Archive for January, 2008

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Yahoo having trouble with the vision thing

Wednesday, January 30th, 2008

Something in this NY Times Bits post about Yahoo’s downbeat earnings call and resulting stock swoon reminded me of a book I’m reading now. Here’s the bit that triggered the connection:

…Mr. Yang and Ms. Decker’s strategy is essentially “vision goes here.” They want to be the “starting point” for users on the Web. They want to be the “must buy” for advertisers. And Mr. Yang said he would assume an “aggressive investment posture.”

The only thing missing from that is the substance. Why would users start at Yahoo? How are advertisers going to find Yahoo superior? And what will the company invest in?

…Maybe Yahoo simply has a communication problem. Perhaps it will emerge with great products for users and advertisers. But my take is that it will be much harder if its customers, employees and stockholders don’t understand what it is doing and why they should care.

The book is “Executing Your Strategy” (I’m going to have to post on clunky titles affixed to good business books) by Mark Morgan, Raymond Levitt and William Malek. The book says that to create a vision, a company must answer three critical questions. These questions drive and prioritize the handful/dozens/hundreds of projects that will help the company achieve its strategies. They are:

  1. Who are you?
  2. Why are you here?
  3. Where are you going?

From the earnings announcement and conference call, if Yahoo has deeply considered and answered these questions, they’re not saying.

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Posted in reading list, strategy | Comments

700Mhz auction: who will be coming to Harrisburg, PA?

Wednesday, January 30th, 2008

Depending on whom you read, the auction is making good, predictable progress or barely inching forward. I agree with the former. The nationwide C-block package, the one with open-access requirements, is approaching its reserve amount. The total bid is closing in on the pre-auction estimates of “over $10 billion.” All this with less than a week gone. So I think we’ll be fine, in spite of the slow bidding thus far for the D-block, public safety band.
So the real question is:

If the 700mhz band is wireless “beachfront property,” then who wants to build a trashy wireless boardwalk in my town, Harrisburg, PA?

For answers, I turn to Greg Rose’s Econoklastic blog, which has been the most insightful resource I’ve found about the auction, and the stories behind it. Greg has done a sprawling, six-part post (1, 2, 3, 4, 5, 6) on who might be bidding for which slices of spectrum. What does Greg think about Harrisburg, or, more specifically, the Harrisburg-Lebanon-Carlisle A- and E-block components?

Verizon will be aiming at the nationwide license bundle. But others, such as MetroPCS, Cricket, and Alltel, who need to fill in coverage gaps might be interested. While most of these folks would prefer the larger B-block licenses, they will use the A’s and E’s as fallbacks.

How about cable companies? Sorry, no. The qualified bidders (Cablevision, Cox, Advance/Newhouse) are expected to stay in their regions. Our dominant cable provider, Comcast, is sitting the auction out.

Chevron, a wild card? Greg expects them to target offshore regions where their oil platforms reside.

And, of course, Google. They are aiming at the nationwide C-block package. I for one really want the opportunity to buy a Google phone and subscribe to Google service. I can’t imagine what that would be like, except I’m pretty sure it wouldn’t resemble the wireless experience as we know it today.

We can only hope they’re successful…

(Photo by weirdvis)

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Posted in 700MHz auction, Google, broadband, technology, wireless | Comments

Top 5 Harvard Business Review breakthrough ideas

Tuesday, January 29th, 2008

In which we select the best of the annual Harvard Business Review list of twenty breakthrough ideas (free link) for the benefit of time-constrained executives everywhere. This service is provided at no extra charge.

1. “Here Comes the P2P Economy,” by Stan Stalnaker. Web 2.0 is accelerating a shift to an economy with many, many small sellers.

2. “Task, not time: Profile of a Gen Y Job,” by Tamara Erickson. Young workers are not tied to the clock, or the office. Give them specific tasks and let them do them when, and where, they see fit.

