October 2, 2009
02:20 pm | 0 recommendations | Be the first to comment
“The General Motors Corporation today displayed the prototype of a small car intended to someday match similar Japanese cars in cost and match or exceed them in quality.”
So wrote The New York Times on November 4th, 1983. And yesterday, with the withdrawal of Penske as a potential purchaser of Saturn, the “someday” of that distant, gauzy announcement has turned out to be never.
Saturn is vanishing from the face of the road, and with it will disappear the first new GM division since Chevrolet in 1918 – and an entire fleet of hopes that surrounded its introduction.
But here’s the real scary part. When you look back at the swirls and eddies of hype that surrounded the launch of Saturn, those promises sound exactly like the assurances we’re getting about the glimmery future of the new GM.
Trust me, go to the G.M. “reinvention” website and they proclaim: “See how we’re reinventing the automobile and our company.” It’s the same promissory script, with largely the same cast.
Let me try to paint a picture of the extraordinary hope that Saturn represented at the time, because it’s a microcosm for the jubilation that’s pouring out of a post-bankruptcy G.M. about a leaner and more nimble company.
We were repeatedly promised that Saturn was a long-overdue and self-imposed shock to the system: a new era of innovation in both corporate structure and manufacturing; a new vision of labor and management partnership; a new relationship with consumers that included “no-haggle pricing.”
Back in 1983, and that was more than a quarter century ago, the Times reported that Saturn was going to be “a departure from traditional practices and would reflect the technological ferment under way in the once-complacent auto industry as it tries to out-do the Japanese.”
Flash forward: the allegedly new, post-stimulus General Motors is also supposed to up-end their Soviet-style bureaucracy and create a leaner, meaner, Japanese-and-Korean fighting machine.
Well, as Saturn inched towards launch, the Japanese continued to drive innovation with their relentless, fast-track rigor. G.M.’s share continued to slump. Meanwhile, it took until 1990, seven years later, for the first Saturn to be shipped.
The L.A. Times story on October 12th announcing the event began with this ominous sentence:
“By its own admission, General Motors Corp. has only one more chance to prove that it can design a small car that can compare credibly with the Japanese.”
The story went on to note that Saturn boasted a radical leadership structure that was jointly managed by the president of Saturn and a United Auto Workers officer. GM had undertaken “…a clean-sheet approach. The project was staffed with volunteers attracted to the idea of cutting through some 80 years’ worth of corporate insularity, acrimonious labor relations and other ills…”
The article wrapped up chilling prescience: “The importance of the venture goes beyond GM’s own fortunes. It is also seen as a test of America’s ability to rebound from the beating its own manufacturing sector has taken at the hand of foreign competitors.”
The launch was relatively successful. “Shortages seem inevitable” crowed the L.A. Times, and it appeared that Saturn has a fighting chance.
But there were already skunks at the picnic. A few months later, in March of 1991, a gimlet-eyed New York Times conceded that “...it’s clear that the $2 billion project has not produced a revolutionary car.” Why didn’t it? Why couldn’t the no-holds-barred innovation culture at Saturn produce something miraculous, the iPod of its day? If there were talented designers at GM who were being choked by the system, why didn’t their lungs bloom when the corporate foot was lifted from the oxygen supply?
Part of the tragedy of Saturn’s demise is that in its early years, the car developed a true cult following. The apogee of which was an owners’ rally that was so successful the media gushed over the product intoxication the new GM division had created. The Washington Post headline read “What if You Had a Party and 28,000 Saturn Owners Showed Up?”
The story went on to describe a scene where “There were children everywhere, running through fields and playing on bales of hay, while their parents huddled in groups and talked about God, family, country - and Saturn.”
The New York Times said “It is without exaggeration that many Saturn owners call themselves groupies, fanatics, even members of a cult. That zealousness has been skillfully cultivated by Saturn, a subsidiary of the General Motors Corporation and perhaps the nation's most fervent practitioner of "relationship marketing."
G.M. had something great going. What went wrong? Well, their “skillfulness” was transitory. They couldn’t keep the consumer relationship fresh or the momentum going. They failed to move quickly enough into the web and social media – the ultimate relationship marketing platform. And the cars themselves, never innovative, oozed into boredom. They let down their fans. Disillusioned, the cult scattered. The “clean sheet of paper” became an obituary.
It’s hard not to view the failure of Saturn as a grim augury of G.M.’s prospects. They had more than twenty years of relative luxury to create a shining, independent laboratory of innovation and they squandered the opportunity. Now, time is against them, and there’s less reason than ever to believe they can pull it off.
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July 28, 2009
03:44 pm | 0 recommendations | Be the first to comment
Last Friday at 6AM Starbucks officially re-acknowledged its
brand limits.
