlantic responded by imagining themselves "as a venture-capital-backed start-up in Silicon Valley whose mission was to attack and disrupt The Atlantic,” said Justin B. Smith, president of the Atlantic Media Company.

I encourage you to read the story of their transformation, but I couldn't help but chuckle when I saw this paragraph in the middle of the story:

The strategy is not a cure-all template for troubled media companies, of course. The Atlantic, a tiny enterprise compared with vast corporate magazine empires like Time Inc. and Condé Nast, has only about 100 business and editorial employees and a circulation of 470,000. A scale that small means that a few million dollars could push the company over the top — an amount that would barely register on the balance sheets of many other publishers.

The author defines the business by the number of employees and the (print) circulation! Two metrics that are being completely challenged by the internet disruption. I read into that statement, "While we really think this strategy is cute for a small publication like The Atlantic, it would never work for a massive institution like the NY Times". I am not saying the strategy should be exactly the same, but the NY Times should be thinking along the lines of, given this market disruption, how would a Silicon Valley start-up disrupt us.Thinking you are different because you have more employees and a higher print circulation when those metrics are from increasingly irrelevant business models tells me they have a long way to go. Main question from my perspective: Who's income is increasing and who's is decreasing?

Credits:

I discovered the story from GigaOM

Somebody at Atari Stopped Listening to the Lawyers!

More than a few times, I have criticized companies that immediately send out cease and desist letters when their intellectual property is being used on the internet without their permission (I'm talking about you, Ford and Nintendo). I have even recommended companies proactively create a public use policy around their IP to help fans understand how they can engage with their favorite brands.
So, it is really nice to be able to highlight an example of a company that gets the opportunity these situations present and the destruction cause by immediately going legal on every unauthorized use of IP. Here is an interview with Atari executive vice president of online and mobile, Tom Kozik. Atari faced the issue of people, who have an affinity for the classic Atari games, creating imitations of their popular games (some not so great) and distributing them on fileshare networks. Rather than following the disturbing trend of sending C&D letters to the fileshare and the individuals distributing the games, Atari decided to engage them and offer legitimate versions of the games to distribute. Tom explains his position perfectly:

Truth be told, why in the world would I ever want to go after my fans? These are people who absolutely love our classic old arcade games...Now, instead of arming up a cadre of lawyers the smart thing to do is say, "Look, you're fans of our games, let us give you the legitimate version of the game,"

So instead of alienating their biggest fans, Atari is engaging them. They feel this action can open up new avenues to generate revenue, by working with the fileshare distributors where they can:

...bring those affiliates into the fold by saying, "We'll actually share revenue with you." They've been running that less than optimal, if not [coughs] a little dodgy, version of Asteroids or Missile Command, so why not just run the original one, share in the revenue and still have the same appeal to the fans they want to draw to their site? And we've got the library of all our other great games that we can bring to them as well.

So let's evaluate the pro's and con's of this strategy

PROS:

Re-asserted control of brand
Deepen brand engagement with fans
Raise likelihood fans will promote brand to their friends and followers
Co-opted an underground channel for piracy into a potential revenue channel

CONS:

Risk losing some revenue from people still downloading the games for free (but would they have paid for them anyway?)
I am at a loss for any others

I think it shows that Atari is ahead of the curve and have a sophisticated understanding of today's market environment. Great job Atari and Tom!

27 Sep 2010

Another Example Why Big Companies Often Miss the Big Ideas

Building on last Thursday's post that discussed why big companies fail to execute on the game changing ideas. The main reasons:

Big companies are focused on winning the current game
Therefore, they incentivize their teams to win that game
The incentives discourage winning teams to change the game

Venture Beat's Devindra Hardawar collected some stories from Nokia that perfectly illustrate this phenomenon. First, it appears Nokia had developed a demo touch screen device back in 2004. Apple released their game changing touchscreen iPhone in 2007, so it would have been possible for Nokia to be the first to market (or at least tied for first) if they would have kept product development going. However it was killed due to the senior management's perception of the riskiness of the concept. Next, it was claimed that in 2004 Nokia management also rejected the concept of an application store for mobile app's that would run on Nokia devices. Other ideas that were killed included a 2002 proposal to develop a 3D user interface for Nokia's Symbian mobile OS platform.

Back in 2004 Nokia was the massive market leader. They where winning the game and likely incentivizing the management team to continue winning the game. Why would they risk changing the rules of the game?

23 Sep 2010

Innovation in Large Companies: Where are the Big Ideas?

Are you in a big company and continually hear the lament "We have lots of ideas, but where are the game changers?" See the graphic below from the 2010 McKinsey Innovation and Commercialization survey that states that 57% of respondents feel they need a more robust pipeline of big ideas (I will substitute "big ideas" with "game changers" - a common term I hear thrown around).

