Further on the ‘Growth’ Theme – Procter & Gamble Edition

10 Sep

Growth will be the new holy grail of business as we emerge from this downturn: how and where to find it, profitably.

The point is that organic growth (unlike M&A synergy growth) will result from the hard work of innovation, and investment in products and services. Confirmation comes today from Procter & Gamble, which now expects to rebound to organic growth in its fiscal second quarter due to demand for new products.

Says the packaged-goods giant’s CFO Jon Moeller: “The innovations we are launching and the investments we are making are having an impact in the market.” P&G thus confirms its guidance for its first half and fiscal 2010, saying it expects the decline in its organic sales to come a halt.

This news sends P&G 4 percent higher, to above $55, in early trading today.

Another tea-leaf….

Growing Pains…..

7 Sep

There is lots of talk as Labor Day recedes in our collective rear-view mirror about the end of the recession and the start of a rebound. The mixed economic statistics suggest we may have a very uneven recovery. Regardless, as we emerge from the downturn, there will be a premium on business results that have been hard to come by in recent years. The top priority? Growth, both in revenue and profits.

It’s easy to understand why. So much of the focus of business in the developed world in the past several quarters has been cost reduction, synergy-expense recognition and restructuring. All that is vital, of course, to healthy companies and healthy economies. While we have experienced some skilled and finely tuned cost-cutting, there is precious little evidence of the only things –- revenue and profit growth — that will really enable employment expansion, new job-creation and increased capital investment, which are critical for long-term economic growth.

But there is reason to be optimistic if you read a few recent tea-leaves.

Exhibit One is the experience of an exciting startup that is a leader in location-based services for mobile consumers and whose board of directors I am joining. Using their application, anyone anywhere in the U.S. can quickly find nearby businesses, people, movies, pizza, taxis, weather, news, you name it.

This company is experiencing explosive usage growth, and revenue is coming along with this increase in demand for their innovative product, which was not possible before the omnipresence of wireless networks and smart mobile devices. The revenue is sourced both from consumer subscriptions sources (in a hybrid model where network operators pay a fee to subsidize their customer use, and where subscribers pay for preferred content and access) as well as advertising.

Exhibit Two: Another company on whose board I sit, is seeing demand is increasing for its leadership training and development courses. These areas unquestionably were cut during the downturn, and companies are now looking hard at retaining their key employees through development programs as well as creating an alluring ‘HR’ brand by investing in talent.

The start of any growth strategy begins with your customer. We are in the battle for customer’s time and attention in any industry involved in this “convergence” world – telecommunications, information, entertainment or internet. Because this such a competitive world – we must be uniquely respectful of the time that our users have to spend with us.

So, starting with the customer, the primary thing to be concerned with is their happiness or satisfaction with our products and services. At EarthLink, where I ran the $1B consumer business, we tried to organize the entire company around our 2.5 million customer relationships. Satisfied customers tend to positively influence other customers, and – especially in such subscription businesses as telecoms – since so much of the shareholder-value-killing churn happens early in the life of the customer, taking care that your newcomers are feeling positive is extremely important.

Of course, big catalysts for growth are such innovative products and services and the location-based products I was discussing a moment ago. And surely, as growth returns, much of it will be based on new products, services and features that might not have existed even months ago. Among these: increased personalized services, reflecting your unstated wants and needs, based on what we can know about your location, or habits or behavior. Also, expect enhanced aggregation services, marrying much of your diverse data and deriving intelligence about what to recommend you do next.

This is not “crystal-ball” stuff; many of these applications are starting to emerge as personal data goes to the cloud and then value is added by companies or other customers. One innovative example of this comes from Nike. Their new Nikeplus website allows users to store all sorts of data about their workouts (distance, speed, even their mood) to a profile that can be protected or shared with other users. Nike brings coaching and even encouragement from other users to their individual customers, and allows the customer to control the extent to which they want to participate.

The companies that will grow fastest in the next upturn are those that deeply understand their relationship with their consumers, and those who can deepen that relationship measured by time spent, use and attention. The borders between network services, hardware, applications, content and software are becoming more fluid, and that will continue to evolve. But those companies that triumph will be those who really profoundly understand their customers’ wants and needs and supply products and services that rise to meet that demand, whether articulated or not.

For more on this topic, check out a recent interview I did as part of my membership on the Customer Experience Board, a group of global executives. The report can be downloaded here. Please click on the link to download the Benchmark Report on Competition and Convergence in the Communications Space, where I was a featured contributor.

Finding the ‘I Love Lucy’ of the Internet….