With the opening of “15th Avenue Coffee &
Tea” in Seattle, the company has gone public with the admission that it requires
a new, Mata Hari-brand to accelerate growth.
And while it’s not branded Starbucks, its cannily constructed
environment and studiously bohemian charm are straight from their playbook.
After growing to 11,000 stores in the U.S. since 1971, management
obviously decided that despite its scale and successes, Starbucks was
imprisoned by its many controversies: fair-trade issues; mom-and-pop carnage;
corporate homogeneity; the threat of a globalizing steamroller.
The Seattle Times reports that 15th Avenue
is “part of a test that will include two more Seattle shops named for their
surrounding neighborhoods.” Seems like
the idea is to dissolve into the community with an innocuous name that encodes
faux localism and hides the corporate dad.
And to expand by similar acts of disappearance.
This isn’t the first time that Starbucks has tried to
hide. Back in 1999, they launched their
ill-fated Circadia Coffee House in San Francisco. At the time it was described as:
“…graced with antique furnishings, red velvet
curtains and well-worn couches. More than just a place to grab a cup of joe, Circadia
also boasts complete breakfast, lunch and dinner menus; a full liquor bar; live
music; Internet access from many tables and a private meeting place called the
Green Room.”
As with 15th Avenue, Circadia was parentally shy:
“Circadia doesn't use any corporate branding. Nor does it
leverage Starbucks' name in any way. In fact, there are no outwardly visible
signs that the place is even linked to Starbucks, and many patrons don't have a
clue it's owned by the coffee powerhouse.”
15th Avenue is reheating the same tropes, making
the same manipulated stab at historicity, manufacturing the same wannabe gemütlichkeit. The Seattle Times notes that is has a
“rustic, old-time coffeehouse vibe” and that:
“The 15th Avenue store's community table, which easily fits
10 to 12 people, has a surface that came from a wooden ship; other wood around
the store was salvaged from a barn. Barbed-wire lampshades above the table were
left to rust — for effect — in Lake Washington…” Who said America can’t make
anything, anymore? We can manufacture
falseness.
The store will also feature small batches of coffees and
teas, artisanal cheeses, and live entertainment including music, poetry, and
the achingly trendy “actor line readings.”
Much of what’s being introduced in this test store feels
like a delayed reaction to the leaked memo that Howard Schultz wrote in 2007
in which he lamented a “commoditization of the experience.” One example he cited was the philistine move
to automatic espresso production:
“For example, when we went to automatic espresso machines,
we solved a major problem in terms of speed of service and efficiency. At the
same time, we overlooked the fact that we would remove much of the romance and
theatre that was in play with the use of the La Marzocca machines.”
Well, 15th Avenue Coffee and Tea corrects the sin. It will feature “Espresso pulled from one of
Starbucks' old manual La Marzocco machines, which were phased out a decade ago
in favor of automated models that work at the push of a button.”
Is Starbucks right to push beyond its ubiquitous storefronts
and look once again at new coffee and
restaurant concepts that involve different environments, more serious meals,
wine and beer? There are all sorts of
existential questions about how far brands can go, about the border fences
around them. Just how far can a brand be
pushed and pulled and stretched, and in which directions? There’s a yin-and-yang-ing to this
debate. There was period when the
conventional wisdom was that strong and resonant brands were brilliantly
elastic. As long as you were respectful
of the brand’s equity it could roam widely on the marketing range.
Starbucks was a practitioner of this view. As the ultimate lifestyle brand, it believed
it had the perceptual reservoir to sprawl into a range of caffeine-free
ventures, all of which stumbled. “Joe” was a magazine produced as a joint
venture with Time; it lasted three issues.
Quirky merchandise like desk clocks and pencil sharpeners lasted 10
months. Even their reasonably
successful “Hear Music” label was silenced in July 2008.
Interestingly, Starbucks’ stab at hegemony came during a
post-Cold War environment when America’s own brand power seemed equally
limitless. Coincidence? Perhaps Starbucks was guilty of its own “Imperial
Overstretch”, a concept popularized by the historian Paul Kennedy in a book
about the limits of the great powers.
Perhaps Americans were more open to grand ambitions back then, and we’re
now dialing back our aspirations. A
brand that’s everywhere from Beijing to Brazil doesn’t feel as cuddly and inviting
as one whose global sweep begins and ends at 15th Avenue.
Has Starbucks become over-sensitized to its own limitations
though? Despite those who grouse and
gripe, Starbucks has a powerful and still magical brand in many ways. Just because it’s cool to bitch about them
doesn’t mean you don’t value them. McDonald’s takes the opposite approach. Despite brand hit after brand hit, from their
name becoming a synonym for oversized excess -
McMansion - to the muckraking of
“Supersize Me” – they continue to focus on expanding their core brand. Most recently, they chose to go after
Starbucks with McCafe; they’re not
spending their time trying to create a second McDonald’s that can accomplish
things the first one can’t.
