Tuesday, March 31, 2009

Positive NPV vs. "The Best use of Corporate Capital"..?

Fred Wilson's recent post about Google's VC business highlights a discussion we been having in our FinMgmt course, which overlapped discussions in both ITMgmt and StratMktg. It's one thing for Venture Capital firms to take on the risk associated with start-ups, but well does that risk-management and strategic-planning work for corporations that are trying to identify positive NPV projects to create value? Should you measure activities that attempt to drive Disruptive Technologies in the same way that you measure Sustaining Technologies?

One of the comments highlights an interesting paper from Michael Porter (HBS), who is frequently referenced in our FinMgmt readings:

"A study of the diversification records of 33 large U.S. companies from 1950 to 1986 shows that diversification--whether through acquisition, joint venture, or start-up--generally has not brought the competitive advantages or profitability expected. Portfolio management, restructuring, transferring skills, and sharing activities are four concepts of corporate strategy that companies most commonly use. Portfolio management no longer works very well in the United States because of its highly developed capital market. Restructuring is merely a stopgap measure that will not build shareholder value over the long term because it usually produces an unwieldy conglomerate. Companies have the best chance of being successful at diversification if they capitalize on the existing relationships between business units by having them transfer skills and share activities."

An alternatve opinion to my Facebook idea

A little while back I posted some basic ideas for Facebook to add revenue streams. One of them was around class reunions. I recently saw this article in the NYT talking about a lack of interest in 5 year reunions, because the author already felt like they knew what their classmates were doing and it ruined the element of surprise.

Who is right? I don't know. Who is wrong? I don't know. It simply highlights the need to not only go talk to prospective customers (especially non-customers) and listen to their input and feedback. It's also important to talk to people across various generations, and across various social levels. The 10 and 20 year reunion crowds seem to be very interested in physically reconnecting with people. Maybe the 5 year crowd has supplemented the need for personal interaction with Facebook, Twitter, etc. at a much higher level. I tend to believe this is very true.

It's still Market Research 101, but technology is broadening the generational gaps in every industry. We all need to make sure that we're taking this into consideration.

Monday, March 30, 2009

Great Discussion about Disruptive Technologies

This one is coincidental, as we're just now getting around to discussing Disruptive Technologies in our ITmgmt course. I personally think the entire course could (or should) have been focused on that, but I don't make the syllabus. Oh well...

A few weeks back I talked about a B.S.Report podcast between Bill Simmons and Chuck Klosterman where they discussed the downfall of the newspaper industry and some of the reasons this was happening.

As a follow-up to that discussion, Bill interviewed (right side of page) John A. Walsh, one of the Sr.Execs at ESPN behind ESPN.com and SportsCenter. Not only did Walsh provide additional reasons why the newspaper (and traditional news) industries are struggling, but he provided excellent insight into the mindset that is needed to truly create disruption within an existing marketplace. His passion for creating change and thinking differently comes through in ways that make you wish that you were working on one his projects right now!!

If you get a chance, take a listen for the first 30 minutes (or more) and then determine which end of disruption your business is on today. And keep in mind that ESPN began during the middle of the 18% interest rates and recession of the early 1980's. There may be no better time than now to be disruptive.

Happiness, Sadness and the Bracket Challenge

Tough weekend.

On one hand, I was happy to see Michigan State get back to the Final Four. It's always good to see teams from my home state doing well. Classmate Andy Klassa, an MSU alum, will definitely be fired up. And the GO GREEN! GO WHITE! cheers will be even louder as they have virtual home-court advantage in Ford Field (Detroit, MI).

On the other hand, I had to watch my WFU bracket get destroyed, as I dropped from #1 to #5. It's a friendly competition, but my competitive nature enjoyed last week's position much more than this week's reality.

Best of luck to everyone except Carolina ;), and I hope all the attendees spend $$ to help the Detroit/Michigan economy in any way possible.

Interesting Business Models & Selling Techniques

While classroom studies are interesting, the real value comes in the translation to real world activities. I periodically go through my list of interesting business models or sales techniques to see how they leverage learnings from the classroom, or break the traditional rules to create new opportunities.

Here's a few that I recently found interesting:

Tats for Tees - Interesting approach to reducing the concerns that people have about spending too much on a "want" (not a need) in a challenging economy.

3/50 Project - Powerful concept; Shared concern for 1000s of people; Explained in a simple way that many people can understand and take action.

Threadless - Redefining how a basic product (T-Shirts) is designed, forecasted, and manufactured. Embracing community on a whole new level.

