Monday, December 11, 2006

Eric Schmidt, CEO of Google interview

Here's what Eric said recently,

View from the top: Eric Schmidt, Google CEO

Published: October 12 2006 22:47 | Last updated: October 13 2006 01:25

CEOs review the news on video on

This week: Eric Schmidt, CEO of Google.


FINANCIAL TIMES: Clearly, the dominant business news event this week is your own acquisition of YouTube. Why is user-generated video worth $1.65bn to Google?

ERIC SCHMIDT: Well, on the money side, it’s easy because we have what we think is the world’s best advertising system and we can take that advertising and use that over time to build quite a business off all of the things the users are doing on YouTube. The real reason, however, was not the money, and not even the advertising, it was because we believe that video is going to be, and is sort of already, one of the most important new media types on the internet.

More and more people are going to be doing videos of one kind or another to communicate ideas, sell their product, record their memories, and ultimately a lot of the existing broadcast world that we’re so used to will become available on the internet.

FT: Since doing that deal, you’ve been quite assiduous in going and visiting some of your other big media partners and talked to them about the significance. Has it made them again ask this question that we’ve heard a lot about Google ‘friend or foe?’ and worry about Google moving into content creation.

SCHMIDT: We, of course, want to be their friend. We don’t want it to be Google foe. We see ourselves as a technology provider and a distribution network. We’re not in the content business. And the partnerships that we’ve constructed over the last few years, and especially the ones over the summer, really show the application of our advertising network to the content and media capabilities of our partners. So we want those media partners to put their media content, literally their content, into this emergent new and much larger system as a result of the YouTube acquisition.

FT: You’ve met with some of them already. You’ve met with News Corp executives, you’re in New York, meeting maybe with people maybe from Time Warner. Are they comfortable with that explanation?

SCHMIDT: All of the media companies are dealing with dramatic changes in their business. All of them are looking for a partner. All of them are looking for a way to make money. One of the great news, from our perspective, is people are using this content on the internet. The bad news is it doesn’t make as much money for the businesses. And ultimately the businesses need to make money in order to produce the new content. So what we’re trying to do with all of these partners is to say, ‘if you work with us we can combine our advertising platform and your content with a much larger audience.’ So far people like that message, they are now trying to figure out what to do about it – should they, should they not, under what terms, and those sort of things.

FT: Another new generation internet property which has generated a lot of interest recently is Facebook. Are you thinking about acquiring Facebook? Do you think Yahoo might acquire them?

SCHMIDT: I shouldn’t speculate on mergers and acquisitions either our own possibilities, or competitors’. It’s clear to me that social networks are going to grow and grow quickly. We did a very, very significant deal with MySpace, which we’re very proud of. We think it’s the defining economic deal in that space.

FT: Your acquisition speaks to the tremendous technological change which we’re still really at the beginning of. Are there going to be victims? And which companies might be those victims.

SCHMIDT: You know, every technology dislocation has winners and losers. And the winners are the companies that can adopt these technologies more quickly and the losers are the ones that are stuck, unable to make the transition, unable to take advantage of new technologies. It is clear that the internet and the web and what is generally known as a marketing term of web 2.0 are the defining new technologies. I think that race is underfoot. It’s too early to say who the losers will be. Clearly the winners will include companies like Google and all the other companies that have made their bets on web 2.0.

FT: More broadly, Silicon Valley has been roiled by corporate governance controversies recently. There have been the pre-texting issues at Hewlett-Packard, the backdated stock options issues which have claimed some very senior, long-standing leaders in the technology industry. What kind of an impact is that having on innovation, on people running public companies like yourselves now?

SCHMIDT: It makes people be more careful and I don’t think that’s necessarily a bad thing. Certainly, some of the standards in the past may not have been as tight. Some of this may be revisionist looking back. Certainly the pre-texting was not appropriate because it was a violation of privacy. I think all of that is a sideshow relative to the innovation in the Valley, which is fundamentally created by small teams of people who see the world in a different way. And I don’t see these crisises, these scandals and so forth, as fundamentally changing that.

The story of the Valley is still the same. It’s about small teams doing amazing things with limited resources, often with venture capitalists, creating great companies.

FT: You talk about the innovative tradition of the Valley. More generally there has been a lot of questioning in America right now, about this country’s ability to maintain its competitive advantage in a globalised world with lots of cheap programming talent in other developing countries. Is the Valley still competitive?

SCHMIDT: The Valley is certainly competitive. It would be a lot more competitive if our government would start doing rational things like letting the smartest people in the world come into the United States on H1 visas rather than preventing them from doing so. So a small number of changes from the government, including increasing the funding in basic research and development around computer science and science in general and also trying to make sure the United States remains an attractive place for the best and the brightest. The compound value of that, the innovations and the companies that these, essentially, immigrants create, is a part of the American story.

FT: You made a big impact in Europe recently addressing the Tory party conference. Why did you choose to do that and what kind of a message do you think an innovative American company, like Google, has for Europe? For Britain?

SCHMIDT: It’s interesting that in Britain, of all the European countries, the United Kingdom is one of the best examples of innovation. If you look at the creation of the Cambridge technology centres, all around the research centres that were formed there, the transformation that’s gone on in British society over the last 10-15 years, encouraging innovation, encouraging new capital formation, it’s really an icon for the rest of Europe. And I think that’s wonderful.

My message was a message of optimism. My message was that technology, we’re just at the beginning, and I was not particularly trying to make a partisan comment. Google is certainly not political. And the messages that I gave, and I happened to be invited to [I guess] the conservatives’ party, but I would have given the same speech to any of the other parties and, in fact in any of the other European countries.

