Weekend Reading

Purpose

Process

  • Uber’s Next Billion-Dollar Financing Could Be A Convertible Debt Round: http://tcrn.ch/1xpOxuI {TechCrunch}
  • Baidu’s CFO on the future of search: http://for.tn/1szvN6z
  • The Founder’s Guide To Selling Your Company: http://bit.ly/1xuKVrj
  • Need a Loan? Let’s Look at Your LinkedIn Profile First. http://entm.ag/1zRMrpR
  • Americans’ Cellphones Targeted in Secret U.S. Spy Program: http://on.wsj.com/1v9f5l2 {WSJ}
  • Introducing data center fabric, the next-generation Facebook data center network (already allowing Facebook to increase its intra-building network capacity ten-fold with 50x improvement possible): http://bit.ly/1sO7MsH {FB Engineering Blog}

People

Product

Platform

Venture Capital

Miscellaneous 

Is Your Company Relevant to Customers’ Lives?

Empathy is famously considered to be a central principle of effective design, and for good reason. You’d be hard-pressed to design a successful product without first understanding the consumer—what’s important to her, where her priorities lay, etc. Similarly, businesses should make other strategic decisions, about topics such as marketing, retail experience, and mission, based on their knowledge of what customers are truly looking for in life.

I believe that if your company is focused on trying to convince customers why they should buy your product, you’re on the wrong track. The bigger question is how your company can offer something that might contribute to consumers’ lifestyles and to their most ideal visions of themselves. If you can nail this point, you’ll have loyal customers for life.

I recently read that, for example, Microsoft has recently amended its corporate mission. It now seeks to help its customers achieve productivity, and to find a way to make that enjoyable. I honestly can’t think of a better mission for a software company, especially in the modern context of constant distraction and noise. And when you think about it, it’s true that for most of us, it’s not the software itself that we want; we want the results. We want the deep feeling of satisfaction we get from a day of efficient work. This may seem insignificant, but I think it’s likely to cause seismic shifts in the way Microsoft designs products.

As I wrote in a recent piece, Nikon also represents a great example of a company that has moved beyond “customer service” by actually helping customers expand their photography skills. Companies in all sorts of industries can imitate this approach by asking themselves: how can they help people meet health goals? How can they enable people to save time, so they can spend it with their families? How can they help people learn a new skill? Make new friends? The product design, the customer experiences, and even the marketing messages need to reflect the answers to these key questions.

And the answers to these questions may even provide a strong lead on how to fix retail. We’ve all resigned ourselves to the belief that all customers want is convenience, which is why they shop on Amazon. But customers want other things as much, or possibly even more, than they want convenience. For example, connectivity is still extremely important to people—and if retail stores can find a way to make their in-store experiences an opportunity for engagement with other people, they might find a way to get bodies back in the stores. Alternatively, in-store experiences and programming could also seek to entertain or educate customers, instead.

Local DC bookstore Politics & Prose represents an excellent example of how this kind of strategy can help a company not only survive, but thrive, even in a dying industry. Politics & Prose is only expanding its presence in DC, primarily as a result of the way it’s positioned itself as a community mainstay. It offers excellent live readings, book clubs, and writing workshops that all leave customers thinking about the store as if it were a second home. That’s a very particular example, but there’s no reason why it couldn’t be emulated by bigger corporations.

Developing these sorts of approaches takes time. But if your company is ready to embrace uncertainty and test hypotheses, it might find new ways for it to remain relevant to customers’ most significant wants and needs. And strategies like this can help ensure that you’re building a long-term relationship with customers, rather than just offering a one-time exchange.​

The Power of the Crowd And, Inevitably, the Rise of Custom-Made Products

Moses Namkung

Moses Namkung

In the age of the Internet, the crowd is in control of pretty much everything in a way that wasn’t possible just a decade ago. Wikipedia and Twitter are great examples of how we get our information in this new reality. Yelp and various other mechanisms of review give the crowd control in providing feedback. The traditional gatekeepers in nearly every industry have been ousted in favor of a more democratic flow of value and information.

And this year, we’re even starting to see a phenomenon emerging in which customers are accessing control over design and other decisions that shape the very products they buy. For example, fast food chains like Taco Bell and Domino’s are empowering their customers to custom-make their own meals from scratch (via an app) and share them with their friends on social media. This is beneficial for two reasons: it pleases customers to “have it their way,” and it helps the company stay tapped into what sorts of recipes their customers will like, thus improving their standard menu options.