Etsy - Leveraging the long-tail of the market for hand-made goods. A simple way for companies to get access to a huge market, that previously would have been expensive and cluttered.

Sunday, March 29, 2009

"Everything in Moderation...Including Moderation"

I've got to apologize in advance for this one, because it has no business being a blog post. It has the potentially to be long, confusing, and maybe not terribly well thought out. I try not to let this blog be a diary, but this one could turn out to be like a notepad capturing a bunch of ideas that I'm trying to piece together in my head.

Before I get started, I should explain the title of this post. I have a family friend that uses the phrase every time we talk about something that goes out of control. I like it because it's simple to remember, and it forces me to take a long-term view on things. It enforces the value of strong fundamentals and being well-rounded, but also encourages risk-taking and exploration within the framework of moderation.

One of the things that I've been thinking about frequently this semester is the idea of value creation, and how to sustain that over long periods of time in the face of growing short-term pressures (profitability, competition, etc.). When the world collapses upon itself because people and companies create artificial value, it becomes an interesting time to look for examples of companies that didn't get crushed and what discipline they used to avoid the mess.

Amazon is a great example of a company that takes very long views of their business, and allows those goals to drive their strategy and decision-making. Back in 2002-2005, Amazon's stock price took a beating after the DotCom bubble burst. They were widely criticized for making major investments that wouldn't pay off for years, and even then were considered very risky. But CEO Jeff Bezos continued to state that his strategy of innovation would allow them to grow in the long-run, and that he would essentially ignore short-term shareholder sentiment in order to execute his plans and go after new market-share.

But what about the shareholders? Aren't they supposed to come first in the outputs of a leader's decision making? How do you measure the patience they should have for curiosity around innovations? How do you get approval for those project which only have positive NPV's if the 100:1 scenario succeeds, and it's success depends on a market, business-model or technology that doesn't exist yet?

Amazon got through the mid-2000's and is now executing very well, and has expanded into several new markets which were not on anyone's radar screen in 2002. And even now, Bezos' need for continued exploration is driving a new phase of innovation.

By employing the philosophy and methods of kaizen across the organization, as Bezos does at Amazon, does this imply that we're going to hit more singles and doubles that home-runs? Home-runs get on ESPN SportsCenter, but they also are frequently associated with strike-outs. Do home-runs and strike-outs give us a better chance of long-term survival and success, or does a high on-base-percentage of singles and doubles lead to greater long-term success?

It's a difficult question to answer. Managers and Entrepreneurs get caught up in the spotlight of IPO's, big bonuses and buy-outs. But is it truly creating value? Andy Grove, former CEO of Intel, recently commented on today's Silicon Valley entrepreneurs and their lack of long-term thinking on building companies and value creation.

As I stated at the top of the post, I knew this wasn't going to be well organized or come to clear conclusions. It's just a set of examples and ramblings as I try and pull together my thoughts on the mindset needed to come out of these challenging economic times. It's the tradeoffs between Shareholders and Stakeholders. Between investing in innovation and investing in concepts that are believed to have positive NPV (in some known time period, using known business models). Between the agency conflict of long-term company values and near-term manager goals.

OK, I'll end it here for tonight. Lots of other work to get done. I'm sure I'll come back to these notes and thought-process at a later time, when I've got more examples from both sides.

Thursday, March 26, 2009

We're glad that Lexi is feeling better!!

One of the great things about going back to get your MBA after a little bit of "life experience" is that you not only make connections with classmates, but you also connect with their families. In essence, you're given an extended family. And when someone in the family is struggling, we all feel it.

Over the past couple of weeks, the daughter of teammate Marty Jones was ill with a stomach "bug" that was causing her all sort of unpleasant side-effects (I'll spare everyone the details). Needless to say, it broke our hearts to hear all the pain that this precious little girl was going through. But after several days and nights of tests and tubes in the regional hospital, we were all glad to hear that little "Lexi" is home and feeling much better. We're all hoping that next weekend we get to hear stories about how she's back to being the "little Marty" that we're been hearing about since August.

Wednesday, March 25, 2009

Getting your Business to the Right Size

I've written about this before, but Seth always seems to be more elegant at describing concepts that will effect our future. So what does this mean for companies and employees?

On one hand, it means that there won't be as many jobs available (from big companies) in the future as there have been for the past few years. On the hand, it means that companies will look for more ways to leverage outside "groups" to provide functions for them. This isn't a new concept, it's called outsourcing. But outsourcing in the past was about large companies taking over chunks of work for other large companies.

