Different: Escaping the Competitive Herd

I'm about halfway through Harvard marketing professor Youngme Moon's new book titled Different: Escaping the Competitive Herd. The book argues that far too many industries are characterized by herd behavior. In most instances, Moon argues that firms compete themselves to a point where the industry becomes incredibly homogenized, rather than differentiated. Yes, we have many more product choices than ever today. However, she points out that product categories have become a blur to many consumers, with a dizzying area of products that aren't all that different. Brand loyalty has dissipated as companies constantly augment their products to catch up to the competition. Imitation is everywhere.

I'm now to the point in the book where Moon offers examples of strategies for escaping the competitive herd. Her first example is what she calls "reverse-positioned brands." Here is how she explains this strategy: "What this means is that there is a commitment to withholding benefits that the rest of the industry considers necessary to compete. Reverse brands say no where others say yes. And they do so openly. Without apology." At this point, she is echoing Michael Porter's long-time argument the necessity of making tradeoffs, i.e. "the essence of strategy is choosing what not to do." However, she goes one step further. She writes that reverse-positioned brands do "a second thing that is equally audacious. They take their stripped-down value proposition and infuse it with some unexpected form of extravagance." She offers examples such as Google, JetBlue, and IKEA. I think the idea of reversal is intriguing, and I've begun thinking about other examples that I know. I'm sure you may have some. Please comment on the blog and share those if you like.

I'll have more on Moon's book as I continue reading, but I definitely recommend this to business executives and students everywhere. Moon's writing style is terrific, and the insights jump off the page.

Seth Godin on the Demise of Higher Education

Seth Godin has a tremendous blog post today on the "coming meltdown in higher education." This is a must-read for all university administrators, faculty, parents, and students. Godin makes a number of interesting points, and I think he's right about rankings and accreditation. Rankings and accreditation bodies have actually contributed to an increasing homogenization of higher education, while costs continue to rise faster than wages. As Godin writes, there's an increasing "sameness" to the education offered at universities. Everyone is focused on the same small set of variables in the rankings, and they are all trying to meet accreditation standards that often leave little room for truly breakthrough, innovative strategies. Standards and rankings have reduced differentiation in the marketplace of higher education, which cannot be a good thing. I'm not suggesting that we abolish rankings or accreditation bodies... we need both, but at the same time, universities need to think more creatively about how to break away from the pack. Herd behavior is everywhere in higher education, and that does not benefit anyone.

Apple Acquires Intrinsity

According to the Wall Street Journal, Apple has acquired start-up chip technology firm Intrinsity. The article explains that, "Some analysts believe that Intrinsity's technology is used in the A4, the Apple-designed chip used in the new iPad." As my students have learned, such an acquisition represents an example of backward integration, i.e. a firm choosing to produce its own components.

In general, I'm skeptical of vertical integration because I believe firms should pursue focused strategies and allow other companies to specialize at points of the value chain in which they have unique and superior capabilities. Moreover, I believe the transaction costs of using the market often are low enough that contracting with outside parties for component manufacturing makes more sense than in-house production.

However, this particular acquisition may have great benefits for Apple. Let's step back and look at several valid reasons to backward integrate. First, firms may do so to enhance the differentiation of their finished product. Apple certainly may want to own a chip technology firm for this reason. Second, firms may backward integrate so as to foreclose access to key inputs for key rivals. Apple may choose to keep certain innovations in chip technology away from competitors. Third, firms can benefit from backward integration if they find themselves in a situation in which asset specificity exists. What does that mean? Well, suppose that Intrinsity has to invest in assets and capabilities completely specific to Apple in order to supply parts for the iPad. Moreover, suppose Apple cannot secure that technology from any other supplier. Both firms would be beholden to each other because of assets specific to each other. That mutual dependence creates the potential for contracting difficulties if they remain independent. A solution to such challenges would be to bring the two firms together, i.e. an acquisition or merger. Thus, we have a potentially very strong rationale for backward integration in this instance.

