This fun article about the resurgence of Pabst Blue Ribbon beer, over on Fortune's website, provides a vivid example of how a small brand can be successful by positioning itself as anti-mainstream, directly in opposition to the values of the market leaders.
Pabst sales have risen by approximately 30% this year. Fortune writer Beth Kowitt writes that, "But the lagging economy isn't the only thing energizing PBR. The brand has also cultivated a reputation as a hipster, offbeat beer -- or what the president of the National Beer Wholesalers Association, Craig Purser, likes to call "retro chic" -- positioning itself as an alternative to big, mainstream brands."
Interestingly, the new brand positioning did not emerge from the Pabst marketing team's minds. Instead, they noticed a surge in sales in Portland, Oregon. Upon visiting the city, they learned that Pabst had found a loyal following among the members of the hipster, music crowd. A new brand positioning was born! Customers drink Pabst specifically because it is not Budweiser, and because it does not market itself the way that those mainstream brands do. It seems to me that many other smaller brands in other markets have an opportunity to position themselves as anti-mainstream, or anti-market leader in their image and values. One way to start understanding how to cultivate that image might be to look closely at a particular area where a small brand seems to be having local success, as Pabst marketers did.
Thursday, December 31, 2009
Wednesday, December 30, 2009
Splitting Chairman-CEO Role
Senator Charles Schumer has proposed mandating that public companies split the role of Chairman and CEO. Dennis Carey, a partner at executive search firm Korn Ferry, argues in the Wall Street Journal that such legislation would not be productive. Carey raises some interesting points, and I do agree that government should not be legislating any such change. However, I do not think that citing successful situations such as those at IBM or Proctor and Gamble necessarily provides a compelling argument for not splitting the role. One could easily cite plenty of counterexamples of firms where perhaps splitting the role would be beneficial. We have seen too many examples of all-powerful Chairman/CEOs who have had boards effectively in their back pocket.
What Carey hints at but does not address specifically is that, fundamentally, corporate governance will not improve simply by making structural or legal changes in the way Boards operate. Companies need to focus on the dynamics in the boardroom and the process of monitoring and control. In the end, the quality of the dialogue in the boardroom will drive performance more so than any structural change.
What Carey hints at but does not address specifically is that, fundamentally, corporate governance will not improve simply by making structural or legal changes in the way Boards operate. Companies need to focus on the dynamics in the boardroom and the process of monitoring and control. In the end, the quality of the dialogue in the boardroom will drive performance more so than any structural change.
Tuesday, December 29, 2009
Meaningful Work
In the 1970s, scholars Richard Hackman and Greg Oldham developed their job design model, in which they argued, among other things, that people will exhibit high degrees of internal motivation if they believe they are performing meaningful work. In this article on the Business Week website, Nick Tasler argues that making the meaning of work more clear to employees can be a very effective, low cost mechanism for enhancing organizational performance. For instance, Tasler describes how Volvo encourages customers and employees to share stories of how people avoided serious injury in a car crash thanks to the automaker's safety features. Similarly, Medtronic invites customers to corporate meetings to share their stories of how the firm's medical devices saved their lives.
Tasler's article cites the research of Wharton Professor Adam Grant in this area. Here is an excerpt from the Business Week column:
"According to research by Adam Grant, an associate professor of management at the Wharton School, making this connection doesn't just improve morale. It also has a huge impact on the bottom line. Grant has discovered that when people get to meet a living, breathing person who benefits from their work, their job performance skyrockets. In one study, Grant found that university fund-raisers who listened to a scholarship recipient tell how the assistance had benefited him increased by 200% the number of weekly calls they made to potential donors. The average amount of funds they brought in jumped 500%, from $400 per week to more than $2,000 per week.
That's an impressive increase in performance by any standard. It's especially so when you consider what did not happen to create the surge in productivity. The callers were not offered a raise. They did not go through extra training to sharpen their interpersonal skills or persuasion techniques. Their managers did not receive extra training on how to be more charismatic or transformational. It required no internal branding effort to communicate a newer, more inspiring vision. The only expense incurred by the organization—time or money—for this dramatic increase in productivity was the 10 minutes of time that fund-raisers spent listening to the beneficiary of their work."