Expect customer-designed items to show up on menus sooner rather than later—and not only that, but I think we’ll also start to see customers getting rewarded for their contributions (and not just with pizza). We could see the burden of marketing redistributed, so that standout customers, who act as brand ambassadors, eventually do the majority of marketing through their large networks. In addition, we may start to see customers making more significant decisions about the companies themselves.

The new trends with fast food got me thinking about other industries, and how they might succumb to customization and crowd control in the near future. My first thought was about the garment industry. I once traveled to Asia and had some clothes custom-made for me, and let me tell you, the power to decide the color, cut, material, and fit of your brand new dress is a luxury for which there is no real substitute. At what point will American consumers decide that mass-produced clothes and other products just aren’t good enough? At what point will we see the first J. Crew design that’s a brainchild of an amateur customer?

But there are plenty of other industries this could apply to, as well: Furniture. Cell phones. Packaged foods. Especially with the advent of 3D printing, I think for many industries, this time isn’t so far away, after all. So how do you get ready for the changes?

The first and most important thing is to realize that everyone has the capacity to be creative. Your people aren’t the only people who can have genius ideas. So your company needs to maintain adaptability by keeping an open mind about where great ideas can come from. Remember that sometimes the greatest insights come from folks who are a few degrees removed from the problem, because they have a fresh perspective. Think about ways your company might be able to empower customers to contribute, and how you might be able to reward them when they do.

Additionally, the internal structure of your own company must reflect the conditions of the outside world, too. This is why Undercurrent is always going on about the importance of the holacracy—if we live in a world in which authority is widely distributed, then of course it’s important for our companies to function similarly. Young people are especially unlikely to tolerate hierarchies and dictatorships, because they are accustomed to existing in a world without gatekeepers. By distributing authority, you empower your employees to exercise their creative muscles and run with it, which will ultimately yield much better results for you.

It goes to figure that you should probably keep all this in mind when you’re hiring, too. A certain percentage of young people on your team is going to be hugely beneficial for keeping the company responsive to these sorts of changes. You’ll also just want to be on the lookout for people who are extremely creative, but who are open-minded enough that they don’t always assume their idea is the best. You have to make room for new influences, and the only way to do that is to hire people who aren’t overly egotistical or possessive of their projects and ideas.

Weekend Reading

Purpose

Process

People

Product

  • Apple Retail SVP Angela Ahrendts: Apple Watch launching in “Spring,” after Chinese New Year: http://bit.ly/1tT8ucd {9to5Mac}
  • Verizon and AT&T aim to support HD Voice calls between networks in 2015: http://bit.ly/1x83OOL {The Verge}
  • Apple’s Next iPhone Rumored To Have Glasses-Free 3D Display: http://read.bi/1Gu8pB9 {Business Insider}

Platform

Venture Capital

Miscellaneous 

Simplicity Saves the Day, Again

I came across this invention, which condenses humid air into drinkable water, and I thought I’d share:

Attached to the frame of the bike and powered by a small solar panel, the device cools down hot, humid air, and as the water condenses, droplets roll into the bottle. The movement of the bike helps send more air into the machine, so water can collect faster.

It really goes to show that, as is so often the case, the most effective solution to a social problem that affects the developing world is often the simplest one. Again and again, attempts to revamp infrastructure fail, but small, affordable devices are often the best way to make a difference. This is extremely encouraging because it means that the products are easy to create, market, and sell — any company can take on such an initiative.

Whether you’re looking to sell clean-burning cook stoves, water purifiers, shoes, cataract surgeries, basic laptops, or vitamin-packed snack foods for the malnourished, there is a huge market of people who will pay small amounts of money for these essentials. Plenty of companies have paved the way with successful examples that not only made a profit, but also made a difference. And it’s a great way to break into markets that might be interested in other product offerings down the line.

It might be worth considering what products your company might have to offer.

Starbucks Commits to Deliver

Lately a lot of companies have been concerned with cracking the delivery nut, which is no doubt an attempt to prove the value of retail in an environment of greatly reduced retail foot traffic. It’s an expensive endeavor, and many who have come before have failed. But some are hopeful that with improved data collection and smartphone app capabilities, they can make it work for them.

Starbucks is the latest company to announce it will soon provide delivery services, which has many experts scratching their heads. How could they afford to provide this sort of service for a $4 latte order? They figure it might require a minimum order amount (and, of course, will be restricted to certain geographic areas). But it’s worth paying attention to, because if things keep going in this direction, we may see delivery replace drive-thrus in urban areas.

