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Drilling Down

Anyone who has read anything on marketing/sales/branding and positioning a product as a "problem solver" etc will be familiar with the old chestnut

People don't buy 3/4 inch drill bits. They buy 3/4 inch holes.

Well John at Business Evolutionist disagrees:

"People don't buy 3/4 inch drill bits. They don't buy 3/4 inch holes. They buy the respect and admiration of people commenting on the picture they've hung on the wall using the hole provided by the drill bit.

The drill bit is a tool put to use in service of some goal of the individual. Almost no one cares how the drill bit is made. The hole will be covered up by a picture or covered with paint."

That's true.  It's not about the hole; it's about the "feelings" that the hole will bring.... the drill bit and the hole are secondary to the WIIFM factor.   John thens goes on to illustrate his point with a personal example.

Rappers & Bloggers

Yo!  Some cool Sunday reading.

(via IA)

Who needs innovation when you can have am Acquisition Manager

Oligopoly Watch points to a Wall Street Journal article that looks at the current boom in corporate mergers and big eating small acquisitions; "Bosses Prefer Buying Businesses To Building Them", 2/17/2005). The author sees the following points about the current boom:

1. Many big companies are flush with cash right now. Many have used that money to pay down debts, buy back stock, and increase dividends. The next logical place to put that money is into acquiring new companies.
2. While the world economy is doing better than it was after the Internet bubble burst, the actual growth in capital spending is increasing at a modest speed, and that looks likely to be an upcoming trend. Therefore, expanding through internal growth is getting harder.
3. Corporate heads are more optimistic than ever about mergers and acquisitions, in spite of the relatively high valuation of suitable targets. But the key is investors. In contrast to some of the thinking before, investors have been rewarding a number of skillful acquirers with high stock prices. Since execs get highly compensated (options, shares, incentives) when stock prices go up significantly, there's a good reason. (Of course, we often see executives get highly rewarded when stock prices go down, so that may not be the sole motivator.)

Whilst it's all good and well for the Big end of town to swallow up whatever and whoever they want, in the end it strangles many new ideas and innovation that generally only occur "down the other end of the street." 

What tends to happen is that Big Slow Corp (who is too lazy (dumb?) to do something WoW itself) buys Fast Little Company in order to latch onto and eliminate what might become a threat to them; which they simply see- from afar- as being the systems, technology, people, reputations etc within the Little Co. they are eying off.

But they always forget that it was the company culture of Little Co that nursed and encouraged the innovation that allowed the Little Company to be so fast in the first place; enabling it to leverage its systems, technology and people.  That culture (= the real, inimitable source of the competitive advantage) is inevitably killed off following the acquisition (Just ask Tony about trying to be innovative in a Big Company), because the Big Co isn't really interested in maintaining a culture of innovation, they just buy other peoples.  So why do they need creative people?  They don't, just Acquisition Managers.

But the potential threat to Big Co has been killed too; so they win anyway.

But if it works, then Big Co still wins:

"Exploiting a product that someone else has made by giving it the big company treatment in marketing, sales, and distribution is a lot less painful than finding ways to make serious and effective internal changes For all the talk of re-engineering the company, most companies would rather just buy another one. That move is high-concept, ego-gratifying, and relatively straightforward. Rethinking a corporation is complex, painstaking, and often tedious."

Tom Peters on Dell & Innovation

It's not often that I disagree with Tom; but I disagree with this:

Dell rules.
Great "business system."
I applaud.
Pathetic innovators!
Consider it a waste!
Newsweek/02.21.2005: "Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas."
TP to MD: You'll not be around 20 years from now! R&D and Re-imaginings count over the long haul.
Come to think of it, nothing new in PCs (save Apple!!!!) in years & years. I don't buy that the PC world is "mature."

I was thinking about this, and whilst he might be be innovative in the classical, text book sence, his distribution methods are innovative, are they not?   Dell distribute and manufacture better than the others. They price tighter than ever thought possible. They let the big  guys design the newest, bestest, brightest.  Then, and only then, do they determine the fastest, most efficient, most inexpensive way to deliver these opportunities to the customer.   Thier processes are innovative, so much so that they have managed to leverage huge competitive advantage from them.

And as for not being around for long, here's what Michael Dell has to say on that:
"Stay tuned. There's a lot we can and will do.  A better business model will beat a better technology, "The days of engineering-led technology companies are coming to an end."

I am inclined to agree.  As products such as computers, televisons, and other consumer electronics become increasingly commoditised and cheaper (CHINA!), people like Dell will only see their potential market grow.

Virgin's Blues (updated)

It will be interesting to see how Dickie Branson's Aussie offshot Virgin Blue responds to their current state of crisis.  A crisis that they have made worse through their arrogant attitude towards their customers.

The whole thing started yesterday morning, at about 10am when a mystery leak caused the closure its Melbourne Airport terminal.  Ambulance crews treated 57 people for vomiting, nausea and shortness of breath caused by the still unidentified leak (yes, still unidentified almost 48 hours later!).  The terminal remained shut until 8pm, throwing the travel plans of 13,000 Virgin Blue commuters into chaos with 102 canceled flights.