As I read this article, I was reminded of a visit that I paid to Edwards Lifesciences several years ago in southern California. Edwards Lifesciences produces heart valves. The company executives explained that they occasionally brought customers in to meet the person who had worked on their actual valve replacement. These meetings often proved remarkably emotional, incredibly inspiring, and of course, motivational to all. Executives credited these types of efforts to demonstrate the meaning of the work with helping to create an incredibly dedicated workforce which also exhibited remarkably low turnover.
Tasler's article cites the research of Wharton Professor Adam Grant in this area. Here is an excerpt from the Business Week column:
"According to research by Adam Grant, an associate professor of management at the Wharton School, making this connection doesn't just improve morale. It also has a huge impact on the bottom line. Grant has discovered that when people get to meet a living, breathing person who benefits from their work, their job performance skyrockets. In one study, Grant found that university fund-raisers who listened to a scholarship recipient tell how the assistance had benefited him increased by 200% the number of weekly calls they made to potential donors. The average amount of funds they brought in jumped 500%, from $400 per week to more than $2,000 per week.
That's an impressive increase in performance by any standard. It's especially so when you consider what did not happen to create the surge in productivity. The callers were not offered a raise. They did not go through extra training to sharpen their interpersonal skills or persuasion techniques. Their managers did not receive extra training on how to be more charismatic or transformational. It required no internal branding effort to communicate a newer, more inspiring vision. The only expense incurred by the organization—time or money—for this dramatic increase in productivity was the 10 minutes of time that fund-raisers spent listening to the beneficiary of their work."
As I read this article, I was reminded of a visit that I paid to Edwards Lifesciences several years ago in southern California. Edwards Lifesciences produces heart valves. The company executives explained that they occasionally brought customers in to meet the person who had worked on their actual valve replacement. These meetings often proved remarkably emotional, incredibly inspiring, and of course, motivational to all. Executives credited these types of efforts to demonstrate the meaning of the work with helping to create an incredibly dedicated workforce which also exhibited remarkably low turnover.
Your Next Move
My friend and former HBS colleague Michael Watkins has a new book out titled Your Next Move. In this follow-up to his best-seller, The First 90 Days, Michael has identified eight typical career moves that managers make in their careers. He explores the challenges one faces with each type of move, and then offers sound, practical advice for how to navigate the pitfalls a manager is likely to encounter during that transition. Michael grounds his work in extensive field research, as well as his consulting work with thousands of managers around the globe. I think every manager ready to navigate a career transition will find this book insightful and useful.
Monday, December 28, 2009
Technology that Harms the Consumer Experience
In the past year, Bank of America has introduced new ATM technology. Instead of depositing checks in an envelope, you insert checks directly into the ATM. The machine scans the check and reads the amount, and then it completes the deposit. Sounds great, right? Well, the technology certainly has promise, but I find that it actually worsens the consumer experience if you have multiple checks to deposit. The process becomes considerably slower than the old envelope method if you are trying to deposit three or four checks. Moreover, it becomes very tedious if the scanning technology fails to read the check amount properly. In that case, if you have forgotten the precise amount of the check you wish to deposit, you face a very frustrating further slowdown.
I raise this example not to bash Bank of America. The technology clearly has great promise. However, Bank of America's ATM provides a vivid example of a company rolling out a new technology that has great benefits for the bank, but actually has some serious negatives for the customer. The bank is not alone. Many companies do this, focusing on how a technology can improve efficiency or accuracy for the firm, without understanding how it may hurt a critical feature of the user experience (in this case, speed).
I raise this example not to bash Bank of America. The technology clearly has great promise. However, Bank of America's ATM provides a vivid example of a company rolling out a new technology that has great benefits for the bank, but actually has some serious negatives for the customer. The bank is not alone. Many companies do this, focusing on how a technology can improve efficiency or accuracy for the firm, without understanding how it may hurt a critical feature of the user experience (in this case, speed).
Saturday, December 26, 2009
Best Business Books of 2009
Thank you to Leadership Now's blog for naming my book - Know What You Don't Know - one of this year's best leadership books!
Thursday, December 24, 2009
Research on Social Networking
In this article on the HBS Working Knowledge site, Professor Mikolaj Piskorski explains his research on social networking, including some interesting findings regarding the demographics of MySpace vs. Facebook users, gender differences in the use of social networking, and how Twitter usage patterns differ from other platforms.
