Oppose Internet Censorship

Make yourself heard:

https://www.google.com/landing/takeaction/

Since I can’t find better words than Seth on the matter I invite you to read this: http://sethgodin.typepad.com/seths_blog/2012/01/when-the-world-changes.html

Hunters pay the bill or: profit centers done right

The concept of profit centers is often misunderstood as a merely administrative tool to justify the benefit of each department to an organization. Staff functions are usually exempt which is a flaw of this method, but let’s ignore that here. The biggest mistake made is to treat all departments as if they were each separate and isolated parts of the business.

This is how reality works: sales and marketing receive incentives to grow the business. They are the hunters bringing home the orders the business is all about. It is the nature of hunters to take calculated (or not so calculated) risks in order to kill their prey. These risks, in business often manifested in special prices or shorter than standard lead times, typically have consequences on the entire organization. Consequences that everybody but the hunters pay for.

The precious metals industry is an excellent example as it magnifies the impact. Shorter lead times than promised by production will not only cause extra cost (overtime) but also force the organization to hold higher inventories of  precious metals (as raw materials or semi-manufactured products). I remember a business I worked for many years ago where a “hot line” process was introduced to fulfill particularly urgent customer requests. After a short period of time, 80%  of all orders fell in that category rendering the system obsolete, and causing chaos everywhere.

The demand for lower than promised fabrication prices (the two usually come together) causes inter-dependencies between new products and spent materials coming back for recycling, which may – after some treatment – serve as input materials. Such materials have to be kept on stock to save labor cost, and to have the right alloy or pre-fab available when a customer calls. All of this piles up inventory cost for which production is held responsible.

Despite being a marketeer I have to admit that this is unfair. The hunters take all credit for bringing home the prey, they are the stars of the organization, and they get high bonuses for achieving (or over-achieving) their budgets. Production takes the beating for not being fast enough, for being too expensive, or for being inflexible. Here is how it should be done:

1. Sales needs to establish solid planning. Solid and realistic. No hockey stick effects in years 3-5 of the budget. No pressure (this may sound counter-intuitive) on growing the business year by year. The only result of this is that sales will over-promise. Allow sales to make realistic promises based on existing product portfolio and pricing / competition. New products and the economy are a marketing job, not sales. I once worked in an organization that penalized (!) sales people for over-delivering too much on their budget.

2. Based on the sales forecast, production needs to promise volumes, and cost. This will include all inventories required for the NORMAL operation of business, for which the department will be held responsible.

3. Both sides will then be held responsible for their promises. If for any reason sales needs an extra effort from production then it must be clear that sales will pay for it. This includes any effort to achieve shorter lead times, and all price reductions. If this sounds too rigid, how about separate budgets for marketing or management to decide they’ll do a business anyway, for strategic reasons?

Consequently, sales will be more conscious of the effects of its actions on the bottom line of the business. Sales will also be encouraged to think about compensation for the extra effort. If a customer wants an early shipment then there is no reason why should not pay a surcharge. Most will understand, and I know of companies applying surcharges they agree on with their customers at the beginning of a contractual relationship, so the extra price is a known factor and not a surprise.

Try it – it works wonders, it will add to your bottom line, it will prevent customers from playing the system (the purchasing organizations of large corporations in particular have a tendency to push the boundaries of agreed terms and conditions), and it will feel everyone within your company equally appreciated for delivering what they promised.

Best Buy – Last of the Dinosaurs

I have long held the belief that too many companies are run by bean counters – pardon me: financial experts is what I meant – rather than by managers with marketing and people skills. Best Buy is kind enough to serve as further proof of my theory. While holiday sales weren’t bad at all for many retailers, Best Buy saw sales decline by more than 1% in December, compared to the year before. While that doesn’t sound like much it should be noted that Best Buy holds a quasi monopoly on the electronics retail market in the United States, being the last chain standing after the demise of CompUSA (how many even remember them?) and Circuit City. Sales might have been better but it seems like inventory mismanagement lead to quite a few ruined holidays for people holding confirmed online orders.

Larry Downes, contributing author to Forbes Online, made out two important reasons for this effect in his recent article:

1. Unacceptable customer service quality and practices and
2. The fact that people use Best Buy as a show room to check out items they then buy online from somebody else.