I suggest you ask the lamenter these questions:

Are we a market leader in our industry?
Do you judge success by revenue and EBIT growth?
Are we, as a company, focused on operational excellence to increase our EBIT?
Given your answer to the first three questions, can you honestly be surprised when your organization fails to product "game changers" that would likely disrupt your industry (potentially weakening your market position) and drop your revenues?

Some people love to drop the word "game changer", but fail to understand what it means. "Game Changer" by definition changes the game. If your business is winning the current game and your people are incented on their ability to win that game. Not surprisingly, they will likely not be willing to change the game.

Update: See a real world example of how Nokia management shied away from changing the game.

18 Aug 2010

Mistakes or Ristakes - What to Celebrate?

HBR has a interest blog post by Vineet Nayar that questions to blanket logic of celebrating failure. I am a big proponent of celebrating failure, but I think the distinction between Mistakes and Ristakes is important.
Definitions:

Mistakes: A mistake is as an error in action or calculation caused by poor reasoning, carelessness, or insufficient knowledge.

Ristakes: A risktake is an error — but not one caused by carelessness or insufficient knowledge. Its possibility has been foreseen, calculated, and accepted.

When I talk about celebrating failure, I implicitly assume you recognize that we are talking about failures of the Ristake variety, but I can see how some may not assume that I am including Mistakes as well. Although, I think we should "cautiously" celebrate the first occurrence of a Mistake in the organization.

In business I think we often do not delve too deeply to determine if the failure was a product of a Ristake or a Mistake. Mistakes are embarrassing for employees and the company, so the common response is to shape it as a Ristake, celebrate it, and quickly move on. Unfortunately, your employees miss a valuable opportunity to understand and learn from the mistake. There is a chance that the same mistake will be repeated somewhere else in your organization. Is it possible for a company to celebrate the same mistake (although framed as a ristake) multiple times throughout the company?
I think so...

2 Aug 2010

Maybe Marketers Need the 40 Year Old Playbook

Building on my last post on the missed opportunities to build brand value, here is a photo of a letter to Andy Warhol from the Product Marketing Manager from Campbell Soup (I found the original article citing the letter here). I have no idea if it is real, but it is a great response. Makes me wonder if marketers need to ditch the 20 year old playbook for the 40 year old one?

2 Aug 2010

Once Again Marketing People ... Get the Lawyers Under Control

Another day, another DCMA takedown notice issued by a company's attorney that takes an opportunity to build brand value and actually destroys it. The picture (you can find it on Flickr here) is a DCMA takedown notice sent to a MIT educational program about a student who built a replica Pac-Man game from the programming language Scratch - a simple programming language designed to teach people how to program. Again, the attorney probably acted by the book in issuing the takedown notice, but did NAMCO, its marketers, and the attorney miss a brand building opportunity?

It's been a few years since I got in the middle of some IP law, but from what I remember IP law does not require that you demand the takedown of every potentially infringing piece of content, you just need to demonstrate you are exercising control. Control can take many forms. They could just grant the student permission for the purpose of this educational exercise. If there was a real threat to their game built on more robust computing languages, then they could limit the permission for a specific period of time. Problem solved. Now think about the wasted brand value building opportunity?

How much free press would they have received if they congratulated the student for embracing their iconic game in their pursuit to learn how to program? What if they granted an open license for any student to build Pac-Man replica games in the pursuit of their learning? People may actually see Pac-Man everywhere. What a tragedy for the brand?

This new age of content manipulation should force any brand marketer/content owner to rethink their playbook on how they will build brand value. Those who don't and keep doing what they did for the past 20 years are negligent in their duties (IMO). If you are a marketer and these situations make you unsure of how to act, start asking questions. Get your key stakeholders (including legal) into a room and explore "what if" scenarios. Ask your attorney what is the "minimum" that you must do to protect the brand's legal rights - Minimum being the key word. Then discuss the potential upside of different responses. Takes some risks. Learn. You may surprise yourself with the results.

We need to stop using the 20 year old playbook in this new world!

The Success of Old Spice's New Media Marketing Campaign

Old Spice has stopped their 3-day, non-stop new media assault that hopefully wakes business up to the potential of new media. Kudos for recognizing the power of directly connecting to your market at an individual level. Bold steps - instead of relying major brand marketers security blanket strategy of TV advertising and tracking the Gross Rating Points, think about the rich data generated by this campaign. What do you think they used as success metrics?

Target Market Connection

Questions submitted (individual brand engagement)
Responses Posted (direct connection by brand to members of target market - 185 posted)
New members/subscribers to YouTube channel, Twitter account, and Facebook page
Social Media ripple effects (retweets, etc.)

Traditional Brand Building

Value of Media generated by news references
Establishing iconic brand identity

I wonder how much this cost compared to a traditional TV campaign.

Some key takeaways:

Engage your market
Communicate the tone and values of the brand, without pushing the brand itself
Set your success metrics in advance and track in real-time
Don't be afraid to adjust in mid-campaign to new opportunities or audience feedback
Virality will be linked to tone, message that people are quick to share - think light and funny or shocking