New Teaching Company Course

The Teaching Company just launched a new course titled "The Art of Teaching: Best Practices from a Master Educator." Emory University Professor Patrick Allitt delivers this series of lectures about teaching excellence. I'm very proud to have been one of six faculty members from around the country that Professor Allitt profiled as part of his course development work. He came to Bryant back in the fall, videotaped me teaching a Disney case study, and then interviewed me and four of my students. He has interspersed clips from that day with us at Bryant throughout his lectures. I just received my copies of the course, and I'm enjoying listening to Professor Allitt explain his perspective on the art of teaching. Every educator should have interest in this new course (and no, I'm not plugging it because of royalties - I don't receive any from this course!).

Financial Regulation and the Establishment

From Greg Mankiw's blog:

A Great Sentence From David Brooks (New York Times):

The premise of the current financial regulatory reform is that the establishment missed the last bubble and, therefore, more power should be vested in the establishment to foresee and prevent the next one.

Journal vs. Times: Murdoch's Battle

Yesterday, the Wall Street Journal launched a frontal assault on the New York Times with the introduction of a metro section covering local New York City news. The managing editor of the Wall Street Journal made some harsh remarks about his rival in the UK's Guardian yesterday:

He lambasted the journalism of the New York Times, citing an average piece as one that began with a theme and then worked backwards to facts. "Themes should emerge after a thorough going-through of the facts, not the reverse, and readers can see through this sort of journalism which is why so many have lost faith in it." He dubbed NYT journalism as "social activist journalism", complaining it had done much harm. "If you want to be a social activist, join Amnesty International." And he went on to castigate the "journalistic elite" which he said had "all the ossification of the traditional bourgeoisie".

From a business standpoint, the key question is: What will happen to advertising rates in the New York metro area? Here, economists and business strategists like to use game theory to think about the answers to that sort of question. After all, we have a competition between two rivals, each trying to anticipate what the other will do in response to a particular action. Game theorists might speculate, for instance, on the likelihood that both parties would engage in a price war, or perhaps avoid one and come to a more cooperative solution.

However, this particular rivalry poses a problem for game theorists. Why? Murdoch and his team clearly aren't thinking "rationally" from an economist's perspective. By that, I mean that they aren't necessarily thinking purely in terms of near-term profit maximization. Murdoch and his team, as evidenced by the quotes above, may have some other non-economic motives in this fight. Moreover, Murdoch tends to take a long term view in his competitive battles, which means he has a history of taking less profit for long stretches so as to damage an opponent. Having considered Murdoch's motives and personality, we now might come to a very different conclusion than the pure game theory models might predict. Will this be an aggressive battle? Almost assuredly. Will it be fun to watch? Absolutely!

Pixar President Ed Catmull

Recently, Martin Giles of The Economist conducted a terrific interview with Ed Catmull, President and co-founder of Pixar Animation Studios (creators of hit movies such as Toy Story and Finding Nemo). It's a lengthy interview, but it's definitely worth watching - particularly for all those interested in making their companies more creative and innovative.

Still Government Motors: Don't Let GM Fool You

Over the past few days, GM CEO Ed Whitacre has made quite a splash with his pronouncements that GM has paid back the entire $6.7 billion loan it received from the U.S. and Canadian government. When I first saw his op-ed in the Wall Street Journal, as well as the advertisements GM placed in major papers, I was a bit puzzled. I knew that GM had taken much more than $6.7 billion in aid. How could Whitacre be claiming that GM had paid the government back, with only this $6.7 billion remittance?

In today's Wall Street Journal, Paul Ingrassia explains. As he points out, the overwhelming majority of federal assistance DID NOT come in the form of loans. Instead, it came in the form of an equity investment. That equity stake equates to more than $50 billion of taxpayer dollars.