Something you won’t find in McDonald’s under any conditions:
patrons who wander into 15th Avenue Coffee and Tea will gaze upon a wall
that’s covered with quotations from Plato’s dialogues; Starbucks director of
global-concept design expects these words of wisdom will “inspire conversation.”
Meanwhile, a protester outside the new coffee shop was
photographed holding up a sign reading “You
can’t fake local.”
You can’t fake Plato, either.
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July 22, 2009
02:30 pm | 0 recommendations | 2 comments
Hey you - a 60% owner of General Motors. Are you worried about the innovative dynamism
of the post-bankruptcy, government-owned GM?
Are you anxious about whether they are truly committed to excellence? Have
no fear, kick-back and have a Margarita.
Because this week, the company proudly announced
via a press release that they are launching an online suggestion box called
"Tell
Fritz." Gee, wow, holy crap, that’s the kind of disruptive thinking we
need.
And as a measure of how desperate the media is
for any stirring of life in the old jalopy, the Wall Street Journal
actually wrote a story about it.
There are three devastating and telling problems
with Tell Fritz.
a) It’s laughably unoriginal. There are more than
one million search hits for "online suggestion box." Thousands of companies have one. Is GM is so
sheet-metaled from the world they don't realize that is a digitally ancient
idea, and that it’s an embarrassment to make a big hoo-ha about it?
And it gets worse. Go visit the site and you’ll see that the
copy describes "Tell Fritz" as a request for suggestions. But in the accompanying video on the site,
Fritz bungles the story. First, he gets
the name wrong, calling it the "Ask Fritz Blog if you will." Then he goes on to describe it as a place to
get questions answered; that’s not a suggestion box.
The guy is clearly out of his element. And how sloppy is that mistake? We’re counting on them to make cars with the
features of the future, and they can’t even keep their own site features
straight. The fact that they don’t even
know the difference between a blog and an online suggestion box illuminates
their corporate thickness.
What’s happening here is that they’re using
social media as a placation strategy, without any real understanding of how it
works. (And we can only grimly estimate how many taxpayers dollars went into building
this fiasco of a website)
b) Even if you think "Tell Fritz" is a really important
step, have the smarts to execute it with some follow-through. Take Starbucks. Their version of "Tell Fritz" - "My
Starbucks Idea" is fully blown-out: you share your ideas, the community
votes and discusses the ideas. Most
important, you get to watch their progress.
By contrast, GM has nothing but a lame little box
for your suggestions with a 255 maximum character limit. (If you can rescue the domestic car industry
in 300 characters, sorry, we’re not interested.) That’s the extent of it. No follow-through, no opportunity for the
community to build on the ideas or for GM to engage in a conversation. Just a black hole.
The rest of the website is equally redolent of
corporate committee-making, including incessant repetition of the "reinvention" meme, links that take you to PR propaganda, invitations to exciting chats on
subjects like "Buick and GMC" and dreary photos of company leadership.
c) Even if executed well, this online suggestion
box is nothing more than digital theater, a transparent attempt to make the
company seem cool Which it won’t. (The GM Twitter feed, which they have been
strenuously pushing, has only 1,714 followers; the CEO of Zappos has over a
million followers.) Social media isn’t a
business strategy, it’s a medium where business strategy gets executed.
The real problem is that GM is afraid to lead,
and Tell Fritz reminds us of their fearfulness. Leadership means taking
consumers to a place where they want to go, even if they don’t know it or
understand it yet. That takes courage.
But GM has been so bludgeoned for not listening to the market that
their response is to over-listen. (This is an unintended consequence of all
those furious Senators berating Rick Wagoner and Fritz Henderson for not being responsive.)
A new, smaller, bankruptcy-chagrined GM won’t
recapture the American mind and the American mood by being an order-taker.
When GM and Ford owned the culture with their
muscle cars, it wasn’t because they polled, surveyed and canvassed car buyers. And it wasn’t a "Tell Steve" functionality
that inspired the iPod or the iPhone over at Apple. Visionary designers possess a creative
alchemy that combines an un-ignited spark in the consumer’s fantasy life with
technology and hurtles the result into existence.
Fritz Henderson has promised that at General
Motors "Business as usual is over." Well, I’m not sure that’s true.
The company is still trapped in PR-inflected hyperbole; the Chevy Volt
website proclaims that the The Extended-Range Electric Vehicle that is
re-defining the automotive world is no longer just a rumor. In fact, its
propulsion system is so revolutionary, it’s unlike any other vehicle or
electric car that’s ever been introduced.
