Change Pulpit by Adam Hanft

06:24 pm | 0 recommendations | 1 comment

The Power of the Past in the Land of iPhone

I was listening to the NPR report on the auction of Twentieth-Century Fox memorabilia this morning, and it was another reminder of the dominating power of celebrity in our culture. Owning a sliver of their lives has almost talsmanic power. In a world where, increasingly, we connect on MySpace and in SecondLife within a virtual grammer that lacks touch or feel, there is an potent power in the tangible.

It also made me think again of what a truly bi-polar consumer culture we're in. Americans may not be political extremists, but we certainly are emotional extremists. On one hand, we fetishize the past, whether it be Humphrey Bogart's first studio contract (one of the items in the auction) or vintage sneakers or half of the kitschy omnium-gatherum that is eBay. On the other, we are this-just-in creatures of the new, always looking forward, never Lot's wife

How do we reconcile this retro-obsession with our worship of the next Steve Jobsian revolution? Americans are fundamentally a move-on people, for sure. (That's why Bush's spinmeisters are calling his new Iraq plan "The Way Forward.") We don't agonize over the past, we move past it. Yet part of us obviously clings to, and wants to own, the artifacts of a simpler, less troubled and tortured time. Deep in our ironic age, nostalgia becomes both a meta-commentary and a shot of Paxil. We bid for the past as we push on to the future.

03:01 pm | 0 recommendations | 1 comment

China Declares War Against Foreign Luxury

The upscale districts of Shanghai and Beijing sparkle with high-decibel status, from Armani to Prada to Burberry. The newly-minted Chinese upper class doesn't seem to mind this. But based on a report in this weekend's Financial Times, the government seems to have a problem.

Seems as though the Shanghai Municipal Industrial and Commercial Administration (and you thought we have leaden bureaucracy over here) has posted a notice on its website that warns against the shoddy construction, mislabelling and even dangerous components that their official quality checkers identified in fancy-schmantzy items.

The FT reports that a spokesman for Armani politely described the Chinese gripes as "not issues that are raised anywhere in the world. We pride ourselves on the quality of our products." That's a very understated response for understandable reasons: no manfacturer wants to alienate the gatekeeper to this enormous market.

Of course, there's an economic reason for the government acting as wardrobe nanny. They simply want to do as much as possible to discourage the purchase of foreign goods, and to convince those Chinese who have the money to drape themselves in luxury that locally-manufactured stuff can actually be superior. As the FT writes, "...the administration said its quality checks showed that consumers should not judge clothes solely on their price and on whether they had been imported."

Earth to the Chinese government: people who buy luxury goods don't give a damn about their shoddy workmanship or the pH levels in their wardrobe (Burberry was forced to recall a line of men's trousers last November when the quality checkers found an excessive pH level).

The nervousness of the Chinese government reflects an interesting reality. The country has roared to the export leadership position it has achieved without creating any "brands." That's the inevitable next step. Rather than bashing foreign luxury brands, my bet is that the Chinese will start to produce their own luxury statements. What better signal that they have moved from emerging to "emerged" status than if they could compete not just on low-cost manufacturing, but on the rarefied level of the superficial? Now that's the global recognition they're looking for.

So it's only a matter of time until Prada and Vuitton start facing the same threat from the Chinese as everyone else they're putting the squeeze on, and until Burberry starts shaking in its pH-flawed trousers.

China's combination of amazing growth and ever-abiding mystery make it one of the coolest places in the world, and coolness is the lingua franca of luxury marketing. If foreign buyers suddenly start finding China's status goods appealing, then suddenly they'll be in high-demand for local consumption, too. That would give China the spectrum from low-end to high-end success, and be one more nail in the economic coffin of Europe, for whom luxury products are an irreplaceable part of the economy.

04:35 pm | 0 recommendations | 1 comment

Ahmet Ertegun, Atlantic Records Founder, Dies

It's impossible to read about the death of Ahmet Ertegun without reflecting on how much the media world has changed over the course of his lifetime. And how much it hasn't. When he started Atlantic Records in 1947 with $10,000 in borrowed money from a family dentist (seems like dentists have been angels for a long time) the music industry hadn't consolidated into the top-heavy beast it has become. Twenty years later, at the dawn of the merger era, Ertegun sold Atlantic to Warner Brothers-Seven Arts for $17 million dollars, or just slightly more than the omikase at Nobu, in 2006 dollars.