I think Whitacre and GM should have been much clearer in their joyous pronouncements. As Ingrassia writes, "Mr. Whitacre should have acknowledged that directly. He would have enhanced the company's credibility compared with the old GM, which seemed to declare victory every other week even in the face of disaster." I think Ingrassia is correct, and frankly, he's being kind in his assessment of GM's actions this week. The company should have been FAR more straightforward with the American public. GM is still Government Motors until we see a public offering, or some other transaction, which enables the taxpayers to extricate themselves FULLY from this company. It has hardly paid the taxpayers back in full.

Reforming the NFL Draft

Well, tonight kicks off the NFL Draft. Football fans always get excited this time of year to see who their team will be adding to the roster. Of course, the draft can be very frustrating for NFL teams, as they have to spend a great deal of money on players at the top of the draft with a substantial likelihood that the player will not work out. What, though, does the NFL draft have to do with business (other than the obvious fact that the NFL is big business)? Let's turn to today's Wall Street Journal to find out.

In today's WSJ, Reed Albergotti writes about how economists believe they could design a much more effective system for allocating college players to professional teams. In fact, a number of economists have deep expertise helping to design programs such as those that match medical school graduates with hospital residencies. These programs work quite effectively. Alvin Roth, one of the preeminent scholars in this area, explains the power of matching in this way:

"Matching is economist-speak for how we get the things we choose in life that also choose us. You can't just choose a selective school or a job—you have to be admitted or hired—just as you can't simply choose your spouse, you also have to be chosen. Matching is one of the big things that markets do. Markets don't just determine prices, they also determine who gets what. For commodities, the price does most of the work, but many markets, like labor markets, don't clear by price alone. You don't hire just anyone who is willing to work at a given wage, you interview applicants carefully and try to find, and woo, the best ones...For doctors, the marketplace for new graduates has been organized into a centralized clearinghouse that makes efficient matches in students' last year of medical school. (I had the privilege of designing the current clearinghouse algorithm.) Medical marketplaces for subspecialties like gastroenterology are increasingly able to use similar clearinghouses. Some of the same matching technology is now also used for assigning children to New York City high schools and to Boston schools at all levels."

Three of Alvin Roth's proteges at Harvard have attempted to apply matching principles to the NFL draft. They believe that they have designed a solution that would be much more efficient than the current draft system. Under their proposal, each team would still have seven selections. However, they would simply be given a spending limit, and then allowed to participate in an auction for players. One team might spend 80% of its money on one player, while other teams may choose to spend their money much more evenly across seven players. To help promote competitive balance, teams with poor records in the previous year would have higher spending caps.

I'm certainly a believer in using markets to find more effective ways to allocate resources. I also know that the current draft system has many flaws. Of course, I also believe that this auction proposal would be highly entertaining. That should make it very attractive to the NFL. After all, the NFL has made quite an event of the draft in recent years, in partnership with ESPN. This year, the draft stretches over three days, with prime time coverage tonight of the first round. Imagine Chris Berman and Mel Kiper's excitement if an auction replaced the current system. They would be jumping out of their seats!

Will Dodd Bill Hurt Angel Investing?

In this Business Week article, contributing editor Chris Farrell questions whether the Dodd financial reform bill could damage angel investing. He points to three particular provisions in the legislation that could decrease the amount of angel investor activity. Farrell rightly argues that angels are crucial to entrepreneurial activity and economic growth in the United States.

A recent study by scholars William Kerr, Josh Lerner, and Antoinette Schoar sheds further light on the importance of angel investing activity. In their study, summarized on the HBS Working Knowledge website, the scholars summarize their findings from a recent study. They conclude that:

"Angel-funded firms are significantly more likely to survive at least four years (or until 2010) and to raise additional financing outside the angel group."

"Angel-funded firms are also more likely to show improved venture performance and growth as measured through growth in Web site traffic and Web site rankings. The improvement gains typically range between 30 and 50 percent."

"Investment success is highly predicated by the interest level of angels during the entrepreneur's initial presentation and by the angels' subsequent due diligence."

"Access to capital per se may not be the most important value-added that angel groups bring. Some of the "softer" features, such as angels' mentoring or business contacts, may help new ventures the most."