27 Mar

The pursuit of a creative format that would result in massive online audience has been like the chase for the Holy Grail, or the Ark of the Covenant. Many have failed, or given up in frustration. Does such a thing even exist? Or is it Hollywood ‘Legend’?

I have an inkling a new programming format that may succeed where others have failed is literally unfolding daily on our screens — in the online laboratory of actors Ashton Kutcher and Demi Moore.

First, some background. This idea — stumbling on a new creative form that would result in a massive single-form audience driver — has long been a focus of many in the online content-creation world. The business theory underlying this is pretty straightforward: Massive audience means massive money (in terms of advertising revenue and audience engagement).

But it has been virtually impossible to find the gripping narrative that would lead to massive breakthrough audience akin to the early days of television, when Lucille Ball and Desi Arnaz effectively created the whole ecosystem of TV ‘prime time’ with their long-running husband and wife series.  Sure, many web businesses have massive traffic. But no one has yet been able to point to originally produced programming with massive traffic (such here-today-gone-tomorrow wonders as Obamagirl and the video life of the so-called Real Life chick who was actually a marketing ruse don’t really count).

Well, Ashton and Demi may be cracking the code.

Perhaps you are not yet following the trials and tribulations (and fun) that the actors (and real-life husband and wife) are having with Twitter, video upload site Qik and photosite Twitpic. But I have an inkling that they are weaving the ‘I Love Lucy’ on the internet, or something like it, as we watch. And one reason they are succeeding is they are using web tools (hyperlinking, retweeting, real-time photo and video uploads and the like) with great energy and originality to do it.

Both Ashton and Demi have a very active Twitter following (hundreds of thousands of followers) only a handful of whom they must actually KNOW. That said, both are being supremely generous with their time, answering many followers directly and immediately, as they update folks about their ups and downs, comings and goings, etc. (As it happens Ashton is very deeply involved with several new media initiatives, including one involving a friend of mine, Sarah Ross, who was one of Yahoo!’s most talented marketing people. Hiring Sarah was a great move. But I digress….)

If Seinfeld was a show about nothing, then the chronicles of Ashton and Demi are Ionesco-esque in their nothingness. Today’s non-episode is a case in point.

It seems Ashton is filming a movie somewhere on the French Riviera, and Demi seems to be in LA, missing her husband but planning some sort of trip to reunite with him. Whatever.

A while ago, Ashton posts a funny video showing him getting his chest hair shaved (Don’t ask why) that had technical troubles (the video, not the shave). (This is after Ashton apparently slugged his stunt double and knocked him out, but that was another episode).

Back to today: Demi pings Ashton, via Twitter and passing across the computer screens of her 300K+ audience (BTW, that’s nearly double the daily audience of CNN’s Wolf Blitzer) that she wants to see the video of her half-naked husband. Half a world away and apparently frustrated by her husband’s technical mishap, Demi tweets this:

“mrskutcher@aplusk baby this is to complicated 20 vids are there with no title or order ready to lmao so get it worked out for our viewing pleasure.”

It took Ashton a while (does the film ‘take 5’ so he can twitter?), but he responded with this: “aplusk@mrskutcher HI baby love you so much. here babe, http://tinyurl.com/djtkr2″

It didn’t work: Back in LA, Demi said: “mrskutcherThe video is no longer there boo hoo !” (BTW, how many of us watching this have been on the receiving end of a ‘honey do’ list such as the one Ashton got? To me, the authenticity resonates, driving more audience and engagement).

Ultimately, Ashton got the video working, and their tweets moved on to other subjects.

Gripping theatre? Not exactly.

But my point is simply to say this interchange is just part of the evolving plot of their lives, which thus far has included: an Oscar-night party with winner Penelope Cruz and lots of photos, Ashton taking a shot of his wife’s rear-end in a hotel bathroom while she was steaming the wrinkles out of his suit (a photo that appeared on the evening news in half a dozen countries), a trip to Miami, jet lag in Frankfurt and dozens of other twists and turns….

Now, some may say the detritus of two celebrities’ daily lives is about as boring as anyone could imagine, and I am certain they would agree. This ‘show’ is unscripted, and only edited by the 140-character count of Twitter.

Regardless, this evolving programming, including comments and re-Tweets (RT)s from friends (the musician John Mayer plays a frequent guest-starring role, as does another friend, P. Diddy — who apparently is himself tweeting when he replies to Demi and Ashton; it isn’t his ghost-twitterer…) is growing daily (which few can say about the audience for some other programming types, such as daily print newspapers or most prime-time series).