Because Ertegun had an uncanny ear for talent, and was respected as a class act in an industry where trust was never highly rated in the Billboard charts, Atlantic was able to survive and prosper as a label. While he discovered and sponsored titanic talents like Ray Charles and John Coltrane, over his career he witnessed mass-production take over the industry, and with that the slow death of individuality, as artists got swept up, packaged, made-over, homogenized, and exsanguinated.

Yet as we approach 2007, which will be the 60th anniversary of the founding of Atlantic, in a curious and welcome way the music industry is more open to the kind of unmediated originality that Ertegun lived for, than it has been since the days when he got going.

The arrival of MySpace and YouTube -- and, of course, the entire online distribution platform -- provide an opportunity for talent to bypass corporate blockages, institutional fearfulness and focus-group decision-making. It also provides an opportunity for talentlessness to take the same journey.

Which is why what Ertegun did so brilliantly, to find, filter and nurture, is more necessary now than it was in 1947. Indeed, the combination of a democratic distribution sysem and Ertegun's talent tropism is the killer app we've been waitiing for, but aren't likely to find. We're not likely to see his kind again, though we need him more than ever.

06:05 pm | 0 recommendations | 10 comments

The Anti-Inventiveness of "American Inventors"

So, tonight is the premier of "American Inventor," brought to you by the zeitgeist-tappers responsible for "American Idol." Here, the reality TV aesthetic meets Ralph Waldo Emerson, who famously encouraged our national creative spirit with his rodent-catching wisdom: Build a better mousetrap and the world will beat a path to your door.

"American Idol" was all the things you think it was: crass, tasteless, manipulative, a twisted national lottery. But in the end it was harmless in its own way. Sure it promised a path to celebrity that was the off-key equivalent of "Hoop Dreams," but no real damage was done -- other than to a few egos.

I think "American Inventor" is far more dangerous, though. America has always had a fascination with get-rich-quick schemes; we've never had trouble getting in touch with our inner Ralph Kramden. This show reinforces that fantasy. While an innovation can present itself with a flash of illumination, successful innovation is about discipline and execution.

America is not going to succeed in the global economy with a reality TV approach to problem-solving. Of course, "American Inventor" isn't going to singlehandedly destroy our chances of competing with China. But the silver-bullet fantasy that's the emotional driver of the show is a real and deep problem in American business. I've seen its insidious appeal at the highest corporate level. It's particularly risky in creative organizations that value the heroic Big Idea above all else.

Indeed, I've literally see brainstorming sessions end with participants voting on the best idea, just like the judges will be doing. Which means that the worst thing that could happen to us would be that "American Inventor" triggers a national obsession with the next big invention -- when what we really need to win isn't a single invention, but ongoing inventiveness. And those are two very different things.

01:49 pm | 0 recommendations | 4 comments

Ten Steps to Turn Around Wal-Mart, Part 2

[Editor’s note: This column was published in two parts. Click here for Adam Hanft's first five suggestions for Wal-Mart.]

6. Expand your vendor base. It’s no secret that it can be excruciatingly difficult for small and mid-size companies to do business with you, because you require all sorts of sophisticated enterprise software and other technology solutions. (The joke is that only elephants can sleep with elephants). That’s an essential part of your business model; by getting the giants like P&G and Coca-Cola to connect their systems to yours, you monitor sales trends, assure faster delivery, reduce inventory, and manage your other marvels of efficiency.

But relax those standards for entrepreneurs. Actively seek out small, innovative companies with exciting new products, and help them grow. It’s good business, first of all. Consumers are ready to be excited and are increasingly bored by the Sameness at the Shelf. At the same time, they want to see you support these new businesses. (With the explosion of entrepreneurship in America, most everyone is a few degrees of separation from someone who has something to sell you). Help these new vendors get stronger – either by extending credit to help them secure the inventory they need to work with you, or by starting a “new vendor” program that introduces them to partners like Microsoft, Oracle, and SAP with whom you have deep relationships.

7. Stop treating your employees like commodities. No one thinks of Wal-Mart as a place to get a first or a second job, stay on, and build a career. You’ve got to change that. You need to create a culture that is as obsessed with finding, cultivating and promoting talent as it is with getting Frito-Lay to sell you Doritos at a lower price this year than last. Demonstrate your commitment to getting people out of the minimum wage sinkhole as quickly as possible. You’ve got great management systems. Use them to identify the most promising women and men in your vast organization. Increase your investment in training by a factor of ten. Become known as an employer that is committed to discovering talent and creating absolutely amazing personal and career success stories. The effect on morale will be amazing, and that will spread like emotional wildfire to the consumers they deal with.