A large number of commentators to his article seem to confirm this, and I myself whole-heartily agree, at least with the service issues. Before my inner marketing eye I can see a Best Buy CEO in his office of dark wood, ivy league diploma and golf memorabilia on the walls, pondering his next steps after watching his competition implode. I remember avoiding CompUSA whenever I could because I despised being harassed for additional insurances or service contracts; I quite liked Circuit City but their portfolio was a bit narrow, and they often didn’t have what I needed. With these guys out of the way, what does the CEO’s trusty marketing handbook (located right next to “The Art of War” on the oak shelf) say? It says: in a monopoly situation, milk the hell out of your business!.

So he did, and it shows: staff tends to scatter when approached by customers and is generally not very knowledgeable on the items available. There is a lengthy process to hand over more expensive items to customers after they already committed to buying them (they are all locked up, and few people have a key), prompting me once to leave without the iPod I wanted because I got fed up. And on top of it there is the old harassment scheme again to offer insurances and service plans to people who have already said they don’t want them.

The demise of CompUSA would have shown anyone with a heart for customers and marketing that these practices are a sure way to destroying one’s business. So how about stopping it, and how about redeploying the freed up resources to serve their customers better than ever before? How about offering an incentive plan inviting customers to actually buy the products they just checked out instead of buying them from Amazon back home?

It’s not hard, really, to survive when you are a monopolist. A lot of people still want to touch and feel the things they buy for a lot of money. It’s not hard to get them to buy from you unless you run a perfectly good market position into the ground so bad that customers settle for alternatives. “Best Buy” is a promise. And it isn’t kept. Which is why you lost me.

In Memory of Gernot Kalk

“Not for grown-ups” says Antoine de Saint Exupery’s dedication to “Le Petit Prince”. More than 30 years ago, the book was the centerpiece of  religion/ethics classes held by my teacher (and Lutheran priest) Gernot Kalk back at Justus-von-Liebig Gymnasium in Frankfurt, Germany. Indeed, the story of the Little Prince teaches all about love there is to know. It teaches the selfish love of one thing, and the universal love of all things. And everything in between. And it really is key to this book to read it through the eyes of a curious child rather than the “mature” adult’s to comprehend its metaphorical meaning, and to see the elephant in the snake’s belly.

While Germany defines itself as a Christian country adolescent students are permitted to opt out of “religion” as a subject. Which leaves the respective teachers with both the need to advertise their classes and the privilege to only deal with students who have chosen to attend out of interest.

Gernot managed not only to fill his classes, he also started what I later labeled the “Dead Poet’s Society” – a weekly evening meeting at his surreally large flat in a downtown Frankfurt townhouse, most walls covered from bottom to the high stucco ceiling with book shelves, the living room featuring a full size piano, always with a vase of fresh red roses on top. A small group of his most dedicated students would discuss philosophical texts until late at night, for which some of us (not me) got into trouble with their parents frequently because none of us was 18 yet. (None of us ever mentioned the red wine Gernot served).

It was this connection, it was Saint Ex’s view of love, and it was Gernot’s motto that raising a child means “opening the doors of life” that has  since guided me through life like nothing else.

I was happy to reconnect with Gernot 25 years later at an event at the Justus-von-Liebig Gymnasium in Frankfurt. We have since been in contact again. Gernot did not hesitate a moment when, a few years later, I asked him if he would do the Eulogy for my mother who had passed away. Preparing for the memorial service with Gernot lead to a few long nights which taught me things about my parents and me that helped me tremendously deal with their passing.

Gernot was never afraid of standing up for his beliefs, he helped young men make their case to be accepted for social service rather than military duty; he helped anyone with a problem, including young criminals and drug addicts, to show them a path to a better life. Not all of them took it. Actually, few did, but that didn’t stop Gernot from continuing to offer help, even though he was repeatedly robbed and stolen from.

Gernot never stopped learning in the firm belief that the brain is a muscle requiring exercise as much as the rest of the body. We actually had plans for him to show me his unique method of teaching young people latin-based languages on which he had been working.

I was very sad to learn that Gernot passed away last night after a long struggle with cancer. I will not forget him, and his memory will live on in how I see the world and how I deal with life and death, forever NOT a grown-up.