To the extent GM has departed from business as
usual, let’s hope that Tell Fritz and its other granite-footed attempts to
humanize and ingratiate the brand aren’t the highlights. I’m not hopeful. A new spot for the 2010 Buick LaCrosse "one
of the automaker’s most-critical post-bankruptcy initiatives" is so
flagrantly pathetic that even their éminence grise Bob Lutz, who used to run
product for the company and now runs marketing publically complained that the
spot "irks" him.
Putting the spot aside, "LaCrosse" itself has a
deadly ring. It embodies everything
hollow and false about the old GM and its transparently pretentious approach to
naming cars. And do you pronounce it as
LA-crosse, faux French style, or luh-KRAWS, as in the sport that can get you an
athletic scholarship to a good college?
Either way, it’s not going to attract the younger
buyers who are crucial to Buick’s health. Do you know anyone who would
willingly answer the question What kind of car did you buy with a "LaCrosse?"
I think I’ll "Tell Fritz" that myself. Will let you know if he answers.
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June 25, 2009
09:54 am | 0 recommendations | 3 comments
Something new is happening on Skittles.com. The company isn't putting its real estate to work as a marketing platform--singing the vast and socially beneficial aspects of Skittles.
Instead, they have turned their homepage over to their Twitter feed. On some days, Skittles turns their homepage over to their Wikipedia entry, and to their Facebook page.
That means that they're willing to live with
anything that anybody might have to say about Skittles--laudatory, or
lambasting them as evil purveyors of chemical sugar drops.
Depending on your perspective, you'll describe it as a signal of surrender, of resignation, or of enlightenment.
It's a kind of new media theater, and perhaps the ultimate statement that UGC (user-generated content, to the non-wonk) is the
most important and valuable conversation going on in America.
President Obama seems to Agree.
Last week, at the Radio and TV
Correspondents Dinner, President Obama joined the mock-the-mainstream-media
brigades, saying:
"It is great to be here with so
much talent from the world of TV and radio. Despite the flood of new media, I
think your programming is more relevant than ever before. At least, that's the
impression I get when I read the blogs every day."
Later in the speech, he piled on
again:
"As you know, we've been
working around the clock to repair our major financial institutions and our
auto companies. But you probably wouldn't understand the concept of troubled
industries, working as you do in the radio and television."
It is clear that mainstream media,
bloodied by the combination of the Great Recession crushing their revenue
stream, and the muscular emergence of UGC --- from Huffington Post to Yelp ---
is perhaps on the extinction walk. (Although, as I Twittered the other day,
when a reporter from the Huffington Post get kidnapped by the Taliban, then The
New York Times needs to call in the movers.)
But I'm not at all convinced that
the desire for what reporting has always done--to bestow perspective, to
construct a thoughtful narrative, to establish the shifting frames of context
-- is completely old-school.
I am convinced, though, that
we will soon grow exhausted by the current wave upon wave of democratic
blathering. Clay Shirky's book calls it "Here Comes Everyone", but I
increasingly see it as "The Assault of Everyone."
An example of the
counter-reformation appeared this week with a new travel site called Oyster Hotel Reviews.
(Disclosure: they are a client of ours.) We are highly selective about the
start-ups we choose to get involved with. But their business model was so
intuitive and blazingly contrarian that we signed on.
Oyster is a travel Web site. On the
surface, you'd cynically say "Yeah, that's what the world needs."
Well, actually, it's exactly what the world needs. You see, despite the
apparent glut of travel information, virtually all of it falls into two
categories. The first is the vast acreage of personal opinion, like you'll find
on Trip Advisor, which is theoretically valuable but practically unworkable.
You have no idea who's writing what, both in terms of their legitimacy, their
vendetta-quotient and their relative sophistication and experience.
The second content area is the
thousands of hotel websites, and they are masters of propaganda, pushing out
misleading information, doctored photos, and other marketing mendacity.
Oyster, by contrast, has hired real reporters
(yes, someone is actually hiring reporters these days) with journalistic
training and travel sophistication. They spend actual time in the actual
hotels, and then write a detailed review that synthesizes their experience with
discipline and fairness.
They also take hundreds of photos,
so travelers can see what the hotel is really like, not what Photoshop says the
hotel is really like.
You can't do this on Trip Advisor,
Travelocity or the website of the Mondrian in South Beach.
I am convinced that other
business will emerge to fill the many needs that the cascade of UGC simply
cannot satisfy. And the need is also evolutionary. After all, the way we
survived, the reason we're here, is not because we listened to everyone. It's
because we were able to ascertain who should be listened to. And who should be
ignored.
Even millions of years ago, on the
Savannahs of Africa, all opinions weren't created equal.