You’ve got 1.6 million people working for you, a bigger community than Boston or San Francisco. It’s an extraordinary talent pool, but you’re treating them like high-turnover losers instead of assets. No wonder the media portrays them as wretched slaves, and you as a feudal oppressor.

You should also encourage your employees in entrepreneurship. Hold regular seminars and advice on your Website for starting a business. Pride yourself on how many employees start a company each year. (It’s great PR to lose good people for the right reason). Even invest in their businesses, give them micro-loans to get launched. After all, you don’t want the entire retail landscape to be Wal-Mart and only Wal-Mart. Stand for, and support, a diverse retail ecosystem.

8. Open up your business. Become less impenetrable. Act like you have nothing to hide. Install “factory-cams” at your captive manufacturing plants around the world, so anyone can check out the conditions 24/7 on your Website. Let management and store personnel blog. And please talk to reporters. I was being interviewed by a business reporter at a major metropolitan daily who told me that she spoke to two people in your PR department trying to get a comment on the Greenwald documentary, and each time she was referred to your Website. Yeah, that’s a way to make friends with the press.

9. Use your extended warranty marketing as a model for other new services. Consumer advocates have, for years, complained about what a rip-off these policies are. Now, you’re offering a real benefit by selling them for half the price of Circuit City and Best Buy. And you’re not hiring children in Indonesia to accomplish it. What other consumer-punishing paradigms are there that you can break down?

10. Lastly, you’ve announced you’re running a big holiday TV campaign, using celebrities for the first time – names that include Garth Brooks, Queen Latifah, and Destiny’s Child. That timing really makes a lot of sense. Kill it. You can’t afford health care benefits but you can afford to pay over-priced celebrities to dance around the TV screen? Celebrity advertising has lost its luster anyway, and does anyone really believe that these chauffered millionaires actually shop at Wal-Mart? It’s not believable, and that kind of marketing deceit makes everything you say as an organization equally invalid. Instead, run advertising that shows how Wal-Mart democratizes the holiday for real people.

Taken together, initiatives like this can make you not just a feared company, and a targeted company, but an admired company. That’s something no war room – locked in counter-attack readiness – can buy you.

01:24 pm | 0 recommendations | 23 comments

Ten Steps to Turn Around Wal-Mart

Wal-Mart has succeeded as a highly-evolved culture of the tangible by creating a dazzlingly efficient logistics operation, shaving cent-splinters off an item, and driving down overhead. This is the whole relentless apparatus that brings us "everyday low prices" and it is made up entirely of business practices you can touch, feel, and measure. And no one is better at it than they are.

But when it comes to the culture of the intangible -- an increasingly crucial aspect in today's marketplace of corporate self-presentation and perception -- Wal-Mart's skills are unrefined, to say the least. Its history has been both cynical and tone-deaf, and its present behavior is in many ways even worse. For years, Wal-Mart's management ignored legitimate complaints, ranging from criticism about the company's lack of employee health-care benefits to labor conditions in its captive offshore factories to the very real social cost resulting from the demolishing of traditional Main Street business centers and the pandemic death of mom-and-pop retailers.

Wal-Mart has offered a classic case of corporate denial, with management refusing to pay heed even as its stock has dropped more than 25% since Lee Scott became its CEO in 2000. But as of very recently, it does seem as though some folks at the top have are in fact paying attention, a sudden arousal triggered by a perfect image storm: The documentary The High Cost of Low Prices, a leaked and magnificently callous internal health-care memorandum, and the chronic jabbing of activist groups like Wake Up Wal-Mart and Wal-Mart Watch. The company is responding with an ill-conceived blast of defensiveness -- in their mind it's a long-overdue gust of truth-telling -- that will eventually be memorialized as a business-school case of strategic and communication blundering; their Iraq. Elements of the disaster include a Website (WalMartFacts.com) that's bloated with corporate speak, clearly manipulated testimonials from thrilled "associates," and histrionic self-defense; newspaper ads shrilly defending their policies; and gauzy TV commercials on the Sunday morning programs that attempt to portray Wal-Mart as an idyllic place to work. Most absurd, it's been reported that they've hired a bevy of consultants -- former Democrats and Republicans -- to run an aggressive war room out of their Bentonville headquarters.