No one has yet figured out the business model here. How will the advertising be sold? Is it Ashton’s revenue? Demi’s? Does the program belong to Twitter, Twitpic, Qik or your ISP? Is there even a business model?

But one thing is certain: in the pursuit of this holy grail, the first step is creating a big audience. And in that, Ashton and Demi appear to have taken a great leap forward. As of today, their combined total audience is over 850,000. And rising….

That’s not a bad number to start with…

April 3 2009 Update: This morning, a woman in the Bay Area twittered about her possible intent to commit suicide to @mrskutcher. Demi and many others monitoring her feed apparently called the San Jose police, who brought the woman in for observation. More on this incident here http://abcnews.go.com/Entertainment/AheadoftheCurve/story?id=7248406&page=1

April 20 2009 Update: Ashton Kutcher ‘beat’ CNN to the million follower mark. http://www.cnn.com/2009/TECH/04/17/ashton.cnn.twitter.battle/

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What Should Yahoo! News Do Next?

25 Feb

It was great fun to generally manage Y! News (during my time heading Media and Information @ YHOO) and help make it the Number One news brand on the internet.

Part of the fun of those great years (2004 and 2005 mostly) was working with a great team. Hence this post:

There is the start of a very interesting Facebook discussion here (heads up: FB login likely required) ignited by my former Yahoo teammate Tony Tam, a pal and engineer extraordinaire behind Yahoo! News (along with Jeff, Todd, and Glen and everybody else, of course; you know who you are) 🙂

Tony asks: “what are the next game-changers that he and the team should build for Y! News?”

Tony is giving the entire online world an opportunity to help write the spec for the next phase of online news.

So I think we should help!

I’ve given it a start here, in a short suggestion about letting me add more customized sources to my Y! News feed. But let me elaborate:

We made Y! News No. 1 (my former colleagues at CNN.com quibble with this but in terms of pure global engagement and reach, Y! News generally rates No. 1) by focusing on the five key things news customers (and there are more than 40M monthly) care about:

1. Depth of coverage. Deep. Vertical. Profound. Everything you need to know about a subject.

2. Breadth. Lots of points of views.

3. Accurate. No week old postings from spurious sources. I can get that elsewhere. Not at Y! News.

4. Real-time. (This one is obvious. Enough said.)

5. Respect My Intelligence. (Ah, the hardest of them all).

The first two are among the reasons why the internet is grabbing news audience share, at the expense of other media (newspapers foremost among them). Depth and breadth reflect attributes that technology can really help with (search, personalization, automated aggregation and display of related material — photos, original source material, etc.) It is harder and harder for journalists to compete.

But in this next phase of online news development, such sites as Y! News will have to get much better at understanding the audience and accurately predicting the information likely to be of most use to the audience at a given moment, for a given need. Why? Economic opportunity. Because, as bankrobber Willie Sutton famously said of his targets: ‘That is where the money is!”

We haven’t even begun to scratch the surface here, and the opportunities are immense. (Can’t spill all the beans here, can I? 🙂

From a money-making point of view, two important things: While I agree in part with Wenda, who reportedly told the IAB earlier this week that the advertising outlook has dimmed partly because of the laser-focus of the interactive industry on data, rather than brand, there are two key innovations that will drive higher engagement, and higher monetization rates, for online news and content — especially in such sites as Y! News:

1. Y! News can create much more shareholder value by delivering to advertisers greater insight about the interests and real-time demands of the audience. It has the building blocks today (huge reach, great brand, deep engagement). Where to go next? By knowing the audience preferences (think ‘heat-map’) in real-time and then linking those preferences to the needs of advertisers (again, in real-time), Y! News would create tremendous additional value.

An example: fuel prices, while low now, will surely again heat up sometime in the future. As that happens, auto advertisers should shift their message into the rising tide of latent demand, and prices should rise for the ability to market to that demand. Y! News is platform that could optimize that opportunity on a grand scale. It can do it only crudely today, by focusing on key words and traffic to certain areas of the site (Entertainment, Photos). What I am outlining goes substantially beyond the capabilities today.

2. If Y! News’s can anticipate my information needs and deliver to me the information that I need (or perhaps don’t even yet KNOW I yet need), it will lift its value as an audience aggregator (and site of a high-value audience demographic) well beyond current levels, which are already pretty good. I’ve thought a lot about this, and again, let me keep a few ideas ‘behind the curtain’ but I am certain we have only scratched the surface of the business opportunity for news in the coming year.

Just not news on a printed paper, alas.

‘Victory at Sea,’ the global economic crisis, the War on Terror and the Oscars….