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March 23, 2009
12:03 pm | 0 recommendations | Be the first to comment
Is it at all possible for simplicity to emerge from the twisted
processes of the corporate mind? I asked
myself this question (again) after reading last week about Cisco’s purchase of
Pure Digital, the company behind the fresh and frisky Flip video camera, for
over $500 million.
For the uninitiated, the Flip is a deceptively rudimentary
gizmo: a small, almost feature-bare camera (no zoom, no fancy framing options,
no compensatory lighting mechanics) that lets you shoot, and then instantly
move the video into your computer. The
transfer is made via a USB port that’s built into the camera.
Once you’ve got the video on your hard drive, the Flip’s
software makes it a cinch to upload it to YouTube, or to share in other
ways.
The Flip was developed by an entrepreneur and funded by VCs,
both of whom latched onto the untapped market for casual video that was being
neglected by the usual-suspect Big Tech technology companies – Sony, Kodak,
Panasonic. Their cameras were costly and
complicated, mis-aligned with the improvisatory spirit of the quick video
generation.
On one hand, it’s hard to imagine that this opportunity was
missed by the Big Boys. They could see
the explosion in user-generated video, following as it did a similar crescendo
in the taking-and-sharing of digital photos.
And of course, they have great engineers who were certainly
capable of bringing more technology chops to bear than a rag-tag start-up.
Well, that was precisely their problem. Those consumer
electronics giants are historically and reflexively guilty of product gigantism,
bent on piling one feature on top of another, rather than peeling them away.
As a result, Big Tech – in love with pixels and performance
– was unable to see that consumers were willing, if not anxious, to trade off features
and functionality for speed and simplicity.
Meanwhile, Small Tech, at Pure
Digital, wasn’t caught in the model of satisfying the egos, and justifying the
big salaries, of perfection-seeking engineers.
The Flip is made for capturing the demotic stuff of life,
when picture quality is less important than the sheer fact of preserving the
moment. It’s there and available for
the quirky, goofy, everyday experiences that don’t need to be memorialized with
perfect framing and lighting. The Flip
makes video part of our daily conversation.
That’s why Small Tech focused on something I call speed-to-shooting
time. The more feature-loaded your video
camera, the more time it takes to get ready to shoot; you’ve got to struggle
with all sorts of frustrating tweaks and turns.
By contrast, the Flip comes out of your pocket and is ready to start
shooting in a Malcolm Gladwell blink.
And guess what? Even
if someone at Big Tech dreamed up this stripped-down, ripped-down idea, it
would never have survived in its ostentatiously imperfect form. One meeting would have added a zoom, another
would have added backlight compensation, and a third would have demanded a
smile-recognition feature. By the time
you know it, the thing would have needed a larger battery to power it, and the
Flip would have mutated into a flop.
It was the paradoxically narrow focus and big vision of Pure
Digital that kept the Flip smartly flawed, falling short of engineering
perfection but deeply satisfying the consumer’s idea of it.
This innovation path is extremely, extremely different for large
companies to pursue. Why? Well, to start with because they are big and
complex, they have a mindset that over-values size and complexity. We all love solutions that look like
ourselves in the mirror.
So when they’ve got a problem to solve, or an opportunity
that needs to be fulfilled, they respond by throwing teams into the fray. But teams create over-designed and
over-engineered solutions, be they hardware or software. Try using any washing machine or GPS system
or microwave and you’ll yearn for a Flippy alternative.
And big companies are also very polite. They never want to hurt anyone’s feelings;
it’s easier to add Justin’s feature than “dis-empower” Justin and send him
scurrying to HR.
At the same time, the Big Boys are so afraid to fail that
they over-listen to the professional objectors within. It’s not hard to imagine the torrent of abuse
that would have been heaped on the Flip, and the PowerPoint slides that would
have been devoted to improve it to death with a “Feature Expansion Platform Development.”
So, my three simple, Flip-inspired mantras for any big
company in search of the inchoate mysteries of innovation:
Protect a good idea from people trying to help it.
Just because you can
doesn’t mean you should.
The secret of success isn’t just knowing where to start,
it’s knowing when to stop.
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December 15, 2008
11:03 am | 0 recommendations | Be the first to comment
I’ve been haunted by a story I read in the New York Times business section a week or so ago. Dr. Gregory Berns, who runs the Center for Neuropolicy at Emory University, cooked up an experiment to determine what fear does to our decision-making process.
To measure the impact, he told his volunteers that they were going to get a series of electric shocks – but they wouldn’t know exactly when. By leaving his subjects in suspense, he was able to use magnetic resonance imaging of the brain to assess the amount of fear they were experiencing.