How great is the business risk to Wal-Mart from these blistering attacks? And is it too late for them to turn things around? According to a study conducted by McKinsey and leaked by Wal-Mart Watch, between 2% and 8% of consumers have said they stopped pushing a Wal-Mart cart because of the company's practices. That could be over-reporting, and the history of consumers voting with their credit cards isn't that favorable for activists (remember Girlcotts?). But it doesn't take much to put a real blockage in their revenue stream. And the risk is less an outright refusal to shop there than a gradual erosion in shopping frequency and the average ticket. Wal-Mart operates on such razor-thin margins, and Wall Street demands such strong quarter-over-quarter sales, that the total impact of the public relations swirl could be devastating in the short and long term.

So yes, Wal-Mart is right in viewing this particular moment as a turning point, but it's wrong in just about every other way. If it wants to neutralize Wal-Mart Watch, Wake-Up Wal-Mart, and the other activists, it needs to radically retool its approach. Here are ten initiatives that would start to turn things around and elevate Wal-Mart to a stature in the American consciousness that mirrors its business triumph:

1. Stop defending and start examining. Even Jacques Chirac conceded that the recent riots in France were based on a deep and abiding social inequity. Begin a transparent process of looking into how the business has grown, in part, on the backs of the people it serves. Be prepared to accept responsibility, acknowledge difficult truths, and construct a plan for productive change. Are every one of your policies corporate models of enlightened management? Hardly. But to read your Website, they are.

You are not in a war, and you must not define the current situation as a cosmic struggle. The truth is, the people who say horrible things about you can be horribly right -- at least some of the time. The good news is that a commitment to change goes a long way in the mind of consumers. They want their relationship with you to be based on trust. They don't expect you to fix everything right away, but like Dr. Phil rightly says, you can't address what you don't acknowledge.

2. Fire your consultants. The last thing you want are fiercely partisan media manipulators. For years you stayed clear of public relations, staying true to Sam Walton's conviction that those activities were a waste of good money. Now, you've over-corrected in a really scary way, and have gone out and hired a rogue's gallery of spinmeisters who've worked for Reagan, Clinton, Kerry, and Bush. Is that something to be proud of? These are the people who have thrown gasoline on our obscene culture of partisanship and demonization of the "enemy." They're never going to level with you. They'll reinforce your defensive posture, collect fat checks, and try to win debating points in the consumer culture with focus-group tested language. Look at public opinion polls and see where politicians of all species are ranked. Do you want to debase your brand by signing up with the people who've helped make this mess?

And remember, consumers don't even pay attention to all those fancy words, they're tuned into a completely different frequency: which side seems to have fairness on its side; which argument fits my preconceived, imprinted notions and belief systems; what have I heard through the truth-vine of word-of-mouth? (A recent study found that consumers believe other consumers far more than other presumed sources of authority, including news and "expert commentary.")

3. Leverage your size to help your 1.6 million employees in unexpected ways. The public views you as resisting health insurance benefits because you are cheap and evil. Turn that around. Imagine the radical impact you could have on the marketplace and your brand optics if you focused your ruthless cost-cutting skills on HMOs, forcing them to crumble under the same margin pressure that you so regularly exert on vendors. Run a commercial about that instead of those unconvincing and alienating staged scenes of exaggeratedly fulfilled employees. Imagine, also, how positively you would be perceived if you used your operation as a laboratory to test alternative health-care approaches?

And there are other innovative ways to use your vast clout and buying power to bring real value to your employees, and yes, make Wal-Mart an employer of choice instead of the exhaust system of the American economy. Why can't you negotiate discounted, bulk mortgage, insurance, and home heating-oil rates? Taking it one step further, support the communities you do business in by using your infrastructure and purchasing sophistication to help local school districts pool their buying and save on textbooks and other merchandise. All of these programs would be powerful signifiers that your gargantuan size need not be a socially destructive force.

4. Talk to the unions. You've spent years fighting and villainizing them. That's a horrible mistake. It's time to think about the impossible: a solution that would let the unions in. Seemingly impossible solutions are happening with a kind of wild regularity in business these days: GE and BP turning green, Apple deciding to buy chips from Intel, IBM getting out of the PC category, Microsoft and Oracle publicly hugging.

Consider the situation from where the unions sit. The American labor movement is desperate for a victory. They're losing members every year, and spending most of their time negotiating concessions. Both of you have reasons to find a bold and imaginative solution to your standoff. Sure it will cost you more, but it would be such a profound turnaround that I believe you'd see a dramatic sales impact. You'd win back the people who have stopped shopping or are shopping less. For the first time, you would actually make people feel good about where they shop and not just how much they save. It's a critical difference. Consumers wouldn't even mind spending a few pennies more if they knew those shekels were destined to fund health care for families.