23 Feb

On occasional weekend mornings, I have been watching the DVD of “Victory at Sea,” the Emmy-winning TV series from the 1950s. It’s a spectacular work that basically introduced the documentary to American television as it chronicled the Allied victory in World War II.

The multi-episode series has a resonance for today far beyond its obvious historical value. The series is filled with constant illustrations of the industrial power of the U.S. economy of the time (producing countless aircraft, ships, tanks and jeeps). The U.S. produced so much. This productivity provides a jarring juxtaposition with today’s news: Detroit reeling (General Motors’ market capitalization at just above $1 Billion), banks fearing nationalization, and an economy that has not seen the bottom of the worst downturn in 50 years.

In the America that won “Victory at Sea” everything was possible. Today, in contrast, to some observers almost nothing is possible. The current grim times were the subject of Peggy Noonan’s recent WSJ column in which she laments of the current crisis: “People are not feeling passing anger or disappointment, they’re feeling truly frightened (because this) isn’t stock market heebie-jeebies, it’s systemic collapse. It’s not just here, it’s global. It’s not only economic, but political.”

Perhaps. But I can’t help but feel the pessimism is overblown. Is this the same America that won “Victory at Sea?” In some respects, the answer is no, of course. But it is mostly yes.

For one thing, America is larger and more diverse. Yes, Detroit may be on the ropes, the consequence of misalignment of production and consumer demand and a failure to manage change. But the American industrial economy still can build: supersonic military aircraft, high-performance civilian jets, nuclear-powered aircraft carriers and submarines. In the information and life sciences, no country has a advantage over the free-market and entrepreneurial conditions that characterize the U.S. economy. In countless other categories (agriculture, clean-technology) the U.S. still has an edge, and that is notwithstanding a free trade system that generally has helped enrichen the entire world, not simply America.

It is worth remembering watching the thousands of soldiers, sailors and marines in the newsreels of “Victory at Sea” that a decade earlier their fathers were on soup lines and selling apples on street corners — victims of the Great Depression of the 1930s. It was hard to imagine then that less than a decade later the world would be at war, and America’s factories would be at full capacity and then some.

Will the war on terror expand in a way that leads to a similar result? God forbid. But amid today’s unrelenting, terrible news, when pessimism abounds, it is perhaps worth remembering that others have walked in this way before.

And the connection to the Oscars? Well, “Victory at Sea” was an NBC series. It won an Emmy, but not an Oscar. On the other hand, anyone with an inclination to revisit those years on today, Oscar-day, can turn their TV to premium cable, where one station is showing back-to-back WWII classics “Tora! Tora! Tora!” and “Patton.”

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When Does Communication Become Information?

9 Feb

Virtually immediately. But — this just in — not all interesting communication is valuable information.

I’ve been thinking about this question as I have gotten increasingly involved with Twitter (and its various plug-ins, cousins and competitors). Use is growing fast of the status message (Facebook) or its real-time Twitter-ish equivalent (Tweets, etc.). These messages are rapidly transitioning from quick update resource (“So-and-so just arrived @ ATL”) to headline alert (“USAir 1549 ditched in Hudson; photos here“).

What got me thinking about this issue of the value of these updates is the current debate over whether the rise of this communication is a ‘Brave New World’-ish event that puts at risk the very mission of a current leader of the Web world (Google) and its very mission: “to organize the world’s information and make it universally accessible and useful.” Or whether something a little less earth-shattering is at work.

Here is the debate: Google and other search engines are great archival resources, finding all the information one could want; but they are not doing such a comprehensive job with the real-time, “crowd-sourced” web, and searchable Twitter, Yammer and FB status updates are the next new thing and the incumbents will fail to get a grip on the new ‘borg-sourced hivemind” of the distributed internet. Etc., etc. (Note: I just saw Kara posted on this at allthingsd.com).

Hmmm.

It is an interesting argument. But so far, the rise of the status update feels ‘more, better, faster’ to me. In the news business, the same challenge of tapping the value of real-time information has been around for generations: Baron Paul Reuter’s famed carrier pigeons bearing news of Napoleon’s defeat at Waterloo were an earlier form of ‘tweet.’ The information carried by those birds was actionable financial intelligence that made some folks wealthy, and in many respects created the Reuters news brand.

If the pigeons had simply been carrying word that ‘Wellington arrived Waterloo’ there would have been less value.

There is often a bit of a feeling of deja vu. Only a few years ago, there was some enthusiasm that blogsearch (Technorati. Sphere) would help with monitoring the real-time web. While no doubt helpful, they did not exactly set the Earth spinning on a new axis.