As Dr. Berns explains it:
"Every trial began with a statement of how big the shock would be and how long they would have to wait. For many people, the wait was worse than the shock. Given a choice, almost everyone preferred to expedite the shock rather than wait for it. Nearly a third feared waiting so much that, when given the chance, they preferred getting a bigger shock right away…it sounds illogical, but fear — whether of pain or of losing a job — does strange things to decision-making."
Berns put his experiment in the context of the current economic situation, and how fearmongering has a contagious effort that creates a "downward spiral." He advises that we should "avoid people who are overly pessimistic about the economy" and that we should be "tuning out media that fan emotional flames."
But I’ve been ruminating on this for another reason: because of what Dr. Berns has identified, we are now in a business climate that gives no quarter to freshness, imagination or boldness.
I see the way that fear and anxiety warp ordinary business practice, from the smallest decisions to the most over-arching. Sometimes it’s subtle, and sometimes obvious. But the results are consistent: People are afraid to propose the dramatic step, and decision-makers are reluctant to take it. I’ve seen venture capitalists – the most risk-taking brains of them all – turn turtle-like, with a bad neurological case of Seinfeldian shrinkage.
Mediocrity (which is a less euphemistic word choice than "safety") is our default. The comfort in the known is palpable. New ideas are either suffocated or damned with faint praise: "Interesting, but now isn’t the time to try it."
Of course, now is precisely the time to try it.
All of this is a matter of Darwinian bad luck: we are biologically blocked from boldness. That’s because over millions of year, our brains have evolved very precise mechanisms for dealing with crises. But these reactions are often no longer useful in the modern world. Which means that our hard-wiring can actually make our lives harder.
So when we read about people getting canned and carrying their stuff out in boxes, it triggers ancient brain systems that encourage us to hold onto what we have. It’s called the endowment effect.
Berns writes:
"The most concrete thing that neuroscience tells us is that when the fear system of the brain is active, exploratory activity and risk-taking are turned off."
The only way we’ll be able to turn our economy around – once the financial system settles down, trust is restored, and capital becomes available – is through just those "exploratory" activities that fear shuts down.
We need to be developing the next new ideas, right now, that will capture the imagination of consumers (after all, the consumer economy is more than 65 percent of the GDP.) We must be fearless when it comes to new ideas in sustainable energy, infrastructure improvement, nanotechnology, and dozens of other sectors.
It’s not easy to battle our own biology. But understanding how fear makes us mental milquetoasts can be a first step in jolting us into action.
It had better be. Because innovative, surprising and even scary ideas need to be nourished and funded now.
Otherwise, when the economy is ready for them, they won’t be ready for it.
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July 3, 2008
04:06 pm | 0 recommendations | Be the first to comment
There was a story in a recent Wall Street Journal about a new technology that lets insurance companies reward safe drivers with “deep discounts.” Progressive and GMAC will be rolling out a digital back seat driver that tracks not just mileage – that’s old news – but how fast you drive, how hard you hit the brakes, and other habits.
It seems to me that we’re at the cusp of a profound change in the fundamental relationship between individual accountability and pricing. For a very long time, the well-behaved, consequence-aware Felix Unger segment was forced to absorb the costs of the I’ll-worry-about-it-tomorrow Oscar Madison segment.
But now, technology, along with an awakening in personal accountability, are changing that. It’s not a totally new idea, of course. Risk-based pricing is why life insurance companies charge smokers more money. And why property/casualty insurers charge those who have smoke detectors, less. But the ability to monitor behavior, and price your services accordingly, has exploded.
So what Progressive and GMAC have done is just one drive-by example of a trend that I will believe will take hold, finally subverting the legacy “one price fits all” model.
Imagine, if you will, when the power company starts charging you more for the juice you use during the day, than at night, to level out demand and keep their costs down.
Or when your Safeway purchases get electronically sent to your health insurance provider, and you get charged more based on your Doritos consumption habits.
Or when your video game hardware comes equipped with a Wi-Fi device that sends a signal to the school district telling them how much time your kids spend playing Halo – and punishing you with increased school taxes for your bad parenting.
Or when Apple puts a little bounce-detecting chip in your iPod so they can void your warranty the minute you drop it – or charge you more to warranty your next Apple purchase – because you’ve shown yourself to be so irresponsible. After all, why should prudent iPod custodians pay the price for the clumsiness or martini-fueled behavior of others?
We have grown accustomed to accepting an economic model which de-couples action from responsibility. We’re used to the idea of spreading risk across the population. But I predict that increasingly – in areas where costs rise or fall based on good or bad behaviors – it is an idea whose time is passing us by.