I think that's going to change going forward. It's going to be more project-by-project, or what's sometimes called "Hollywood-style", because it's similar to how studios bring together various groups to make the movie and then it disbands. And with all the interconnectedness via the Internet, those groups can be small and geographically dispersed.

So I believe what this will create is a new market for big companies and small independent groups that create expertise in making this Hollywood-style work very efficiently. Not only will they bring world-class skills, but also world-class integration and process-management. There are some opportunities here for people with operational and project management expertise to create quite a niche expertise and consulting business.

Tuesday, March 24, 2009

Measuring Twitter - Usage, Interactions, etc..

There is an old business concept, quoted by Peter Drucker, that says, "If you can't measure it, you can't manage it". Following up on previous posts about Twitter, I think it might be useful to look at ways to figure out it what it's doing. As before, this isn't a complete list, but might give people a starting point to determine if the results align with your goal for using Twitter (or any social media).

The first thing to consider is what your goals might be for using Twitter.
  • Is it to figure out why there is so much buzz around Twitter?
  • Is it to gain knowledge more rapidly?
  • Is it to spread information about your company, product, service or interest?
  • Is it to meet new people that share your interests?
  • Is it to integrate some additional tools or services via the Twitter data feed (called an API) that would increase visibility to your business?
  • Other goals....
The second thing to consider is if you're going to be a "farmer" or "gatherer". Other people use different terminology, but essentially this asks if you're trying to initiate conversations and trying to connect people ("farmer"), or if you're mostly looking to collect knowledge from others ("gatherer"). Either is fine, as long as it aligns with your goals. In most social media applications, the number of "farmers" typically does not exceed 10% (dominant voices). This may sound low, but if you think about a classroom or a dinner party, those numbers aren't out of line with traditional human interactions.

Let's look at some tools that might help you determine if you're using Twitter in a way to align with your goals.
  1. If you're just looking for a starting point, Twitter Grader is a easy place to start. It give you a simple 1-100 score (100 is highest) that analyzes how active you are, how connected you are, and where you fall in the broader Twit-o-sphere.
  2. If you're interested in who are the top Tweeters by city, Top Tweeters by City might be a good place to start. This may be really useful if you're trying to organize local events, or want to make local contacts.
  3. If you want to get into some more granular details of how you're connected or creating connections and buzz, then tools like Twinfluence or Twitanalyzer can be helpful. Not only do they give you stats, but also suggestions on ways to improve your relevance and influencing ability.
  4. If keeping up with all the activities on Twitter seem overwhelming, tools like Twitter Search, TweetDeck and Twirl are very useful to monitor multiple feeds, keywords or trends.
Since all of these tools also allow you to plug-in other people's TwitterID, you can create some baselines that align with your goals. Beyond that, you can create whatever types of correlations that are relevant to your goals (Tweets -> Website hits; Tweets -> Attendance at events; Rate of adding new Followers, etc, etc, etc.)

Hopefully some of this is helpful to find some places to begin measure how impactful your involvement with Twitter is on your business or personal goals.

Monday, March 23, 2009

Would you trust your customers to define your brand?

Traditionally, companies have spent $M of dollars on Brand Management, Positioning and other Strategic Marketing functions. All these activities are geared towards getting customers to understand how they want their products or brand to be seen.

But as we saw during the Twitter discussion this weekend, some brands are becoming more open to allowing their customers or communities to provide feedback. Brands like Skittles are actively using user-generated-content to define what their brand means. Other brands like Coca-Cola have no idea why so many people are attracted to their brand and want to help define it.

It creates an interesting set of questions.
  • How comfortable are you in allowing your customers to help define your brand?
  • Is this a good way to get feedback from your customers to help alter the product, or are customers too near-sighted to be helpful in strategic planning?
  • Should your strategy include a combination of company-defined branding, and the creation of customer-forums to allow them to re-define or augment your brand?
  • Is this potentially the beginning of a new way to look at Brand Marketing, Positioning and Strategic Marketing?

A Saturday Tradition Continues

The Saturday tradition of varying the business-learning environment continued this past weekend. Good to see most of the program supporting this activities, which keep things light on those days when we'd all rather be outside enjoying this beautiful North Carolina weather.

After the 1st Weekend, I'm leading the EXFT2009 Bracket Challenge

While we're all disappointed that our beloved Demon Deacons are out of the tournament after a 1st round loss to Cleveland State, the good news is that I'm leading the March Madness Bracket Challenge for the EXFT2009 class. With 14 of 16 Sweet Sixteen teams picked correctly, I feel pretty good about my chances going forward.

Saturday, March 21, 2009

How does Twitter make money?