3. “A Doctor’s Rx for CEO Decision Makers,” by Jerome Groopman. A relatively new technique–intensive peer review of failures–allows physicians to detect and understand decision biases that contribute to misdiagnoses. Such a process can help business decisionmakers as well.

4. “The Gamer Disposition,” by John Seely Brown and Douglas Thomas. People adept at multiplayer computer games have qualities (such as desire to improve, appreciation of diversity, and results-orientation) that businesses should be seeking in their employees.

5. “What Good Are Experts?” by Michael Mauboussin. Research and experience with decisionmaking tools such as prediction markets is showing that expertise has a more narrow application than previously thought. Good businesses will assess which tool works better for the problem at hand–prediction markets for probabilistic problems, computers for rules-based problems, and experts for the remainder–and act accordingly.

Bonus “I really didn’t know that” item: “Islamic Finance: the New Global Player,” by Aamir Rehman and Nazim Ali. Despite the seemingly-restrictive rules of Sharia, Muslim law, on investing and charging interest, a vibrant and growing Sharia-compliant financial marketplace has emerged in the Islamic world.

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Posted in Harvard Business Review, decisionmaking, finance, learning, mistakes, organizational behavior, strategy | Comments

How to fix your selling process in 192 pages (not)

Monday, January 28th, 2008

A column in today’s Wall Street Journal boils it down for us: “…[C]ompanies need to ‘reinvent’ the way they sell, to focus on their customers rather than product features.”

Stop me if you think you’ve heard this one before.

It turns out that consultant Ram Charan (best known as the co-writer of “Execution” with Larry Bossidy) has sales in his sights. He has a new book, of course, entitled “What the Customer Wants You to Know,” and is interviewed in today’s “Theory and Practice” column. Here’s a taste of Charan’s wisdom:


The sales function has traditionally been about execution. Most sales people are very good at connecting with the purchasing customer. They get training to know the product. And they beat the competition on price.

Now the world has changed. Copying a product became very quick. You now have competition on the Internet to beat down prices.

It has become very hard to differentiate yourself in the eyes of the customer, for business-to-business sales. So salespeople should not sell the product any more. They should find out what the customer needs, which will be a combination of products and services and thought leadership.

Nothing in the above excerpt is incorrect. So why am I so annoyed?

Because these concepts are more than a decade old. There’s not a single statement in the interview that wasn’t well expressed in the ’90’s by people like Michael Bosworth, and Jim Holden, and Jeff Thull, and others. Hundreds of companies have implemented programs to instill these lessons into their organizations. But apparently we needed Charan to compile these ideas into a new book, and assert they are “reinventions,” before businesses would take them seriously.

Hopefully the book is well-sourced, and credit given to the folks who first developed these ideas. But Charan’s salesmanship gives reason for concern: the book’s website states, “This book defines a new approach to selling—which Charan calls value creation selling—that while radical is nonetheless practical.”

Funny, I first learned that new approach to selling in 1995.

All the above obscures one undeniable fact: despite these methods being well-understood and well-taught, most business selling hasn’t improved significantly. So there’s something much, much deeper impeding improvement in sales.

I just don’t think we’ll find it in “What the Customer Wants You to Know.”

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(If you’re interested in sales improvement, I’d recommend connecting with ES Research, a company with a much richer heritage in sales and sales leadership. ESR assesses many different sales improvement programs and provides information to companies looking to adopt new methods.)

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Posted in Wall Street Journal, sales, sales improvement, sales process | Comments

How is the Getty Museum different from Enron?

Saturday, January 26th, 2008

It’s not a trick question. There may be little difference at all. The Getty is one of several museums that have been accused of systematically acquiring stolen antiquities. (The Getty last year agreed to return forty disputed works to the Italian government.) In today’s New York Times, an article states that staffers at two other LA-area museums knowingly engaged with smugglers wishing to sell antiquities to the museums.

But there’s one difference I see. The Enron spectacle played out on the front pages of the nation’s newspapers. Today’s Times article led off the Arts section. The Enron conspirators received sentences of twenty years or more in prison. By contrast, there seems to be little appetite to “make an example” of those associated with trafficking in smuggled artworks (charges were dismissed against the main figure in the Getty case, though other charged remain open).