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June 16, 2008
02:45 pm | 0 recommendations | 3 comments
Politicians used to take their lead from marketers. It was the Madison Avenue image-factory that led the way, teaching consultants and candidates how to shape their advertising, how to use sophisticated tools of persuasion to decoct a message into sixty – and then thirty – seconds, how to use research tools pioneered to sell consumer goods. In the end, it meant candidates were turned into brands.
As a result, the practice of selling a politician “like a tube of toothpaste” was routinely attacked by civic-minded observers, commentators and journalists who were outraged at the trivialization of public discourse and the alleged manipulation of voters by the same amoral martini-guzzlers who got you to buy all the stuff you didn’t need in the first place.
Senator Obama’s campaign, however, is changing the conventional adoption sequence. Its ability to use the medium of the Internet as a new kind of collective and connective stimulus has been extraordinary, and in many ways ahead of consumer marketing. And beyond its fund-raising heroics, the campaign’s use of word-of-mouth, its understanding of the tools required to amplify the natural spread of information, has been canny and innovative.
A particularly fascinating development was the launch last week of the site “FightTheSmears.com.” Rather than sit back and absorb the attacks that have been zooming around the web, the Obama campaign made the strategic decision to attack them head on. You can’t stop Swift Boat-like attacks, but you can be swifter and more muscular than the Kerry campaign about fighting back.
The site calls out specific attacks in no uncertain terms, e.g. “SMEAR: Michelle Obama says “Whitey” On a Tape” – and then goes on to calmly rebut the accusation. This takes some nerve. Conventional wisdom – in politics and in marketing – has been that you should never legitimize baseless – and source less – charges with a response. Even to repeat the word “whitey” can be seen as provocative, reminding voters of the simmering pot of racial grievances.
This is a situation, which many marketers have faced in their own way; while the nature of the accusations have been different, the risks are similar and the discussions about potential response strategies have undoubtedly been the same.
Marketers have to deal with wild charges and rumors about discrimination against specific groups, about product safety, about the behaviors and beliefs of key executives, about causes and groups they allegedly support, about child labor and animal testing.
These problems have always existed, but their incidence will undoubtedly intensify given the Internet’s ability to take a rumor and send it hurtling into millions of inboxes. Plus there are two other related factors that will lead, in my view, to the growing danger that companies face from assaults on their reputations. One is the transparency the Internet provides – every move a company makes is visible; every disgruntled ex-employee (or current employee, for that matter) has a platform. The second vulnerability springs out of the hyper-skepticism of consumers, who stand poised to expect the worst.
I believe that in the past, marketers have been too timid, too fearful in their reluctance to respond aggressively to attacks, rumors and the concentrated efforts of special interest groups. (An exception was P&G, who eventually but belatedly did step up and denounce those nut jobs who claimed its logo was “satanic.”)
But Senator Obama did more than just deny. His website’s URL specifically urges supporters to “fight” the smear. He’s making them deputized agents of the campaign, by asking them to let the campaign know if they received a smear – so they can track down the source. And he’s asking that they forward the site’s content to others, in a form of digital inoculation. This is something new in the consumer world. I’ve never seen a brand when it’s the subject of rumors, open up the defense to consumers in quite this way. But they should. When you’re under stress, don’t circle the wagon. Use your strongest brand evangelists to counter the charges. This will connect them even more to your brand. And when consumers speak up on your behalf, it’s far more powerful than when the company – or God forbid, paid PR flacks – speak.
Once, marketers had to worry about getting consumer to buy what they put in the box. Now, they also have to worry about what others are putting into their customers' inboxes.
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June 9, 2008
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Joe TV Viewer has more channels available to watch than ever before. But a new study has revealed that these options have pushed Joe into a kind of viewing retreat, since the percentage of those channels that Joe actually watches have declined. In fact, it fell to its lowest percentage ever…ever being 1980, which was when Nielsen began to track this data.
Here are the numbers: The average number of channels Joe could watch in 2007 was 118.6; the number Joe actually viewed was 16. That means only 13.5% of “viewable” channels were consumed, versus 15.1% in 2006, 16% in 2005 and 16.2%.
Why are we seeing this behavior? Joe Mandese, who writes for MediaPost, says: “The finding suggests that while the supply of media options is expanding, consumer attention may have reached its limits.”
I disagree. The issue isn’t a cap on consumer attention, which suggests that we are suffering from a national case of ADD. I’ve heard that argument, but this data doesn’t bear it out. In fact, it suggests quite the opposite: If we were all so twitchy, we’d be tuning into more channels, not fewer, desperately seeking something to calm our pumping dopamine.
What’s happening, and what the data tantalizingly hints at, is that we’re becoming more attentive to what we already know. Meaning we’re becoming less curious, less willing to explore and experiment. Viewers are seeking comfort in the familiar, in fewer options, in a personally-constructed echo chamber.