Following up on my previous post about Twitter basics, I thought I'd address another question from class that raised a number of concerns. "How does Twitter make money, and should I trust my information to someone that may not be here in XX months/years?"

Excellent question, and definitely something to be concerned about as you consider new business decisions. I wrote about several ways that Facebook could make money (in addition to advertising) several months ago, because I enjoy using the service and would like to see it continue. Or maybe I'm subconsciously auditioning to be a Product Manager at Facebook...who knows? Either way, it's interesting to look at how these Freemium companies can generate revenue and stay in business.

As of now, Twitter does not have a revenue model. In fact, this has been the center of much speculation amongst the technorati lately. So let's look at the basic ways that Twitter could make money, as well as some additional opportunities for companies to leverage Twitter to drive revenues for themselves.
  1. Advertising - This is the simplest to understand. Just like Yahoo! or Google, Twitter could begin to monetize their traffic by placing targeted advertising along side the tweets. And considering the real-time nature of their traffic, this could create new advertising models for companies trying to reach certain demographics.
  2. Additional Tweet Space - Tweets are currently confined to 140 characters, a throwback to the days when Tweets were mainly sent via SMS (Text) messaging. But some people and companies struggle to get their message out in this short format. Supporting larger character lengths may be a service that Twitter can monetize.
  3. Auctions for "Suggested" listings - This came up recently, as new members often struggle with who to follow.
  4. Integrated Services - An example might be something like this: Starbucks sets up a Twitter "watching" service that looks for people complaining about traffic-jams or any other delay. When they see this, they determine where the users are located. Then they send those people a Tweet offering a coupon to the local Starbucks. This is a very basic example, but there are thousands of possibilities for companies that want to come up with creative ways to reach their target audience. Twitter could offer a service for those companies that can't do this themselves (SMB's with limited IT knowledge), or companies that aren't sure of the right way to engage with social communities.
  5. Broaden the Scope of the Platform - One of the key elements to any Social Media company or service is a willingness to broaden the usage of the platform. This means that not only could others create monetization opportunities, but you can leverage new opportunities because of the increased breadth. This could mean creating new partnerships to leverage the information in Twitter feeds, or allowing partners to insert themselves into the conversations in new ways.
That's just the tip of the iceberg of ways that Twitter could make money. I'm sure there are dozens more.

There is also the possibility that Twitter will get purchased by one of the major social networks, or by Google.

How to use Twitter - An Introduction

Brian Turner from Team 4 gave an excellent presentation on Twitter during our StratMktg class. Lots of questions about why someone might use Twitter, as well as plenty of questions about things like Security, Privacy, Following, so I thought I'd try and give some basics. This is by no means an exhaustive list, but rather some example and guidance from someone that has been using for business purposes for a while.

Business vs. Personal...or Mixed: This is probably the first decision that someone should make if they decide to start using Twitter (or any social media service). Do I want this to represent personal-me, business-me, or all aspects of me? This is very important, because while you may have great business tweets all week, the tweet about having too many beverages with friends at the Britney Spears concert might destroy any goodwill you created. For others, this diversity adds to the personality you're trying to convey about your company. Either way, it's a decision that should be consciously made up front.

Giving & Receiving: There are two basic concepts in social networking and social media that need to be understood before jumping in. For some people they are initially counter-intuituve, but they are critical if you hope to gain anything from the tools.
  1. Social media/networking is about having conversations, two-way or multi-way. It's about connecting with other people that have a similar interest, or who wish to have discussions about a specific topic. It's not about publishing content that is speaking to someone else. That's what newspapers or TV news does.
  2. As with personal conversations (face-to-face), you typically don't receive much if you aren't willing to give something to the conversation. Sure, you can sit at a dinner table and listen to great stories or conversation, but unless you say something, nobody is going to remember that you were there. So while it may seem concerning to share ideas, opinions, details with an online community, it's one of the critical hurdles needed to truly participate in this environment. NOTE: In a corporate setting, this doesn't mean you should break all corporate communications rules. In fact, many companies have policies in place to protect themselves online.
A last point to remember regarding Give / Take is that you may not always like what others say about you or your company. How you handle this is extremely important. For many, the initial reaction is to get defensive or fight back. But this may not always be the best course of action. It's important to realize that this is now a public forum, and it can be just as important to allow customers to vent frustrations ("product is poorly designed", "service was too slow") and learn from them, than to try and limit their ability to express an opinion.