Why the double standard? Why is buying smuggled artwork less odious than defrauding shareholders? Are curators somehow too classy to engage in criminal behavior?

Or is that no one cares about fraud in the narrow niche called the art world?

(Photo: a disputed funerary wreath returned to Greece by the Getty Museum in 2006, from Agence France Presse via the Guardian)

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Posted in New York Times, art, crime, fine art | Comments

700 MHz auction – away we go

Friday, January 25th, 2008

The long-awaited (and I mean long-awaited) 700MHz spectrum auction kicked off yesterday with the first two rounds of bidding. To maintain bidder confidentiality and try to prevent gaming the system, individual bidder names are not released–results only reflect the total amount bid in each individual auction.

The bottom line: a lot was bid yesterday, but nowhere near the FCC’s “reserve” amount. This is especially important for the C-block spectrum, which will have open access requirements should the amount bid exceed the government’s target of $4.65 billion (which Google, the most prominent name in the auction, could fund out of petty cash).

The C-block nationwide bid was for $1.2 billion, a tidy sum, but a long way from $4.65 billion.

Some quick facts on the auction method being used:

  • C-block spectrum is segmented into three packages: a “nationwide” license, one covering the Virgin Islands and Puerto Rico, and one covering US Territories in the Pacific.

  • D-block spectrum is in twelve regional segments.
  • Bidders submit sealed bids each round.
  • Software calculates minimum bids required to continue participating in the auction and publishes them. Bidders can choose to place the next bid at the minimum amount or drop out.

And so it goes, until there are no more higher bids. As long as the FCC’s reserve amount is met, the auction is done and the winners pay for their licenses. If it’s not, the licenses are not distributed and we do it all again.

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Posted in 700MHz auction, Google, broadband, technology, wireless | Comments

Don’t let negotiating counterparts overcommit

Wednesday, January 23rd, 2008

The most useful part of Danny Ertel and Mark Gordon’s recent book “The Point of the Deal,” to me, is this lesson: in a negotiation, if you convince the other side to do more than it can reasonably deliver, you have not won anything. More likely, you have set up the project for failure.

It’s easy to say “it’s their problem” when the counterpart agrees to a concession that you demand. But if the concession causes long-term issues for the counterpart, eventually your company will suffer.

Here’s an example: when I was a product manager, we sold a usage-data collection product to a large wireless telecom carrier. It turned out that the service level that the customer insisted on added costs that made the deal unprofitable for us.

We agreed to the service level, and certainly made serious errors. I made some optimistic assumptions about future customers we could sign on, cost efficiencies we would gain with experience, etc., that didn’t occur. We really needed that anchor customer, and stretched too far to get it.

But the point is that, while the customer had a couple of years of getting more service than they were paying for, our problem eventually became their problem. Our company looked at this money-losing account and said, “Something’s got to change,” and they insisted on a price increase. The customer refused–they had not been previously aware of the cost issue. The contract was not renewed, the product was pulled out–even though it was adding value. Goodwill evaporated.

Ertel and Gordon recommend the following steps to ensure that the other side doesn’t overcommit:

  • Avoid extracting pointless overcommitments
  • Adopt an implementation mindset
  • Take the “80/20″ hindsight challenge (identify with your counterpart, while negotiating, the 20% of decisions and commitments which in the future you will wish you had clarified further)
  • Engage with all the key implementation stakeholders


(Photo: “Overload” by brage)

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Posted in dealmaking, negotiation, reading list | Comments

Collaboration or individual leadership? Which is it?

Tuesday, January 22nd, 2008

Collaboration is in. The WSJ Business Insight article “Leading From Below” states, “at most companies, senior managers are increasingly hamstrung by the demand from investors and analysts for immediate results”–requiring middle managers to provide leadership at the company level. Other scholars say dissent in the workplace is to be encouraged. The democratic organization is gaining traction.