As this article adeptly points out, though, one concern for these companies (and others that jump on the delivery bandwagon) is how to maintain control over customer experience when the customer does not step into your store. I think there must still be something special about the experience for it to be truly memorable. For example, I think Anthropologie’s online orders are such a special experience because they come to you wrapped like a present, which makes you feel like it’s your birthday every time you receive a package from them. How could Starbucks deliver a little bit of delight with each order? That’s both the challenge and the opportunity on my mind.

The… Employee?… Is Always Right

I recently blogged about the role of the corporation in America and our perceptions of whom it is meant to serve. My thoughts on that were that a company that puts the interests of shareholders and CEOs above all else is putting itself in a dangerous position.

And then I read this piece about Virgin CEO Richard Branson’s organizational philosophy:

Surprisingly, Branson recently revealed that Virgin does not put the customer first. In fact, Virgin employees are the company’s top priority. That may sound counter to decades-old business wisdom, but it has worked so well for Virgin that Branson says he’s surprised more companies haven’t adopted an employee-centric management strategy.

“It should go without saying, if the person who works at your company is 100 percent proud of the brand and you give them the tools to do a good job and they are treated well, they’re going to be happy,” Branson tells Inc. president and editor-in-chief Eric Schurenberg in an interview.

As he articulates later in the piece, Virgin puts its employees first, its customers second, and its shareholders third. That’s an interesting philosophy and one I think I can really get behind. It seems counterintuitive; but then again, when I think about the most responsive companies I know, the thing they all have in common is an extremely happy staff. This is a pretty radical stance to take, but I think it’s worth considering.

It’s sort of like how the best marketing ends up being word of mouth. You can institute all these mandated processes that must be complied with to ensure great customer service, but ultimately if your employee resents the company, the customer will feel it in the end. Your employees have to feel an authentic urge to represent the company well in order to actually do so.

Ever Think About the Role of the Corporation in American Society?

The Atlantic ran an incredible (and incredibly thorough) thought piece this week on the problem of outsized CEO pay in America, and how this is relevant to widening economic inequality, among other social issues. What I found most interesting about the piece was its assertion that excessive CEO salaries stem from a bigger issue: a fundamental flaw in the way we view the role of companies in our society.

And until we rethink our deepest assumptions about the corporation, we won’t be able to master the challenge of excessive CEO pay, or the inequality it generates. Is the CEO simply the agent of the company’s shareholders? Is the corporation’s only obligation to return short-term gains to shareholders? Or can we begin to think of the corporation in terms of the interests of all those who have a stake in its success—its customers, its community, and all of its employees? If we take the latter view, the challenge of CEO pay will become clearer and more manageable.

This really got me thinking about the holacracy and many other practices we advocate for. Though of course it’s important to pay talented CEOs well, if a company is paying them exorbitant amounts at the cost of lower salaries for the rest of its talent, it needs to make sure it can justify that. In a holacracy, you have a non-hierarchical system that demands a lot of responsibility from all staff members. When those staff members feel that their CEOs and other upper management are being paid unfathomable salaries in exchange for not a whole lot more responsibility, they might not feel as valued as they otherwise would. As organizational structures evolve to suit a changing world, pay structures may also have to evolve accordingly.

I also loved the point that the author made in this piece, which is that in an ideal world, the company would exist not just for the benefit of its shareholders and CEOs. It would be beholden also to the needs and interests of its entire staff and customer base. Currently, very few companies can claim to be accountable to either of those interest groups; they respond to staff needs and customer needs as much as they have to in order to stay in business, but don’t challenge themselves much further than that.

I’m sure there are other, non-financial ways for companies to serve the interests of staff and customers, and if your company can do that, it’s likely to have extremely low turnover rates and high brand loyalty. I mean, I suppose what I’m describing is just another way to look at corporate purpose. But it’s interesting to think of it through this lens.

Where Do You Get Your News?

Shane-Smith

Where do you get your news?

The answer to that question should probably depend on the kinds of markets you’re looking for your company to serve. As everyone knows, the media and publishing industries have changed drastically in the past few decades, but if you think these changes don’t affect you or your business, well… you might already be a lost cause. And I’m not talking about PR and advertising — although of course those things are important, too. More than that, though, it’s crucial to figure out what’s working in media these days, because the success stories have a lot to teach you.