Wednesday, December 23, 2009
Making Tech Complex but not Frustrating
My former HBS colleague Andy McAfee has a great column at Forbes.com about how companies such as Apple, Amazon, and Google have been able to enhance their technologies and make them more complex without frustrating consumers. McAfee focuses on four key principles:
1. Evolve, don't upgrade: Focus on making a series of smaller incremental improvements rather than major upgrades that can be disconcerting and confusing to users.
2. Keep the core interface constant: Think about the consistency of the Amazon's website or Apple's iPod interface.
3. Don't even talk about it: Let the consumers discover the enhancements on their own.
4. Let the users opt in: Provide new features that are optional for the consumer, and that the customer can begin to use as they become comfortable with these technological changes. Think about the App Store from Apple.
By the way, if you are not familiar with Andy's work, I highly suggest that you check out his blog.
1. Evolve, don't upgrade: Focus on making a series of smaller incremental improvements rather than major upgrades that can be disconcerting and confusing to users.
2. Keep the core interface constant: Think about the consistency of the Amazon's website or Apple's iPod interface.
3. Don't even talk about it: Let the consumers discover the enhancements on their own.
4. Let the users opt in: Provide new features that are optional for the consumer, and that the customer can begin to use as they become comfortable with these technological changes. Think about the App Store from Apple.
By the way, if you are not familiar with Andy's work, I highly suggest that you check out his blog.
Tuesday, December 22, 2009
Helping a friend who's been laid-off
Keith Murray offers advice to anyone who has a friend who's been laid-off over on his blog. It's a terrific post, particularly as we approach the Christmas holiday.
100 Day Plans
This article at Fortune.com describes the culture and management practices at a small boutique innovation consulting firm in NYC called Fahrenheit 212. While much of what is described may only be applicable in a start-up environment, the "100 Day Plans" that the firm employs seem quite interesting and more broadly applicable. Writer Nadira Hira explains:
"Every 100 days, everyone gets together, locks the doors, ditches the cell phones, and sits down to a company-wide strategy session. Together, they set the company's goals for the next 100 days. And they go around the table to hear how each staffer -- execs included -- did on his personal deliverables over the last 100 days. They ask each other questions, weigh in with their own perspectives on their colleagues' work, and do lots of ribbing, reflecting, and cheering. And if the fear of being embarrassed in front of rowdy colleagues weren't enough, staffers work directly with their managers to lay out their individual plans for the next 100 days and actually grade themselves on their last 100-day plan -- and at the end of the year, the scores are added up to help determine incentive bonuses and future compensation."
Why do I love this practice? First, it moves away from strategic planning as an annual exercise that's more about creating piles of documents than it is about candid dialogue. In a fast-moving world, it seems much more appropriate to revisit the strategy every three months or so, and to do so via a vigorous open dialogue as opposed to "death by Powerpoint." Second, this 100 days exercise creates a powerful sense of accountability, with people being held responsible by their peers, not just their bosses. Third, the process promotes transparency, which ultimately has many positive effects. Finally, the meetings provide opportunities for prompt feedback, giving people time to engage in corrective action as they work on projects... rather than waiting until a year has passed and the project is complete before hearing any formal feedback.
"Every 100 days, everyone gets together, locks the doors, ditches the cell phones, and sits down to a company-wide strategy session. Together, they set the company's goals for the next 100 days. And they go around the table to hear how each staffer -- execs included -- did on his personal deliverables over the last 100 days. They ask each other questions, weigh in with their own perspectives on their colleagues' work, and do lots of ribbing, reflecting, and cheering. And if the fear of being embarrassed in front of rowdy colleagues weren't enough, staffers work directly with their managers to lay out their individual plans for the next 100 days and actually grade themselves on their last 100-day plan -- and at the end of the year, the scores are added up to help determine incentive bonuses and future compensation."
Why do I love this practice? First, it moves away from strategic planning as an annual exercise that's more about creating piles of documents than it is about candid dialogue. In a fast-moving world, it seems much more appropriate to revisit the strategy every three months or so, and to do so via a vigorous open dialogue as opposed to "death by Powerpoint." Second, this 100 days exercise creates a powerful sense of accountability, with people being held responsible by their peers, not just their bosses. Third, the process promotes transparency, which ultimately has many positive effects. Finally, the meetings provide opportunities for prompt feedback, giving people time to engage in corrective action as they work on projects... rather than waiting until a year has passed and the project is complete before hearing any formal feedback.