Fool’s Hats

The fool’s hat has a long tradition in Europe since medieval times: it grants protection from prosecution to the wearer for whatever opinion he expresses while wearing it. The fool’s hat is of great political relevance; it allowed common people to voice their concerns or opinions on the government, their neighbors, another ethnic group or a country, without having to fear prosecution. A bit like Comedy Central being largely protected from lawsuits by labeling themselves “Comedy”.

In Germany and a couple of other European countries the tradition is still upheld during carnival (“Fasching”) season. The season starts on November 11 (11/11) and ends some time in February, still following ancient christian fasting rituals, I believe. The important thing is that not only “common folk” but also political dignitaries (picture: Christian Wulff, German President of State) put on the fool’s hat to express their feelings about political opponents or allies in ways that would be inappropriate or even unacceptable in normal life.

The fool’s head helps expose issues in a funny way and solve them by giving them a new angle. All in all a good thing.

U.S. presidential candidates have adopted the ritual and believe pre-election campaigning is their carnival season. They spend obscene amounts that could feed entire countries on self-promotion and they are wearing imaginary fool’s hats allowing them to promise whatever they want without consequence. They shut down Guantanamo Bay, they reinforce the Mexican border with moats, they pretend not to know where or what Libya is, they praise American values while wearing clothes made in Pakistan (that said, some of the fool’s hats may actually be made in China, too) and – because it never fails – they strew in the occasional insult to Europe who are so hopelessly drowning in socialism that they actually care for each other.

Well done, dear politicians. I’ve been wondering for years why my fellow countrymen in Germany have become so obsessed with Halloween. It is good to see it goes both ways.

Is there an App for You?

Perhaps the word of the year? “App”, short for application because we have not enough time in our lives for long words. There are apps for anything, including remote activation of your coffee maker, instructions on how to tie your shoes (you still have to tie them yourself)  and an app to find your phone with all the cool apps on it in case you lose it somewhere.

So what’s left that can not be converted into an app outside of app programming? Can your job be done by an app? Can an app manage your relationships without anyone noticing? Is there a Siri to give the answers you are giving?

And what if the answer is: yes ?

The meaning of i

For once I am with Seth Godin on a topic: who am I to add another Steve Jobs eulogy to the book? Millions of people have done it today in blogs, articles or verbally, and most look at Steve’s world-changing accomplishments from different angles. What I was wondering is: can his contribution to our world be condensed into one sentence, or even one word? It can. And the word is “i”.

Before Apple, “i” stood for “injection” as in “fuel injection” for cars. Apple turned it into a term to uniquely describe and identify its products: the iPod, iMac, iPhone and so on. The letter i was and is a symbol of empowerment. Apple’s products are generally designed with an emphasis on ease of use and on iron-clad reliability. Their products have empowered people over decades to unchain themselves from office desks and become independent from “experts” who would help them set up their device and troubleshoot it when a blue screen appeared. It simply didn’t happen.

Along with it came a distinct brand image making it easy for users of Apple products to show their loyalty to that particular tribe. Apple products are cool; evil masterminds use Apple products in movies where the cops use Microsoft and Motorola. And the sight of college students showing off their Apple computers at Starbucks’ has become a staple of modern American culture.

By going down this path, Apple distinguished itself strongly from Microsoft and thereby from America’s other 20th century icon, Bill Gates. Microsoft went down the road of trying to please them all, and stay out of the hardware side of the business. This fissure allowed for much more plurality, but at the price of technical complexity and varying levels of quality and compatibility.

These different approaches are even reflected in the companies’ names: while Microsoft says exactly what the company does in an accurate, almost nerdy manner, Apple is a silly graffiti of “I am different and I don’t care about the established ways of doing things”.

While the i clearly stood for individualism in the sense of independence and empowerment it soon became a one-letter attachment to the names of anything nifty or supposedly easy to use. BMW botched it completely with their first version of “iDrive” but got it right in the meantime; Google used it for its iGoogle which made sense, and CNN now has iReports which are generally rubbish. Either way, the intention is to say: “as cool and as easy to use as an Apple product”.