Does GE Have a Leadership Problem?

Business Week's cover story asks: Can GE Still Manage? The story points out that GE's market value has been cut in half over the past ten years. The question is: What's wrong at GE? In the article, author Diane Brady focuses on leadership development at the company. She interviews a number of experts who question whether GE has fallen behind the times in the area of leadership development.

I would like to offer a different perspective. Perhaps GE's problem is not in the area of leadership. Perhaps GE has a strategy problem. My question is: Does GE's unrelated diversification strategy still make sense in the year 2010? Can this $157 billion conglomerate be managed highly effectively by anyone? Before GE tackles a transformation of its leadership development approach, it needs to determine whether it has the right strategy for the decades ahead. The corporate strategy will drive what types of leaders it will need moving forward.

Weinsteins Reacquiring Miramax from Disney?

The Wall Street Journal reports this morning that Harvey and Bob Weinstein are discussing the possibility of acquiring Miramax Films from Disney. For those who do not know the history here, the Weinsteins sold the Miramax studio to Disney back in the early 1990s, and they continued leading the studio for many years thereafter. They earned a large number of honors and awards for films such as Pulp Fiction. Then, in 2005, Bob and Harvey Weinstein left Disney to launch a new studio. Disney continued to operate the Miramax studio.

Why would Disney choose to sell? The real question is: Why did Disney own Miramax in the first place? Yes, it was a hugely successful operation when the Weinsteins ran the studio. However, one has to wonder whether Miramax ever fit the Disney brand image. What precisely were the synergies between Miramax, and say... the theme parks? Miramax, after all, was known for making many R rated films with violence, sex, etc. I understand that Disney helped Miramax a great deal in 1993 by helping them secure much wider distribution for its films. However, other entertainment companies could have achieved this, without the image issues associated with Disney owning Miramax. Then, of course, the question comes up about how much value the Miramax studio had without the Weinsteins. Once they left, did Disney have the talent to run the studio as successfully as the two brothers had? After all, most Disney executives led businesses with a very different strategy and brand image.

The potential Miramax sale continues a refocusing that has taken place under CEO Bob Iger. He continues to go back to the earlier strategy of striving for synergies associated with character development. Thus, he has acquired firms such as Pixar and Marvel. He has not simply pursued a broader entertainment diversification strategy, as Eisner did in his later years at Disney. Disney's strategic reorientation provides more powerful linkages among its businesses and the potential for larger economies of scope. Moreover, the firm avoids many of the conflicts and risks associated with owning businesses that diverge significantly from the core animation business.

Teaching Leadership

I spent last night walking in our campus Relay for Life at Bryant University. The experience both emotional and exhilarating. As I watched the student leaders who organized the event, I beamed with pride. They are truly extraordinary young people. What did they learn from this experience? Perhaps, they learned more than they ever could from a textbook or lecture. Undoubtedly, they developed their organizational skills as they put together this event. They learned how to lead and motivate people, as well as how to work together as a team. As I watched them during the night, I observed tremendous public speaking skills, as these young people addressed the large crowd numerous times. Perhaps most importantly, I believe events like this prove seminal events in the character development of our students.

As an educator, I have always believed that much learning occurs outside the classroom. At too many universities, though, such extracurricular activities remain divorced from what goes on inside the classroom. To truly offer transformational educational experiences, we need universities that effectively marry the classroom experience with such events and experiences so that they are truly co-curricular. That means instructors have to be involved in the activities and events organized by students and the student affairs staff at colleges and universities. That means instructors have to use these types of events as an opportunity to facilitate dialogues about leadership with their students, and to help students reflect on what they have learned during these experiences. These experiences can be powerful leadership development experiences, but to be optimal, students and instructors should come together to help students reflect, learn, and develop for the future.