You would think that we’ve passed into a new phase of corporate management–leadership by collective. Yet a couple of authors have recently reasserted the importance of individual vision and leadership in business.
In “The Opposable Mind,” Roger Martin celebrates the unique capability of individual innovators. Martin writes, “the most common failing of conventional thinking is the tendency to lose sight of the whole decision. It may be easier to dole out pieces of a decision to various corporate functions, but that ensures that no one will take a holistic view of a particular problem.” (p.46)

And, in the January Harvard Business Review, Cynthia Montgomery of Harvard Business School states that we should be “Putting Leadership Back Into Strategy” (link – $$). Writes Montgomery:

The need to create and recreate reasons for a company’s continued existence sets the strategist apart from every other individual in the company.

Throughout her paper, Montgomery underlines the need not to delegate strategy, but to make it the most important task of the CEO. Strategy-making by committee? Not in Montgomery’s view.

So which approach is correct? I’m stumped. Perhaps the artful company balances a strong, visionary leader with the tools and techniques of collaboration, somehow combining the coherence of a single vision and the power of the masses and the “wisdom of crowds.”

No wonder there are so few brilliant companies out there.

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Posted in Harvard Business Review, leadership, organizational behavior, strategy | Comments

The world’s worst professional services invoice

Sunday, January 20th, 2008

In today’s New York Times, a front-page article in the Business section concerns the legal difficulties of famed plaintiff’s lawyer Richard Scruggs, one of the authors of the multi-billion dollar settlement with the tobacco companies. What caught my eye was the above invoice, sent to Scruggs (or “Dickie”) by PL Blake, a figure in the case.

There is little or nothing tangible exchanged in a professional services transaction. Therefore, the invoice is normally constructed to give comfort to the payer (and its auditor) that the vendor delivered appropriate and valuable services in exchange for the payment.

Given the large amount due and the, say, haphazard way it was put together, invoice #856 sets a new low in the practice.

I wonder what his tax return looked like?

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Posted in New York Times, invoicing, law, professional services | Comments

Hats off to those who made free software into a successful business

Thursday, January 17th, 2008

I have been stuck in Chicago for three hours–snow in Chicago, snow in Harrisburg–and it looks to be at least another two hours before I get out. So, I’ve gotten a glass of wine here in the United Red Carpet Room and am prepared to stay here a while longer.

This is a roundabout way of saying that what I planned to write about, how CEOs cannot delegate strategy, will have to wait for another day.

Instead, let’s talk about open-source software. (”What?” say the readers. “We were expecting something interesting!”) For the uninitiated, open-source software’s programming instructions (source code) are freely available and modifiable.

It sounds like a joke. Imagine coming into a venture capitalist’s conference room, firing up the laptop, and announcing, “Our business sells free software…we’re looking for a first round of $5 million.”

“Get out of my office!” says the venture capitalist.

But today comes news that Sun Microsystems will pay $1B for MySQL, distributor of the free relational database software of the same name. And Bob Young, the founder of another open source company, Red Hat Software (most recent quarterly net income: $20 million) was profiled in “The Opposable Mind” (reviewed earlier this week).

Call it Open Source Week.

So how do open-source companies make money? By packaging that free software into standard releases, providing maintenance and help-desk services, to businesses that want to use open-source products.

The businesses’ IT staffs could download the source code over the internet, compile it themselves, then distribute it to their own servers for installation–all free. But the volume of open source modules and the frequency with which the modules change add up to a major headache to companies who want a stable, predictable environment for their web sites or other applications.

The genius of the successful open-source companies, therefore, was to recognize a value niche between the chaos of truly free software and the large license fees of proprietary software like Windows. They sell open-source subscriptions at a fraction of proprietary license fees–that offer a stable, supported product to risk-averse corporate customers.

Add it up, and it’s worth a pretty penny–or a billion dollars to Sun.

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Posted in open source, software, technology | Comments

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