Monday, December 21, 2009
Are you a micromanager?
The Wall Street Journal has an article today about CEOs getting into the weeds much more during this downturn. While the article explains why leaders feel the need to be more hands-on at this tumultous time, it also cites the risk of micromanagement. This leads to the question: how do you know if you are micromanaging with possible negative consequences? Here are three signs:
1. You begin to find many decisions being kicked up to you on issues you feel do not belong on your desk... A sign that people may be afraid to make decisions on their own.
2. Your schedule becomes increasingly crowded with meetings at which you are being asked to essentially validate decisions made at lower levels, or to review numerous minor status update meetings on projects.
3. People seem to wait for you to express your opinion before offering ideas at meetings. That sign is most dangerous of all. It shows that folks are afraid to speak up and are waiting for a cue from you rather than offering original and creative thoughts without fear of repurcussions.
1. You begin to find many decisions being kicked up to you on issues you feel do not belong on your desk... A sign that people may be afraid to make decisions on their own.
2. Your schedule becomes increasingly crowded with meetings at which you are being asked to essentially validate decisions made at lower levels, or to review numerous minor status update meetings on projects.
3. People seem to wait for you to express your opinion before offering ideas at meetings. That sign is most dangerous of all. It shows that folks are afraid to speak up and are waiting for a cue from you rather than offering original and creative thoughts without fear of repurcussions.
Friday, December 18, 2009
Tired of Boring Training Sessions
Nearly all employees have taken part in mandatory training that they found boring, repetitive, and difficult to apply to their daily work. In this column in Fast Company, Chip and Dan Heath explain how one technology consulting firm created a highly engaging ethics training video. This firm created a fictional TV series, patterned after the popular NBC hit The Office. The series profiled a variety of ethical transgressions in hilarious fashion. Employees clamored for more, as they enjoyed it so much! Check out the video below:
Aggrieva Season 1, Episode 6 from Resonate Pictures on Vimeo.
Wednesday, December 16, 2009
Listening to vs. Understanding Your Customers
Michael Norton, assistant professor of marketing at Harvard Business School, has published a case study about elBulli, a unique and incredibly popular restaurant in Spain. In this article discussing the case, Norton makes an interesting distinction between listening to customers vs. understanding them. Norton explains the chef/owner's thinking: "Adrià 's idea is that if you listen to customers, what they tell you they want will be based on something they already know," Norton observes. "If I like a good steak, you can serve that to me, and I'll enjoy it. But it will never be a once-in-a-lifetime experience. To create those experiences, you almost can't listen to the customer."
Congress and the Auto Dealers
Here we go again! As many predicted, Congress cannot help but meddle in the auto industry, particularly given the government ownership stakes. Alex Taylor of Fortune writes:
"Last week, House and Senate leaders agreed to a proposal to give the right of arbitration to terminated GM and Chrysler dealers, which are said to number more than 2,000. In other words, Congress, after complaining that the two companies don't know how to make a profit, is imposing a new requirement that will make it more difficult for them to make a profit."ress
Dealer rationalization must occur for the American automakers to turn the corner toward a sustainable profit-generating business model. No one with any sense of how businesses and markets work would argue otherwise.
"Last week, House and Senate leaders agreed to a proposal to give the right of arbitration to terminated GM and Chrysler dealers, which are said to number more than 2,000. In other words, Congress, after complaining that the two companies don't know how to make a profit, is imposing a new requirement that will make it more difficult for them to make a profit."ress
Dealer rationalization must occur for the American automakers to turn the corner toward a sustainable profit-generating business model. No one with any sense of how businesses and markets work would argue otherwise.