Baggage Fees

On Tuesday, Harvard Business Review reported (via their iPhone app's stat of the day) that airlines experienced a 23.8% decline in lost bags last year. According to transportation IT firm SITA, airlines saved over $400 million because they lost fewer bags. Of course, the baggage fees drove these changes, as people checked far fewer bags. The airlines seemed to create a double win, collecting fees for checked luggage plus generating savings from fewer lost bags. However, I'd like to see one other statistic: how much additional revenue did Southwest generate through its "bags fly free" ad campaign? Did this swamp the cost savings and fee revenue other airlines generated?

Video Games: Setting Talent Free!

This article at Fast Company's website discusses an emerging trend in the video game business that may pose a serious threat to the large gaming companies. The article describes how Seamus Blackley, the head of the video game division at Creative Artists Agency, wants to empower the "star" game developers. In the past, these designers worked as employees of large video game firms such as Electronic Arts. If Blackley's vision becomes the reality, then the video game business will become more like the movies. Video game developers will become free agents rather than employees. Games will not necessarily be developed and sold by a single publisher who owns 100% of the rights to the game. Instead, a star designer may partner with multiple entities, and bond financing may be used to fund the development effort.

What does all this mean? For starters, talk about an increase in supplier power! After all, star developers are suppliers to the large video game companies. If CAA's model takes hold, then these stars will have a great deal more leverage relative to the large publishers. In addition, if the new financing model takes hold, perhaps we will see a surge in new innovation in the market, as creative new ways emerge to fund great ideas.

Lousy Self-Evaluators

In the Heath brothers' new book, Switch, they describe how individuals are afflicted by positive illusion. In their words, we are lousy self-evaluators. As a result, we may not be ready to change, because we are often delusional about our own current strengths and weaknesses.

The authors describe a startling experiment by psychologists Peter Borkenau and Anette Liebler. They called it the Fake Weatherman study. The scholars brought a fake weatherman into a room full of people, and that person gave a 90 second weather report. The folks in the room then had to guess the weather reporter's IQ. They also asked the fake weatherman to guess his own IQ. What did they find? Amazingly, the observers offered far more accurate predictions than the weathermen, even though they knew nothing else about these complete strangers!

The inaccuracy of the weathermen's self-evaluations demonstrates the power of positive illusion. To make change happen, we have to deal with the fact that people often maintain a very rosy assessment of their own capabilities.

Think Like a Child

In the famous ABC news program featuring IDEO, the top notch product design firm, we hear about how it's a very playful place to work. One of the founders talks about how being playful is key to being creative. The company designs a great deal of toys, and it keeps lots of toys and games around the office. Play and work come together all the time at IDEO.

Now, we hear about some science that backs up the notion that being playful may indeed spur creativity and innovation. In the Boston Sunday Globe's Uncommon Knowledge section, we read about a study done by two psychologists (D. Zabelina and M. Robinson). These scholars found that they could induce more creativity on the part of college students if they encouraged them to think like a seven year old. The lesson for firms who want to be innovative: Perhaps one can spur creativity by creating environments that make people think, feel, and act less like stiff, proper adults and more like imaginative, playful children.

Mulally: Ford Dealerships like Apple Stores

Can Alan Mulally, CEO of Ford, remake the auto purchase experience? He's going to try. In this video, he explains how he would like a visit to a Ford dealership to feel like walking into an Apple store. That clearly represents a lofty goal, but an admirable one. We all know that buying an automobile, for the most part, feels about as enjoyable as going to the dentist for most of us. Can Ford reshape that experience? If so, they will have a leg up on the competition. Mulally clear understands that rebuilding Ford requires more than just making higher quality, more attractive cars. He also has to connect with the customer in a more powerful way. He has to make that purchase experience more positive. Can he do it? Changing the culture of dealerships will be an uphill climb, but his turnaround efforts to date make me unwilling to bet against him.