Following and Followers: At a basic level, anyone can follow anyone on Twitter. Just like anyone can visit CNN.com or ESPN.com to gather information. What you put on Twitter is an information feed about yourself or your company. How much you share, when you share it, or how you share it should reflect the image you're trying to get across. That might be formal or casual, fun-loving or serious, personal or business. And if you present something interesting, you can expect to have others want to "follow" you. These might be friends, business partners or complete strangers. For those concerned with security or privacy, Twitter does allow granular controls over who follows you, how they are allowed to request a "follow", and if you'd eventually like to "block" them. But I'd suggest that in order to truly get value from #1 (above), the more open you are, the more connections you'll be able to make. And you never know where that next great connection is going to come from. The next great partner, the next great job offer, the next great customer order. But it definitely won't come if you always have your "blockers" up.

Announcing Information: A simple way to get started with Twitter is to use it to announce information about your company (or personal interest). Product announcements, new blog posts, breaking news, or coupons/specials are all great ways to keep customers updated about what's happening that could be valuable to them. While this isn't necessarily a two-way conversation, it is a simple way for customers that love your brand or products to follow your latest activities.

Enhancing Customer Support: I've written about this before. Twitter in no way replaces a friendly voice, but it can augment the overall experience. Especially for those situations where people want immediate updates. Companies like Zappos and Salesforce.com have embraced this community and are embedding it into their operations and products. And as more Gen-Y people join the workforce, they are going to be expecting the availability (and integration) of the tools that they use in their personal life, so getting ahead of this now is very important.

Solicit Feedback from Customers: What would you like to know about your customers, or products or service? Why not ask them? If you generate enough of a following (see #2 above), you'll start to get feedback. It may not all be positive, but that's OK. We learn more from problems than pats-on-the-back.

Create a New Image: Do you wish that people, customers, partners, media thought you were something different than they do today? This is an opportunity to help shape that new image, and get immediate feedback to the changes.

From a personal perspective, I use Twitter as a extension of my efforts to market our products and services, as well as connect with customers. We announce new products, events, and services. We have industry discussions. We listen to what our customers are saying about the company, as well as our competition. While I can't draw a complete correlation, we have found that the traffic to our content sources (website, blogs, online libraries) have been up 50-100% month over month since we began more actively using Twitter as a means of managing information. Obviously results will vary from company to company, but so far we've been happy with the return on a very small investment of resources and time.


Friday, March 20, 2009

Ping Pong Champion!!


Congratulation to Brian Turner, the champion of the the 1st annual EXFT 2009 MBA single tournament. An image of his crushing defeat over Gregg Lewis is displayed above.

Class Presentations - Open Book Management

Today we presented final projects for the MgmtAcct course, which were focus on Open Book Management. The project was to look at where it made sense at the targeted companies, and how the implementation plan may work. Below are the highlights from the presentations.


VisionPoint Systems (Virginia): Privately held company (<20>How to begin implementing financial visibility into a company that is less formal in how financial and management information is shared today?
  • How to implement new techniques while the company is rapidly growing, in a way that doesn't effect productivity or the existing culture?
  • With many engineers in the company, how will they embrace the need to learn business-centric information and skills?
  • In a competitive market for talent, some concern about sharing financial information if conditions change (ie. visibility may scare people into leaving).

  • Timco Aviation (Greensboro, NC): (~200 employees) provides aviation services and interior components. In the highly competitive aviation industry, how do they try and drive greater innovation from all levels of the company? The focus of this presentation was the engineering division and ways they would become more innovative. They laid out how they created "critical numbers" for each group (hrs/job, productivity systems), and their plan for education and creating the rewards system. Interesting take on how they planned to leverage existing "competition" between sub-groups within engineering, especially how it would buffer the plans before direct bonus-sharing increases could be implemented.


    Que Pasa Media Network: (Winston-Salem, NC - 100 employees)
    Family owned media company focused on Hispanic communities in North Carolina. They are looking to increase overall company value; create less employee turnover (currently not an issue); create greater efficiencies of resources (people, assets, cashflow). The presentation focused on the roll-out plan and education of the various groups that would be involved, and the associated critical number. They face the challenges of a limited budget for education, limited management data (beyond upper-mgmt), and a leadership model that has been driven by the CEO for the lifetime of the company.


    Mills Manufacturing (Asheville, NC; 100 employees) - Family owned manufacturer of military parachutes. The presentation focused on similar goals and concerns as Que Pasa. They face the challenges of information leaks (ie. union leaders), high turnover rates, multiple languages spoken in the plant, and many workers with no high-school education. The team laid a plan to identify "public" numbers for the workforce vs. "private" numbers for the management team. Interesting discussion about the challenges of communicating in a simple and visual manner to the various languages and education levels. With high turnover rates and absenteeism, it will be interesting to understand the education challenges they will face, as education will need to be more frequent.