Tuesday, December 15, 2009
The Design of Business
I just finished reading Roger Martin's new book, The Design of Business: Why Design Thinking is the Next Competitive Advantage. Martin, the Dean of Toronto's Rotman School of Business, has become a thought leader in the area of how design thinking can be applied to business, and I enjoyed his prior work on the "opposable mind." I think this book does a nice job of highlighting the power of what Martin calls "abductive thinking" - while also exposing the dangers of over-emphasizing reliability in organizations at the expense of exploratory, creative work. The book, however, has one substantial weakness. Martin fails to actually take the time to explain to the reader how designers do their work. As a result, the discussion of design thinking remains rather abstract and conceptual. It would have been helpful to walk the reader through the design process, and THEN show how that process has application to the broader field of business.
Why We Buy
I am thoroughly enjoying the book, Why We Buy: The Science of Shopping by Paco Underhill. The author explains how his firm has mastered the power of observation to understand how shoppers behave and how retailers can use that understanding to drive sales. Every retailer, large and small, should read this book. I especially love ideas such as the "butt-brush" effect - the idea that customers don't like being jostled from behind as they shop. I also like the "decompression zone" - the idea that customers make a transition as the enter a store, and they often walk right past signs and other materials in this decompression zone. The book has many more interesting conclusions based on intense observation over many years. It's a great read for consumers too; you will never think about shopping the same way again.
Friday, December 11, 2009
Colbert on the Federal Reserve
With thanks to Greg Mankiw, on whose blog I discovered this great clip from the incomparable Colbert:
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| Fed's Dead | ||||
| ||||
Restructuring at Talbots
Talbots announced a complex financial restructuring this week, along with news that the company had returned to profitability. The earnings report provided an unexpected surprise to Wall Street analysts.
What has Talbots accomplished with its recent restructuring? First, the divestiture and shutdown of non-core assets and unsuccessful diversification plays has left Talbots more streamlined and focused on its core women's apparel business. Second, the financial transaction announced this week enabled Japanese retailer Aeon to divest its stake in Talbots, and it reduced Talbots' leverage substantially. As a result, the company finds itself with a stronger balance sheet. Moving forward, it has secured a credit facility from GE Capital to help it finance future growth plans. Third, the earnings report indicates substantial progress toward streamlining the company's cost structure. All these moves position Talbots more securely as they prepare for what is hopefully a stronger economy in the year ahead.
What still troubles us about this once-great company? Well, Talbots reported a same-store sales decline of 15.9%. That's a huge decline. If the company cannot reverse that steep decline, then all these financial maneuvers will be for naught. Ultimately, Talbots has to find a way to walk a tight rope... specifically, it must continue to freshen its image and product line while not alienating its traditional demographic. The company has always faced an interesting question: to what extent should it try to appeal to younger women? In my view, a laser focus on women 35 and older probably has merit. Trying to be all things to all people surely will lead to disaster. Having said that, the company has to find a way to adjust to the fact that the 35 and older demographic looks like quite different than it did a decade ago. That target market's wants and needs have changed, and the company must find a way to adapt to those changes without alienating long-time, loyal customers.
What has Talbots accomplished with its recent restructuring? First, the divestiture and shutdown of non-core assets and unsuccessful diversification plays has left Talbots more streamlined and focused on its core women's apparel business. Second, the financial transaction announced this week enabled Japanese retailer Aeon to divest its stake in Talbots, and it reduced Talbots' leverage substantially. As a result, the company finds itself with a stronger balance sheet. Moving forward, it has secured a credit facility from GE Capital to help it finance future growth plans. Third, the earnings report indicates substantial progress toward streamlining the company's cost structure. All these moves position Talbots more securely as they prepare for what is hopefully a stronger economy in the year ahead.
What still troubles us about this once-great company? Well, Talbots reported a same-store sales decline of 15.9%. That's a huge decline. If the company cannot reverse that steep decline, then all these financial maneuvers will be for naught. Ultimately, Talbots has to find a way to walk a tight rope... specifically, it must continue to freshen its image and product line while not alienating its traditional demographic. The company has always faced an interesting question: to what extent should it try to appeal to younger women? In my view, a laser focus on women 35 and older probably has merit. Trying to be all things to all people surely will lead to disaster. Having said that, the company has to find a way to adjust to the fact that the 35 and older demographic looks like quite different than it did a decade ago. That target market's wants and needs have changed, and the company must find a way to adapt to those changes without alienating long-time, loyal customers.
Behaving at the Office Holiday Party
Susan Adams at Forbes writes a column on how not to behave at the office party. The photos are hilarious.
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