Barbie the Computer Geek

The Wall Street Journal has an interesting story today about Mattel's efforts to involve Barbie fans in an online election as to what the next Barbie doll should be. Mattel offered the following options: anchorwoman, architect, computer engineer, environmentalist and surgeon. Not surprisingly, girls voted heavily for the anchorwoman. That's not the end of the story though. Female computer scientists around the world came together to vote heavily for the computer engineer Barbie. The viral campaign involved more than 1,800 tweets in the month of January alone. Soon, the adult involvement caused computer engineer to pass anchorwoman in the vote totals. In the end, Mattel decided to make both dolls.

This incident certainly demonstrates the power of social media once again. However, it also speaks to one of the key challenges facing Barbie as a brand in the past few years. On the one hand, many new competitors have emerged for young girls' attention. At the same time, a substantial group of mothers have concerns about Barbie in terms of the message being sent to their children at times (in terms of body image, for instance). So, the young girls want the computer engineer in pink, though some of the adult professionals bristle at the color choice. The trick for Mattel: Continue to attract young girls while not alienating their moms. It's not an easy balancing act. This story illustrates Mattel's challenge quite well. Many toy companies face a similar balancing act as they build brands and develop products.

Kindle, iPad, and Switching Costs

I'm quite intrigued by the Kindle app designed for the iPad. Several months ago, my wife purchased me a Kindle. I love the device, particularly when I travel. With the introduction of the iPad, I began thinking about the issue of switching costs. Would I be reluctant to buy an iPad because there would "costs" associated with switching platforms. Specifically, I worried that I would not have access to all the books I've purchased from Amazon on my Kindle. Well, with the Kindle app, those switching costs go away. You can read your Kindle e-books on the iPad with no trouble at all. iBooks purchased from Apple's e-book store cannot be read on the Kindle at this time. It's relatively rare to have situations such as this one, where the switching costs are not symmetrical. Clearly, this situation may make it much easier for folks to abandon their Kindles and adopt the iPad.

This conclusion about switching costs leads to one obvious question: Why would Jeff Bezos and Amazon decide to make it so easy to switch? Clearly, Amazon wants to be a big player in the e-book market. While they would like to also be a key player in the e-reader market, they don't want to lose out on the e-book market of the future simply because they are trying to protect the Kindle device sales. By making the Kindle app for the iPad and iPhone, they insure that they can compete on multiple platforms for e-book customers. They avoid simply forfeiting all iPad consumers to Apple.

How about Jobs? Is he happy about the Kindle app? Sure, he's quite content in many ways. After all, Apple's iStrategy involves making hefty margins on each of these devices. The broader the array of apps and digital content (music, books, movies), the more likely consumers will purchase high-margin devices such as the iPad from Apple. Since Amazon's e-book library is larger than Apple's at this time, the Kindle app can be helpful in increasing adoption of the iPad.

Ryanair: Paying to Pee

Well, Michael O'Leary has done it. O'Leary's airline, Ryanair, will indeed be charging customers to use the bathroom - an idea it first floated last year. At the same time, the firm will be removing several of the bathrooms on board its planes to make room for a few additional seats. Everyone knows that the airline business has high fixed costs and very low marginal costs. With each new effort to reduce costs and find new sources of on-board revenue, Ryanair continues the move toward a day when the marginal cost of a passenger on board one of its planes might be zero. For those not familiar with O'Leary, take a look at this video:

Will Customer Service Suffer?

I have a question to pose to my readers today: Will customer service at many companies suffer as we emerge from this recession? Now, why would I ask this question... Many firms have reported strong earnings in recent months, surpassing investor expectations on numerous occasions. These firms have cut costs dramatically during the recession, in large part due to employee reductions. Now they are experiencing a surge in profits as revenues begin to grow again while costs remain tightly controlled. One wonders, though, whether revenue growth may strain some firms' abilities to serve customers well given how much they pared their workforces over the past two years. In other words, what if revenue growth bounces back quickly in the coming months and surpasses the firms' abilities to staff up appropriately to keep pace with the new sales? I believe some firms will feel this strain if the pace of economic recovery quickens significantly in the near future.

Journal of Organizational Excellence

Thank you to Professor Gillian Rice of Thunderbird School of Global Management for writing a terrific review of my book, Know What You Don't Know, for the Journal of Organizational Excellence (March/April 2010 issue).