    General Parts International (GPI) - The largest privately owned company in North Carolina, they provide auto parts distribution to retail stores and service shops. GPI has two business units, WORLDPAC and Carquest. WORLDPAC had implemented a open-book management style in 1995 and grew the company until it was acquired by GPI. The presentation discussed a plan to take the OBM success at WORLDPAC and look at a plan to implement it in portion of Carquest and GPI. Monthly operating results are shared monthly with Directors and above. Month-end and Daily sales data is shared with all managers. "Critical Areas" were identified across all upper-management.

    Overall this was a good mix of small and large companies, public and private. While not all of these plans may get put into place, it forced each of the teams to think about how they could focus each department of a company on their primary ability to effect the bottom-line and the health of the business.

    Wednesday, March 18, 2009

    How the Internet effects your Business

    I've written about the demise of newspapers and broadcast television before. Most discussions about the evolution of media sources is tied to the economics that get changed because of the Internet. But I was listening to The B.S. Report: 3/13 this morning, and Bill Simmons and Chuck Klosterman had an interesting discussion about the cultural aspects of why people tend to gravitate towards the Internet. At ~45 minutes, it's worth a listen. And no, you don't have to like sports or know about sports to connect with the discuss.

    Beyond the discussion of the need to have information immediately (or gratification immediately), it touches on several issues that we've discussed in StratMktg. How do you react to competing business models? How do your customers perceive value? Can you still create revenue opportunities or provide "perceived value" if your primary product is free?

    Tuesday, March 17, 2009

    Thanks for Visiting


    Things have been pretty hectic lately between family emergencies, work and school, so I haven't had a chance to publish much over the last couple of weeks. I have a number of posts queued up once the MBA readings are complete and the fire drills subside, so for now I'll just post this picture. It shows all the places where people have come from that visited the blog. I assume some were a mistake because of a search result, but none the less it's still fun to see such international interest. I've been lucky enough to talk to some of the people and it's been an interesting experiment.

    On a side note, I think this would be a fairly strong position in the game RISK. Maybe after the China trip, I'll be able to better cover the east Asian flank.

    Sunday, March 15, 2009

    The Chinese Assimilation begins tomorrow AM

    Well, not in the cool Dollhouse sense of assimilation, but as close as I'm going to get in 2 months in preparation for the International trip in May.

    My Rosetta Stone Level 1 Mandarin showed up this weekend, and I've blocked off 30 minutes a morning from now until May 9th to learn as much as possible. I'm actually 2 months behind on my New Year's Resolution, but life's been a little bit hectic lately. I'm not expecting miracles, but it's a starting point in a longer journey. At a minimum, I need to get a little bit fluent (whatever that means), because as soon as my 4 year old gets a hold of this, I suspect that she'll be fluent in 6 months.

    Wednesday, March 11, 2009

    How Open Systems Change Economies

    One of my favorite activities is thinking about ways in which radical ideas can completely change existing rules. While this typically doesn't happen as a "radical change=new rules" model (not that simple), what does frequently happen is a small change with built-in flexibility can radically change the rules. The secret ingredient is typically to allow people (users/partners/etc.) to be able creatively modify the change, usually in ways that you never image.

    I was originally going to write about this topic because I'm exploring certain aspects of the Freemium business model for my Strategic Marketing course. With the drop in online advertising due to the economic downturn, I'm interesting in exploring how companies that have grown through Freemium (or just Free), will survive. Will their growth drive enough ad revenue, even at low CPMs? Will they begin to charge for corporate usage or partnerships? Or will they develop new business models that change for newly created value (whatever that might be)?

    Reading through the blogosphere this evening, I came across this interesting article about how the adoption of cell-phones in Kenya, and the subsequent creation of phone-minute based economy has evolved the country. Nobody could have predicted that the country would begin using a non-currency as the currency for trade, but it happened because the originators of the system allowed it to remain open, even after it began expanding beyond their original model. It allowed the market to define their own "value" and evolve around it. The incredible line in that piece was,“Within about a year, (Safaricom) became the biggest bank in East Africa.”

    Imagine if your company had that opportunity placed in front of it? Could you react to that much change? Would you be willing to allow that much change to happen?

    Tuesday, March 10, 2009

    Question of the Week - Where's your next emergency?

    During these challenging times, it's often difficult to focus on anything but survival. How to keep today's customers; how to make this month's payroll. Seth Godin's recent blog, about realizing game changing trends, got me thinking about what my company needs to be thinking about as we adapt to the "new normal" that comes out of this economic crisis.