So what did Virgin Blue do to try and look after its frustrated passengers?  They shrugged their shoulders, passed the buck onto the Airport Authorities and served their passengers some water:

"It was out of our control what was happening, so we felt it was a bit unfair to offer food free of charge."

That was Guest Relations Manager Matt Dixon, who obviously has no idea how to look after "guest relationships." (when it hits the fan, he calls it "unfair").   He added that Virgin crews offered to sell  sandwiches ($5.00) and drinks ($3.00) from the in-flight canteen.  There is only one thing worse than an angry passenger, and that's an angry passenger is hungry...

Oh yeah, because they were stuck in Melbourne for the night, they were told they could organise and pay for their own accommodation in Melbourne – or spend the night in the international terminal. How good of them! And as for organising another flight, they were told to do that themselves as well, with many waiting on hold to Virgin Blue for more than half an hour on mobile phones.

Is that fair, Mr. Dixon?
This whole episode will come back to haunt Virgin Blue.  Big Time.  They reckon that the incident has already cost them $2million.  But that will be small fry to the damage to their reputation and brand.

The answer was so simple Mr. Dixon, even if the closure was not Virgin Blues fault.  You had a choice to either take the hit, re-read your "Guest Relations Handbook" and look after the passengers, or look the other way.

All it would have taken was for you to feed your passengers, help them to organise accommodation and to reschedule their flights.  Easy.  Just lend them a hand.  Sure it wasn't your fault, but it sure as hell wasn't your passengers either.  All it would have taken was some sort of demonstration of compassion and understanding.

Then the news would have been dominated by the "mystery leak" instead it is all about the shitful, couldn't care less attitude of you and your airline.

And the irony in all of this?  Paul Stoddart announced the launch of his new Aussie airline OzJet today....

*UPDATE:  23/02/05*

• Virgin Blue has caved to mounting pressure (almost 30 hours after the whole debacle started to unfold) and agreed to compensate travellers affected by the terminal closure. Anyone who was delayed for more than four hours will be offered a free flight of equal value.  Why not just do this in the first place? Instead it entered into a public relations fire.
  
• We still don't know what it was that caused all the fuss, beyond the fact that it was a "leak"  I find that amazing.  The reality is that more than 50 people were taken to hospital after toxic fumes made them ill and they still don't know what it was they inhaled.  Nor has it been discovered where the fumes came from and whether their presence was accidental or deliberate.   So just how secure is Melbourne Airport?  The relevent authorities  should have a good hard look at themselves.

The Celebrity Lawyer File: Stephen Hopper

Either Mamdouh Habib is a dangerous terrorist who should have been left to rot in jail or he is an innocent man, persecuted and tortured because he was in the wrong place at the wrong time. But after telling his tale of woe on 60 Minutes last week, Australia has been left to scratch it's head trying to work out how much, if any, truth lies in Habib's tale of torture and woe.

One thing is for sure though, his lawyer Stephen Hopper is a man very much on the nose with the Australian media and Government, and he continued his charm offensive with them on the ABC's Insiders.  Check the whole transcript out, but here's a sample:

VIRGINIA TRIOLI: Stephen Hopper, Virginia Trioli from 774 ABC Melbourne. Do you concede now in the backwash of a rather failed interview, it would seem, on Channel Nine that you've actually - or your client has done himself more harm than good? He has muddied the waters, he seemed incredibly evasive, and the key question, what on earth he was doing in Pakistan and possibly Afghanistan, not being answered, no matter how he protests his innocence has done himself down?

STEPHEN HOPPER: I think what it really shows is it�s a failure of journalism in this country.

VIRGINIA TRIOLI: What, that she didn't ask a tougher question?

STEPHEN HOPPER: What has happened here, there's an exposure of the government not telling the truth about a lot of issues in relation to Mr Habib but what the media have focused on is Mr Habib. Why don't the media have a look at what the government's said and their whole handling of this affair?

VIRGINIA TRIOLI: Mr Hopper, this was Habib's moment to actually give his account, that's what we all expected. I don't think it�s easy in this circumstance to blame it on the media or even the government?

STEPHEN HOPPER: No, no. This might be your expectations and the Australian public's expectations.

Um yep, it was our expectation.  And if you has shut your mouth last week Stephen, then the whole thing might have turned out differently.

I guess everyone is entitled to legal representation, and Habib has got his, in the form of this dill.  It is a disgrace when a legal professional becomes so involved that they lack any objectivity and don’t do their client justice by attacking other individuals and groups.

But once lawyer's like Hopper become involved in high profile issues like Habib's the public get very sceptically.  Australians are naturally sceptically, anyway, and Hoppers antics, angry barbs, and lack of any credible answers over the last week have done little to win his client any support or sympathy.  Quite the opposite in fact....

But his little lawyer-o-meter will still be running all the same.  But I wonder who is picking up the tab?