A lot of this has been covered in Barry Schwartz’s prescient book, “The Paradox of Choice,” which is a must-read for anyone in the marketing business, where the secular consumer religion of option-proliferation is still a dominant belief system.
Too much choice can be destructive and paralytic. Yet at the same time, we know the consumer markets– including the entertainment side – are driven by novelty and newness. When we’re told to go out and spend our stimulus check at the mall, no one expects us to be buying yesterday’s product news. So how do we reconcile that dialectic?
One argument is that lack of innovation has become a sad fact of life. Consumers expect little, being persistently abused and disappointed by the low quality crap out there (a deficit captured by Springsteen in his song “57 Channels (and nothin’ on)” -- back when 57 channels actually seemed like a lot. Expecting more of the same, they don’t even bother to seek out new options.
Another hypothesis is that cable TV fails in its stunning inability to offer a simple and engaging discovery platform. If I want to find something new to watch – vs. the channels I habitually frequent – I have to go to a programming menu that is ugly, noisy and dysfunctional. It’s a horrific failure as a tool for exploration. It’s a dis-incentive, in fact, to the journey forward... It’s a suppressant to our natural inclination to newness.
Cable TV isn’t alone in its failure to present choice in the right way. How confusing is the taxonomy of cell phones and cell phone plans out there? Pizza Hut offers five signature crusts, seven meat toppings and nine vegetable toppings – and that’s just in their pizza menu.
Even Apple, who is fanatic about user experience, is pushing against the strakes of over-complication with their explosion of iTouch, iPhone and iPod alternatives.
This is a cautionary tale from Nielsen. Consumers represent more than 60 percent of the U.S. economy. It needs to grow for us to be able afford oil at $139 a barrel, and simply piling on new cable channels, new products, endless line extensions, and new software releases in a wild anabolic frenzy isn’t going to do the trick.
If you’re in this marketing game, you’ve got start focusing more on how you present options to consumers. We can’t just crowd the market with stuff. We can’t assume, as we do, that consumers are willing to work at deciphering the impenetrable hieroglyphics we use to differentiate our products, brands and offerings.
We need to start thinking of ourselves as agents of discovery. If not, we’re going to wake up pretty soon and discover ourselves in a world of pain.
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June 9, 2008
10:31 am | 0 recommendations | Be the first to comment
Having abandoned the camera business a year ago, Polaroid
announced that it is now fleeing the film business as well. The final,
symbolic demise of the once mind-blowing technology comes as no
surprise, given that digital imaging is as ubiquitious as Starbucks
locations or screenplays by
Soon, the iconic Polaroid camera will take its final residence in
the Land of Retro, where it will be adopted by hipsters, in the same
way that they've rediscovered vinyl records, the photobooth, and the
Soviet-era Lomo triple-lens camera.
What went wrong seems pretty damn obvious. Polaroid was so stuck in
its model that it couldn't recognize the unstoppage swing away from
analog technology to digital, and thus ended up stuck in a mechanical,
hard copy world.
That's the easy answer. But it's only partially right . You see,
it wasn't just a platform shift that paralyzed them. It was that the
emotional benefit Polaroid offered was being co-opted. It all goes
back to the "What business am I in?" question. And Polaroid wasn't in
the photography business, it was in the instant gratification business.
Remember how those Polaroid pictures -- often still damp and
developing before our eyes-- would be passed around at a party or
celebration? It's the same way that a digital camera is passed along
now, with everyone squinting at the little screen. The magical
immediacy is a potent force.
There would have been a way for Polaroid to keep that immediacy, but
to maintain its differentiation and essence as well. So it would have
been a mistake for them to rush into the digital camera business, and
be a me-two player with Canon and Olympus and all the others. The
world didn't need, and doesn't need, another digital camera.
More interesting for Polaroid would have been for them to continue
to make instant cameras, but digitize their platform so the images
could exist in tangible form, and in pixels as well. That way, you
also could hold your Polaroids in your sticky little margarita hand,
and also synch them with your computer. Permitting you to email them,
photoshop them, post them on Match.com, and so on.
With one fell swoop, Polaroid would be both competitive and differentiated.
At the same time, I would have continually evolved the form factor
of the Polaroid camera itself. There was a huge opportunity to turn
the Polarid into a fetish object, something to be fondled and
worshipped, like Apple has done so brilliantly.
It would have worked. Consumers have a deep emotional connection to
Polaroid. It evokes powerful imprints. They would have rushed to a
new expression of the brand that kept its charming mechanical magic but
opened it up to the digital world at the same time.
It would have taken a new path for Polaroid to succeed in the new
digital world, -- not duplicating the conventional camera makers. But
hey, isn't that what made Polaroid, Polaroid in the first place
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