    I always like these types of exercises because not only do they force you to focus on what could completely change/destroy your current company, but it typically also leads to some thinking about how to create a company that could bring about that emergency. Especially in the technology world, the barrier to create that emergency is becoming lower and lower.

    Sunday, March 8, 2009

    Open Book Management - Brian Healy - Kindermusik

    Over the weekend, our MgmtAcct course was enhanced through a visit by Brian Healy (SVP/GM) of Kindermusik International. One of the topics that we've explored in class is Open Book Management, and how it may be a model that students should consider implementing in portions of their companies.

    Mr.Healy was also a co-founder of Hooked-on-Phonics, so his perspective on managing a start-up and a global company addedOBM breadth to the discussion.

    Some of the topics that interested me were:
    • OBM isn't just a management style (process), it must be ingrained in the culture to be successful. People need to be trained, encouraged, and reminded how it helps impact the business.
    • OBM requires investment by the company in $$ (training) and time. We spoke quite a bit about how mentoring and listening are needed to make this successful.
    • OBM makes each person accountable for their area, on a weekly (or monthly) basis. It forces people to know their role/area, and be accountable for not only that area, but the other areas of the business it impacts. Some people strive in those environments, while others can't handle the visibility. OBM requires the right type of people (see "culture" above).
    • As difficult as it might sound, it is possible to find a "critical number" for each group (and person) in the company. OBM forces a company to go through that thought process, and I suspect that the result is it forces everyone to think very hard about what value they bring to the company.
    There was much more to the discussion, but those are the key points I'l take way with me. In addition to being a very honest and candid speaker, Mr. Healy clearly showed that he enjoyed making an impact on the world in ways that make people better. This was inspiring. It's about making money to pay the bills and satisfy shareholders, but it's even better if you leave behind something better than you started with. It's obvious that Mr.Healy and the good folks at Kindermusik are doing that. Sounds like it would be a fun place to work.

    Thanks also to Dr.Beatty for arranging the visit.

    Below is a segment of the presentation that was given in addition to the discussion.

    Discussion of the Week - "What's your hustle?"

    Fortune's latest issue has a list of the 100 Most Admired Companies. But the introduction to the article says that being most admired in today's economy is like being "World's Most Trusted Con Men", or "World's Nicest Pit Bull". Their point was that admiration for today's corporations is near an all-time low, both from the public and from employees.

    Around 1am on Saturday morning, somewhat blurry-eyed from the FinMgm't case, a classmate and I started talking about how much we trust our current employer and what our future plans might be. Both of us quickly agreed that even the best employees were probably foolish to believe that their employer would keep them around if market conditions changed. The trust between employees and companies has been destroyed over the last 10 years (and especially of late), and that the relationship is ultimately just contract work, breakable at any moment.

    Smart people will say that this is common sense, that you shouldn't expect anyone (or a company) to take care of you. I completely agree. We both completely agreed. So, the discussion progressed to how we hedge against having our current contract broken, and more importantly, what are we doing to have the next opportunity ready to hit the ground running? While I'll keep the details of the plans to myself, it became very obvious to both of us that they needed to start now (as a 3rd job, after the paying one and the MBA), and that it needed to leverage the Internet in many ways for the scale. And based on where the discussion went, I wouldn't be surprised if a few of these future hustles didn't interconnect or intertwine in several ways.

    T-minus 2 months to International Trips

    Our international trips are starting to get more and more real. This weekend was the final date to get in all paperwork for visas (and whatever else we signed off on). It's now just two months away. It's still a long time before the WFU MBA classes (all programs) head off to China, Japan or South America (Brazil/Argentina/Chile), but the level of discussion and anticipation is definitely starting to rise. (NOTE: The India trip was cancelled due to lack of interest. Unfortunately, the "final choice" date happened just a few weeks after the Mumbai bombings, so I suspect the uncertainly doomed the trip. It's too bad, it sounded like a very interesting adventure.)

    Personally, I'll be heading to China. We're going to Beijing, Xian, Shenghai, and Hong Kong, and the trip lasts roughly 14 days. I'm already starting to make some plans with friends in Shenghai (from high-school and previous jobs), but I'm woefully behind my New Year's resolution to learn some basic Mandarin. Note to self - get on the stick and order that Level 1 Rosetta Stone Chinese this week!!

    It should be a great trip for everyone. The China trip has about 45 students, and only 6-7 from the EXFT class, so it'll be a great chance to meet about 40 new people from our Full-Time, Evening and Charlotte programs. And to have an experience like this with all these new people is exactly why this was one of the top reasons I decided to go back and get my MBA after all these years.