As Shane Smith of Vice explains, “There’s a changing of the guard for every generation in media, and we’re the changing of the guard for Generation Y.” And he’s right. Vice thrives in an industry where everyone else is failing. If you’re looking to reach Gen Y, to understand who they are and what they care about, reading Vice is an excellent way to start. Understanding the ways that Vice operates is an extremely elucidating exercise. Getting familiar with the sorts of content they publish, they tone and style they use, and the formats that engage their audience — all of these things will help you.

I mean, think about it. If the audience you’re targeting doesn’t read the Wall Street Journal, it’s probably not your best strategy to confine yourself to that publication, either.

Of course, Vice isn’t the only example. Off the top of my head, Gawker and its affiliates are another good place to start, because like Vice, they are successful media companies that are run by Gen Y.

CBS, FTW

True adaptability is about more than just change. Virtually any company can see a change looming over the horizon and shift their operating practices, products and advertising just enough so that they can stay in business. However, the company that truly masters adaptability is the one that not only sees the change coming and learns to survive, but that also parlays the shift into a big win.

Case in point: I read an article the other day on CBS’ intention to launch a streaming service for their content. Aptly named CBS All Access, the site would provide access to shows that are currently being aired, as well as an extensive library of those from the past. The service will come with a $5.99/month price tag and contain around 6,000 episodes.

CBS All Access is designed to complement, rather than compete with, existing streaming services. Marc DeBevoise, executive VP of sports, news and entertainment over at CBS, sums up exactly what they are looking for nicely in this quote:

This product is definitely something we’re using to go after the ‘cord nevers,’ who are not subscribing to a bunch of other larger services that include our content—and there are definitely millions of those people in this country. In terms of cord-cutting or -shaving, our view is that our service is priced to be complementary to the other services that are out there. If you are interested in a large bundle of channels that has a lot of various things in it, you may not be a subscriber to this service. But if you’re deeply interested in one, two or many of our shows, getting our content outside of your home or buying earlier access to our content on mobile devices, then you’re one of our superfans and you’re going to convert.

This statement shows not only a clear understanding of the way digital subscribers like to watch their programming, but it also provides a service primarily aimed at those most likely to enjoy it. Rather than attempt to compete with all of the other entrenched, large-content services, such as Hulu or Netflix, CBS is pitching a niche service designed specifically for “super watchers” of their content.

The groundwork for this approach to the new audience of digital subscribers was laid back in the late-2000s, with the launch of the ever-popular, digital-content subscriber, Hulu. Rather than jump on the bandwagon like network rivals ABC and NBC did, CBS opted to keep this ace up their sleeve for the time being.

The reasons for this were twofold: First, prime-time hits like C.S.I, N.C.I.S. and The Good Wife were just too valuable and important to send to an outside service like Hulu. Secondly, Hulu only offered seventy percent of ad revenue for shows shown on their service. Keeping the shows in house allowed CBS to keep 100 percent of ad revenues.

Another important factor was that when Hulu first launched, digital streaming was still in its relative infancy. No one knew exactly where it would go, as well as how receptive customers would be to a service they had to pay for in addition to the fee associated with cable and satellite television. Sure, watching shows when you want to is incredibly convenient. But would that perk be strong enough to justify the extra expense? Of course, we know now that streaming is the future. But at the time it was still very much in the air. The decision to hold off on signing a binding contract before the market had truly fleshed itself out resulted in a pair of big wins for CBS.

The first was their run in the top spot in the ratings, which they would enjoy for the five years following the contracts signed with Hulu by their rivals. When alphabet-network rivals, ABC and NBC committed to the Hulu service, much of their content was then available to stream whenever customers wanted to watch it. This sucked viewers away from watching episodes on television, which resulted in a drop in ratings for both NBC and ABC. And as any content-related company can tell you, the higher you are in the ratings, the more advertising dollars you are going to score.

The second win CBS gained by being intelligently adaptable is the whole basis for the origin news article: CBS All Access. ABC, NBC, Fox…these are all networks that are slaves to Hulu, due to those early contracts. The option for launching a standalone service simply does not exist at this point in time. That means that the $5.99 that CBS rakes in from each customer who buys All Access signifies a higher profit margin than what can be expected by their rivals.

All in all, CBS has played the digital age almost perfectly. By being not only adaptable, but also in a manner most effective, they have shown themselves to be one of the top players in the industry for the foreseeable future. Sometimes it pays to wait and watch, collecting and processing information in the meantime.