5. Support mom and pops. One of the more dramatic moments of the High Cost documentary is testimony from small-town business people feeling Wal-Mart's grip around their neck. It's part of the anti-Wal-Mart folklore, and guess what, it's accurate. You do make it impossible for many small retailers to compete with you, and the decades-long march of your stores across the country has hurled thousands of them into bankruptcy.

But you don't need to be the enemy of the corner store forever. In fact, now is the time to start helping mom and pops in some imaginative ways. For example, start a referral network. Your business model is about reduced SKUs and volume. You're never going to carry the kind of items that the local, niche retailer will. You're not going to stock the hot Dutch eyeglass frames in your optical department, or Napa Valley artisanal honey in your condiment aisle, or the National Book Award poetry winner. So why not let your customers know where they can find them? You're not going to lose a sale, but you'll make a friend. Two, actually: your customers (who will appreciate the generosity of spirit behind it), and the mom and pop stores you've adopted.

You should also be reaching out to local mom and pops with free consulting advice. How can they grow their businesses on the Internet, for example? How can they get better at database marketing? Lend them your expertise and watch how your perception will improve in the communities you serve.

[Editor's note: This column was published in two parts. Click here for Adam Hanft's final five suggestions for Wal-Mart.]

06:16 pm | 0 recommendations | 5 comments

Greenspan: Longevity, Defined

Eighteen years after a far less furrowed Ayn Rand acolyte named Alan Greenspan took over the Federal Reserve, the inscrutable chairman marked his final appearance before Congress today. This amazing longevity -- consider that he held court before the first President Bush was President Bush -- is unusual in government (other than Supreme Court appointments and show-up-and-get-a-check civil service jobs). It is unheard of in the private sector.

Greenspan's long, long term makes today an interesting point-of-contemplation for readers of a magazine that is defined, to a large degree, by swiftness and change. In a world where only losers linger and un-packed boxes are emblems of fresh blood pumping orgiastically into the corporate circulatory system, is there any room for perspective and continuity? It's doubtful that we'll see that kind of Lou Gehrig run at the Fed again. But the real question is if our collective worship at The Church of the New Hotness reaches a point that actually neutralizes our hard-wired fear of the unknown. Can we actually have too much acceleration in our corporate nation?

Of course, you don't have to change people to change perspective and react to new ideas. In theory, you don't, anyway. But most of us are like little Greenspans, who clung (and clings) to his Straussian-Freidmanesque supply-side dogma with the ferocity of Bill Grist holding onto his HCA stock.

Part of me wonders if every company needs an Alan Greenspan in an office somewhere -- warning us of excess, a cool, calibrated, calculus with the emotion range of a Pet Rock. The other side of me wants to fill that office with unpacked boxes.

05:59 pm | 0 recommendations | 7 comments

Say Nothing

Business advice no longer comes from just conventional sources these days. Though they have neither an MBA or corporate experience on their CVs, Jesus and Ghenghis Khan (among other notable mavens of commerce) are being offered by gimmick-seeking publishers as posessors of sage business counsel.

But I would urge those really anxious for input from the anti-spreadsheet crowd to turn their attention to last week's winner of the Nobel Prize for Literature, Harold Pinter. His advice can be summed up in one word: Silence.

Pinter's pauses are legendary. An entire taxonomy of pauses, silences, and moments of freighted intent hanging in pendancy is required to stage his often wordless scripts.

And these silences are what business needs more of. We're deep in a high-chatter, instant response, fill-the-frequency verbal flood. Meetings are a series of backed up, stacked up mini-speeches.

Of course, the more we talk the less we think. We're so afraid that someone will get ahead of us that there's barely a nano-second of silence. We're afraid of it. We're amped up and silence is a symbol of indecision or lack of clarity or a lack of forward motion. We're dangerously ponderless.

Imagine, if you will, a business meeting as a Pinter play. Those sometimes ominoius silences would snap a few key points into resolute focus, the way white space around a wall brings meaning and attention to a painting.

Silence lets thoughts remain alive and electric in the air, a subject of consideration, rather than being obliterated by a reactive torrent of numbing commentary.

That makes silence both celebratory and damning. It beams attention to smart and wise thinking which would otherwise be missed, while isolating stupidity and cant that would otherwise be forgiven.

Less Mamet and more Pinter would turn meetings from competitive talk fests into sessions where actual insight might be born and progress made. We might actually learn to interpret nuances, textures, and shadings. Who knows, that could be Sweden's second biggest business gift to America after Ikea.