Did Apple get it right all the time? Of course not. They screwed up products badly and frequently to the point where they withdrew them from the market. Their iTunes software is still a pain to use and a disgrace to Apple’s name; the occasional suicide at Foxconn, their Chinese production partner, sheds a bad light on how Apple views the non-”i”s; and their pricing policies have angered not just me in the past (in fact, they angered me just this week. Thanks for dropping the price of the Nano after I had just bought one a few days earlier). And yes, Apple products don’t ALWAYS work; you can not replace the battery on your iPhone or iPod; the products are generally overpriced and there is no competition; there are lots of reasons NOT to buy their products. But that’s besides the point.

The point is that most of us would miss them if they disappeared tomorrow. Which is where much of the grief for Steven Jobs is coming from. It’s not about him, few of us knew him in person. It’s about what he stood for, that spirit of independence and empowerment, the genius of making things as simple as possible but not one bit simpler, that many of us fear may have passed away at Apple together with Steven Jobs.

We fear for our i.

Too Weird

More than a week since Seth Godin’s latest book “We Are All Weird” came out, and I still can’t get myself to buy or read it. It’s been reduced to $ 2.99 on Amazon (e-book version) so not even price is an excuse. If you know me, that’s weird! I’ve been an admirer of Seth’s work for many years, I am a first generation member of his online club “Triiibes”, and his work has greatly inspired and helped both my business and the way I look at this world in general. So what happened?

Ever since “Linchpin”, a monumental turning point in Seth’s focus, he has carpet-bombed the world with more of the same: the “Domino Project” illuminating every aspect of his topic, workbooks, e-books, “Graceful” – a book that blew by me unnoticed – and now “We are all Weird”.

My issue with all this is: Linchpins have always existed, they aren’t Seth’s or anybody else’s invention, and repeating the message over and over again won’t change a thing: being special cannot be learned. If you don’t have the virus already you won’t even know about these books. It’s in you or it isn’t. It is a combination of character, pain level and a spark. You don’t need another book to bring out the Linchpin you already are. And that’s all that needs to be said about it.

My final turnoff was Seth’s blog advertising the new book: I kept on reading his synopsis waiting for ANYTHING new, a new angle, a new topic, a new idea. But: nada, it read like a summary of “Linchpin” followed by raving reviews written by some of my fellow Triiibes-folks (in other words: his most loyal fans). Adding those reviews sunk the whole blog from a level of “personal, heartfelt and urgent” straight to the bottom of “buy my book” advertising. All of his own lessons forgotten?

I continue to admire Seth for his earlier work, and for his always brilliant and creative mind, but he has lost me on his current path. The world didn’t stop turning two years ago, important transformations are taking place and I am waiting for the day when Seth will emerge from fighting his demon to contribute thoughts and inspiration to the things that really matter right now.

Finding Rodney Brown

Hi everyone,

This blog is of a more personal nature: in 1979, I spent a month at Hampton High School in Hampton, VA, as part of a school exchange program. I stayed with the lovely family of Mrs. Brown who, in addition to her own four children, had quite a lot of foster children of all ages that she raised (the count was 102 children in 1982). Rodney then spent a month with my family and at my school in Frankfurt, Germany.

We met twice afterwards when my parents and I traveled to the USA; then we lost contact. I am trying to reconnect with Rodney.

The picture was taken in 1982 – Rodney front left, the older girls are his sisters Mary and Robin (my dad and I in the background). There was a third sister, Kathy, who is not in the picture. I don’t even have the old address anymore but seem to remember it was “Newport News Ave”… all a bit blurry. I’ve written to Hampton High School several times (still have the old “Crabbers” t-shirt from 1979) but I am not getting any answers. None at all, very strange.

Testing the “six degrees of separation” theory I am asking for your help: if you know anyone in Virginia or even in Hampton, would you mind forwarding this blog to that person? I am quite sure that a family this large will have left a trace in town.

Thanks a lot in advance – I’ll report back if I succeed, of course.

The Gold Vending Machine

Tip of my virtual hat to Ex Oriente Lux, the (you guessed it) German manufacturer of gold vending machines. The first one was installed in Abu Dhabi a little while ago; the second just went into operation downtown London.

A radical new business model geared at impulse shoppers of which apparently there are many. The machine receives updated gold prices every few minutes which is fancy but not really necessary since the gold inventory inside was doubtlessly hedged before putting it in there.

Anti-Money Laundering? No problem – for larger purchases you simply swipe your passport. An exciting new solution to an overly mystified market.

Congratulations!