The Superstar Effect

Jonah Lehrer, author of How We Decide, wrote an article for the Wall Street Journal this weekend about the "superstar effect." Lehrer described the research of Northwestern economist Jennifer Brown. In her research on professional golf, Brown found that the presence of Tiger Woods in a tournament tended to be associated with poorer performance on the part of the other golfers. Brown surmised that the presence of this dominating superstar tended to have a negative effect on the performance of other players, perhaps because they "cut their losses" in the face of inevitable defeat and exert less effort.

Lehrer and Brown conclude that this finding about a superstar effect has implications for companies as they design incentive compensation systems. If a huge bonus awaits the few people who are rated at the top in a particular organizational unit, with a large drop-off for those who fall short of the top tier, then we may see this negative superstar effect on many people's performance.

Are there other explanations for the superstar effect? One thought that I have is that we may be seeing excessive risk-taking behavior in the face of a superstar's presence. After all, if one has to compete against a dominant superstar, then a person may gamble on high risk, high return strategies, knowing that their usual performance won't be good enough to succeed. In short, perhaps we roll the dice more often if competing against a superstar, rather than expending less effort. The risk-taking may explain why we observe what appears to be abnormally poor outcomes in the presence of a superstar such as Woods in a golf tournament.

Coming back to corporate incentive systems, perhaps the superstar effect explains why we observe excessive risk-taking in some corporations. Perhaps some individuals conclude that their usual performance won't get them to the top, that only a roll of the dice will enable them to top the superstar(s) in the competition for bonuses, promotions, and the like.

How to Start a Movement

Derek Sivers gave this terrific, funny talk at TED about how to start a movement. Indeed, he draws some insightful lessons from a silly scene. Take a look!

Twitter Predicts Movie Hits

According to Fast Company, two researchers at HP Labs have conducted a fascinating new study that shows how Twitter use can predict a new movie's success at the box office. In fact, they find that Twitter performs slightly better as a predictor than the Hollywood Stock Exchange (a prediction market for movies). I'm not surprised by this finding, given that Twitter essentially serves as a tool for collecting the "wisdom of crowds" - and it has a much bigger pool of information providers than the Hollywood Stock Exchange.

Many companies already use Twitter to try to market new products. Now they have to also ask themselves: Can they use Twitter to judge the success of new product introductions in the early stages? Unlike movies, new product introductions are not just about the first few weeks after release. In the film business, a movie usually either becomes a hit during those first two weekends, or it does not. Movies rarely become hits weeks after their initial release. Moreover, a film's life at the box office is usually fairly short, even if it is a hit.

Most products have longer shelf lives than movies, and they don't peak in sales during the first two weeks. Thus, most companies have time to adjust if a new product launch does not go well in the early going. Twitter, then, can become a critical tool for learning and improvement during the very early stages of a new product launch, which of course includes the days leading up to the actual release as well as the first few weeks on the shelves.

Are You a Good Listener?

When I wrote my first book, I discussed the issue of listening skills. That topic came to mind again when I was asked by a journalist recently to comment on people's tendency to read/send email in meetings. Here are some key questions (from that book) to consider with regard to assessing your own listening skills:

1. Do you avoid eye contact when others are speaking to you?
2. Do you multi-task during meetings?
3. Do you interrupt often when others are talking?
4. Do you rarely pause to solicit feedback or questions while you are speaking?
5. Do you become easily distracted when others are presenting their ideas?
6. Do you engage in side conversations on a regular basis during meetings?
7. Do you provide many more answers than questions during group discussions?
8. Do you rarely rephrase people’s statements and confirm your interpretation?

One more key question comes to mind now as well. Do you begin to formulate your response before someone has finished making their point? That's a sure sign that you aren't listening well. We all do it, of course. It's quite natural. However, we need to be mindful that thinking ahead in this fashion probably means we are missing some critical elements of what a colleague is trying to communicate to us.