    Pajama Saturday - Kudos to Chris Basinger!!

    It started as a small idea, after a few cervezas, while singing along with the local cover band at the local Wild Wing Cafe. How do we make the next 10-11 months more interesting? Especially since we'll be in Winston-Salem during numerous weekends when the weather will be way too nice to be sitting in a classroom.

    The first idea didn't work out very well (sorry Matt, my bad!!), but Week 2 was much more successful. Thanks to our local Ralph Lauren Polo manufacturers' representative (and classmate), Chris Basinger, everyone in the class is now the proud owner of a new pair of Polo Sleepware Pajama bottoms. Incredibly comfortable, I highly recommend them as a gift for birthdays or Christmas.

    In addition to making everyone more comfortable while sitting in class, they also seemed to raise the ire of our ITMgm't professor (and Asst.Dean), Dr.Iacovou, which is always fun:) Apparently we need to keep this confined to Saturday's, so our bad habits don't rub off on those impressionable full-time students who are bright-eyed, full of dreams, and responsible for driving the ranking of the overall program. OK, we'll play nice. But that doesn't mean that Toga Saturday in April or May is not a possibility!!

    So a big thanks to Chris for making our Saturday more comfortable, and thanks again to Team 7 for breaking the mold and having a little fun.

    [NOTE: We still haven't figured out the double-secret probation penalty for the people that took the PJs but didn't wear them....you know who you are!!]

    What an MBA program should be like!

    We're about 8 months into the program, and we finally had a weekend that was what I had expected the program to be like. Don't get me wrong, the program so far has been very fun, and we've learned quite a bit from both professors and classmates. But this weekend was just a little more rich, a little more complete in terms of the entire experience.

    Here's a few of the highlights:

    Every class spend much of the time working through cases. I've stated my preference for case method learning before, and this weekend was an excellent example of the types of learning and discussion that can occur when it's focused around multi-facted cases. OpsMgm't focused on capacity planning (for manufacturing & service industries); ITMgm't focused on runaway projects and outsourcing; MgmtAcct focused on companies that are looking at techniques like Open Book Management and Beyond Budgeting; and FinMgm't focused on capital budgeting for multinational companies. Great discussions of the issues within the cases, intermixed with healthy arguments of opinions and personal experiences from classmates. The prep work and actual discussion can be exhausting, but I feel like we learn so much more from this method.

    In our MgmtAcc't class, Dr.Beatty has been talking about Open Book Management (OBM) throughout the semester as a topic that student may want to consider evaluating for their work environments. In fact, our final exam is being dropped in favor of a OBM project to create a plan to introduce OBM into one of the companies without our group. Our project (Team 5) will be for General Parts International (Raleigh, NC), a $3-4Byr privately-held company, where teammate Matt Johnson is a Sr.VP. After sending us a recent WSJ article on OBM, Dr.Beatty realized that Kindermusik (referenced in the article) was a local company and arranged to have their EVP/GM (Brian Healy) visit class and give us an overview of how they implement OBM within their organization. Mr.Healy did a tremendous job of sharing experiences and taking Q&A about how OBM helped shape the culture of Kindermusik, and focus each individual in the company on the "critical number" necessary to make that portion of their business successful.

    The evening before our FinMgm't class, the amount of discussion between teams in trying to pull together all the information and analysis of the Whirlpool case was excellent. We were literally walking back and forth between rooms in the hotel comparing notes, debating analysis, struggling with how to handle missing data or assumptions, and generally putting in a ton of time for a piece of homework that effects a very small portion of our overall grade. By 2am we were completely blurry eyed and exhausted. But the journey was well worth it. Not only did we each learn quite about about the concept (capital budgeting), but I think we broke down a couple of mental barriers between the teams.

    A few weeks ago a few of us where out late, signing Bon Jovi's "Living on a Prayer" with the local cover-band, and started talking about some ways that we could have a little fun and bring the class together a little better. Sometimes we get too focused on school work. The first attempt fell short (sorry Matt Kirk!!), but this weekend's Pajama Saturday turned out to be a big success. I'll get into that more later.

    The 1st annual EXFT Ping-Pong Singles tournament reached the finals. This is our unofficial break-time activity. Congrats to Gregg Lewis and Brian Turner for reaching the finals. We're looking forward to the match next weekend.

    So all-in-all a really great weekend. Lots of variety, lots of interaction within the class and outside of class, and I think the group is continuing to come together quite a bit more. It's a great bunch of people and a program that I'm proud to be a part of.