Self-Awareness in Public

Speaking of Ross over at Strategize, he got me thinking with this post on being self-aware in public; think about the following:

• person or group of people will always get as close to an exit (top of stairs, bottom of stairs, top of escalator, bottom of escalator, etc.) and stop.
• People that rush on to an elevator when it arrives at a floor without waiting for people that are on it to get off.
• People that walk next to each other on a sidewalk, causing other people to have to step out of their way.
• People that hold things in their hands (i.e., skis, umbrellas, etc.) and spin around with them while conversing in a crowd.
• People that stop in the middle of a moving crowd to stick their finger in the air and point at things.

Those things are annoying aren't they?  But I bet we all do some of them, perhaps more frequently than we would like to admit.

I apologise to the people at the bottom of the escalator in the shopping centre today....

Yawn!

I am so tired at the moment.  My new job is keeping me really busy; each day (10-12 hours at the moment) is full of new challenges that sap me of my physical and mental energy.  Not that I am complaining about it... it's kinda like running a marathon, hard work, exhausting but will be well worth it in the end.

I am embarking on a significant change program at work, which despite the acceptance that I have gained in my new job, still requires some delicate and thoughtful management to negotiate the needs of each of my staff members.  More of that soon.

But this week it has seemed that I haven't been able to get enough sleep!  Sometimes I feel like I need a bit more, just a quick kip during lunch to help me power through the afternoon.  I might try this at Ross' suggestion:

• Sit in a chair at a table.
• Clasp a quarter (other coins will work) in between the thumb and forefinger of your right hand (your left hand will work as well).
• Place the quarter edge onto a plate or saucer (basically on to any surface that will make a sharp noise when the quarter hits it).
• Close your eyes.
• The sound of the quarter falling when your fingers release it will wake you up and you will feel refreshed.

Anyone else got any ideas to help recharge during the day (not involving wheatgrass shots)?

Weaselwords at the the Melbourne Business School

Came across this quote (from  Professor Amanda Sinclair at Melbourne Business School) in the weekend AFR...

"The language that has grown up in management is wonderfully conveinient.  It adds a patter of credibility and deters any confronting questions.  Once you try to strip it away, you see that the basis of management is pretty simple, so you have to wonder why you've been using that language in the past.  Is it to make something seem more important than it is?"

Yep, it makes people like Amanda feel "special", plus it keeps her employed....just check out the MBS website and count the weasel words:

"With purpose-built facilities and seamless offerings (huh?  Does anyone know what a seamless offering is?)), Melbourne Business School has the resources and capacity to deliver value-added education solutions (a solution is always value added) for businesses, their managers and future leaders. The learning outcomes that we deliver (delivery of an outcome?) are designed to produce sustained change (change must always be sustained) and bottom-line results. Whether this manifests itself in a major life-changing experience for an individual or the direct enhancement of a company’s capabilities (exactly what does enhance mean anyway?), the learning outcomes from Melbourne Business School are highly actionable (not just actionable, but highly actionable)

Maybe the MBS is trying to beimportant than it really is?  

Sydney: Australia's Krispy Kreme Export Hub

Sydney seems to have become the Australian Export hub for Krispy Kreme Doughnuts.

I was in Sydney this week, and I noticed that two of the seven Sydney stores are at the airport!  And given that they don't have any stores anywhere else in Australia, that means that two of the seven stores, or about 28% of Australian Krispy Kreme Stores are at Sydney Airport....one right at the Virgin Blue departures gate.  Now that's clever.

Why?

Well, for interstate travellers like me, there is an aura of mystique about Krispy Kreme, their stores and their doughnuts.   Most of us have heard of Krispy Kreme Doughnuts, but have probably never visited a store, let alone wrapped our mouth around one of their famous super-sweet glazed doughnuts.  Thus travellers are drawn, out of curiosity if nothing else, to the store at the airport to watch the doughnuts being made, to taste some samples, and to buy a box (or two) to take home with us (if the straw poll on my flight is anything to go by, about one in three passenegers will do just that).  The guys at KK put them all in a box, and then into a carry bag that you can take onto the plane with you. It's great fun, and you can't wait to get home to tell others about it.  It's all about the experience.  Of course when back home, we'll either gorge on the doughnuts ourselves or share them with others; relating the experience (which given the scarcity of locations is both unique and exclusive), furthering the buzz and continuing the mystique that exists around Krispy Kreme.  Peter Davidson noted recently:

"The key is for Krispy Kreme to understand that they are selling more than just doughnuts. They need to understand that they are selling experiences. The excitement in the eyes of a child when told they're going to go get Krispy Kreme Doughnuts. The experience of presenting a box of KK Doughnuts to someone who loves them. The experience of a warm sweet doughnut on the tongue. Savoring the last bight of the last one in the box. These are the moments they are selling. Not just another box of doughnuts on the shelf."

Far from the dilution of the branch that appears to be happening in the US (where you can buy them in Supermarkets), in Australia, the folks at Krispy Kreme seem to understand what Peter suggests, and deliver an "experience" to many Australians, via two key locations at our busiest airport.