The value of real-time status will be a function of the value of the content of the update, I suppose. Until we come up with some new tools to better infer content, and context, from those updates by some other means, we are going to have to rely upon one another to make sure we are providing some real information in our communication.

As it has always been…..

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Madison Avenue Shops Are Packing Their Hand-Tooled Bags…

3 Feb

…as mentioned in a previous post….here’s the NY Times on the shuttering of stores on Madison Avenue > http://www.nytimes.com/2009/02/04/business/04madison.html

U.S. Economy Shrinks 3.8%….

30 Jan

…in Q4 2008. A better than expected performance, according to the market reaction this morning, but there is not much of a way to spin this story positively.

In previous downturns in America, Europe and Japan in the 1980s and 1990s, I came up with my own personal rule-of-thumb to gauge the scale of a downturn. I call it the Forman Retail Index, and here is how it works:

An up economy sees new stores opening, sometimes pretty frequently and obscurely (e.g. “Another high-end soap store is opening? That’s the third on the block!”)

A flat economy sees as many stores opening as closing.

An economy shrinking in at a single-digit pace translates into one out of every three shops empty. Anything worse than that: the shop windows of entire city blocks are bare.

If the Q4 pace is the trough, we may not see more lights going out. Let’s keep our fingers crossed.

But this morning’s positive spin (some economists were expecting a 5% rate of decline) reminds me of the Richard Farina short-story collection of the 1960s: “Been Down So Long It Looks Like Up to Me.” The Doors made it a song, which in retrospect was a pretty productive thing to do.

(Postscript: Commerce Department announced week of 22 March 2009 that the final Q4 number was revised downward to 6.3% decline.)

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Questionable Call: Davos Refugee ‘Simulation’ Is Not The Real Thing…

29 Jan

Surprising, to say the least, to read that World Economic Forum attendees are participating in a “simulation of what it is like live in a refugee camp facing rebel attack” according to Andrew Ross Sorkin in the New York Times.

I’ve attended Davos in past years, and reported from refugee camps too (on the West Bank, and in Africa).

There is not much in common.

Of course, it is easy to criticize from a distance, and not being there personally may cloud my impressions. Perhaps the effort to sensitize the Davos attendees is laudable.

But with the resources available to the Davos glitterati, actual humanitarian visits to genuine refugee camps would be more authentic, and certainly from a public relations point of view would reflect less of Davos’s ‘Let Them Eat Cake’ reputation (deserved or not). Since the most precious resource to many of these attendees is time, this ‘role-play exercise’ simply leads to the obvious conclusion that it is more ‘time-effective’ to simulate this experience in the Swiss Alps than to make it a real priority.

An easily avoided PR black eye…..

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News on a printed page?

25 Jan

News on a printed page is a product in tremendous transition, and vital signs are not strong. Several recent headlines (only a few them printed):

— The French government is going to “rescue” that nation’s newspaper industry by providing 18 year olds with state-subsidized free subscriptions.
— Hearst Corp. without warning announces plans to close the Seattle Post Intelligencer if a buyer cannot be found.
— Carlos Slim’s financial “rescue” of the New York Times Co. involves extending the company $250 million at 14% interest at the same time as the company is selling interests in real estate and other assets to raise new cash.
— Fewer and fewer people are getting their news from the printed page as other sources (of course the internet first among them) become more widely used sources of news.

As a longtime newsman, I have been struck by these and other signs of the impending apocalypse long predicted for printed news, and I am hopeful the imminent demise is exaggerated.

But there is one big paradox that is worth pointing out:

For many years, our quality printed news sources (The Times, The WSJ, The Economist and many, many others) have confused tradition with staying power.

Tradition is core to their brands, and maintaining journalistic quality has long been a pre-eminent goal of these companies, as it should be. But for too long, the proprietors and executives who have run these companies have allowed tradition to cloud their vision in looking forward. In many cases, business planning for the coming year was not much more than applying a percentage increase (in advertising rates, in circulation base, in readership) to the prior year performance, and holding a team accountable to achieving those results.

That model is forever broken, I am afraid. Craigslist, Ebay, Yahoo! News, The Daily Show and SMS news alerts are barricades to the future ever being as simple as the past for newspapers and newspapermen. It may be that 2009 is the year that this truth finally becomes self-evident for the industry. It has clearly dawned on a few of the more forward-thinking proprietors. And it long ago was clear to investors, who have driven stock prices for newspaper companies to historic lows.

Recognition by the industry of this situation would be a good thing. The sooner it becomes clear, the more rapidly those companies may be able to focus on new products and new ways of reaching and engaging an audience that is as hungry for news today as it ever has been.

Just not news on the printed page.

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