The important message is a message of innovation - that if you unleash the human capital that is present in Europe you will get tremendous economic returns for those countries. And that’s the story of America. It’s a story that’s well replicable in Europe.

FT: Thank you very much.

SCHMIDT: Thanks.

FT: And now the prediction.

SCHMIDT: You know there’s a whole new phenomenon. Young people online all the time, communicating in new ways and building new social environments. New enviroments, new friends, new ways in which they interact. All of us will be affected by this in ways I could not possibly predict. Political. Social. Community. New businesses. It’s amazing to watch this next generation spend their time online and change the world. / Companies / UK - Pearson ‘on track’ for record year / Companies / UK - Pearson ‘on track’ for record year:
"Underlying sales at Pearson Education were up 6 per cent, driven by a 7 per cent increase in the school business, which has gained the leading share of the school adoption market in the US thanks to new teaching and assessment technology.

The smaller professional training business was up 9 per cent, while higher education sales were up 3 per cent before the year-end selling season."

Ok, it's not Google or WalMart, but Pearson seems to have figured out content distribution business in the education space.

And I believe that the education space is the defense industry of the next period. People need to get smarter, faster. And most of the power networks realize it.

Friday, December 08, 2006 / Services & tools / / Services & tools / Search / Services & tools / / Services & tools / Search: "COMPANIES THE AMERICAS: Google acquires wiki pioneer JotSpot

By: By Richard Waters inSan Francisco, Financial Times
Published: Nov 01, 2006

Google's steady encroachment into the corporate software market continued yesterday as it announced the acquisition of JotSpot, a three-year-old private company that runs wikis, or communal web pages.

The acquisition also opens a new front in the competition between Google and Microsoft, further rounding out the internet company's package of 'productivity' and collaboration tools that are coming to resemble an online version of the Office desktop software.

Founded by Joe Kraus - whose earlier creation, the internet portal Excite, experienced one of the most dramatic rises and falls of the dotcom era - JotSpot is one of several 'Web 2.0' companies that have aimed their services mainly at corporate rather than individual users.

Wikis are web pages that can be written or edited by a group, making them a potentially useful tool for workers in different locations who are trying to collaborate.

As such, they reduce the need for large numbers of group emails and attachments, which have become the bane of many office workers' lives." / Services & tools / / Services & tools / Search / Services & tools / / Services & tools / Search: "Google to beat TV in race for ad revenues

By: By Carlos Grande and Andrew Edgecliffe-Johnson in London and Richard Waters in San Francisco, site
Published: Nov 01, 2006

Google is poised to overtake Britain's main TV channels in the race for advertising revenue, underlining the internet's challenge to traditional media.

The internet search company's advertising revenue in the UK is expected this year to surpass Channel 4's anticipated 2006 take of �800m. Within 18 months, it is forecast to overtake ITV1, Britain's leading commercial TV channel and the country's biggest single recipient of advertising revenue, according to Mindshare and Initiative, two top media buying groups.

Carat, another media buyer, believes the milestone could be passed as early as next year.

ITV1 accounted for 90 per cent of the ITV group's �1.63bn total advertising revenues last year.

" / Companies / Telecoms - 3mobile to put Google searches on its handsets / Companies / Telecoms - 3mobile to put Google searches on its handsets: "3mobile to put Google searches on its handsets

By Philip Stafford andAndrew Parker in London

Published: November 16 2006 02:00 | Last updated: November 16 2006 02:00

The 3mobile group yesterday announced a deal with Google, the internet group, to put its search function with its handset, in a move that 3mobile says is a key step to making the internet fully mobile.

The Google deal is expected to be among several partnerships with technology companies unveiled today by Hutchison Whampoa, owner of the 3mobile phone network.


The Hong Kong-based group regards the partnerships as the most significant development for its third-generation mobile networks since their launch three years ago.

The deal will allow 3mobile customers to benefit from direct access to Google search and will be rolled out to individual markets in due course.

" / Home UK / UK - Google Earth spurs Bahraini equality drive / Home UK / UK - Google Earth spurs Bahraini equality drive: "Google Earth spurs Bahraini equality drive

By William Wallis in Manama

Published: November 24 2006 21:29 | Last updated: November 24 2006 21:29

Since Bahrain’s government blocked the Google Earth website earlier this year for its intrusion into private homes and royal palaces, Googling their island kingdom has become a national pastime for many Bahrainis.

The site allows internet users to view satellite images of the world in varying degrees of detail. When Google updated its images of Bahrain to higher definition, cyber-activists seized on the view it gave of estates and private islands belonging to the ruling al-Khalifa family to highlight the inequity of land distribution in the tiny Gulf kingdom." / Companies / Media & internet - Google to cancel Google Answers service / Companies / Media & internet - Google to cancel Google Answers service: "Google to cancel Google Answers service

By Richard Waters in San Francisco

Published: November 29 2006 23:50 | Last updated: November 29 2006 23:50

Google said on Wednesday that it would end its Google Answers service, marking a rare decision by the search company to trim its rapidly-expanding portfolio of services as it shifts its product development focus to improving those considered to have the greatest potential.

The admission of defeat also points to an area where Yahoo, though widely seen as still lagging Google in search, has outstripped its arch-rival.


Google Answers, launched four years ago, provides online answers to users’ questions by drawing on contributions by real people, rather than the algorithmic search results for which Google is better known.

According to ComScore, in June the service attracted just under 1m users in the US, compared to the 12.3m for the similar Yahoo Answers. Yahoo itself on Wednesday claimed 60m users worldwide for the" / Home UK / UK - Google and BSkyB move to take online ad model to TV / Home UK / UK - Google and BSkyB move to take online ad model to TV: "Google and BSkyB move to take online ad model to TV

By Andrew Edgecliffe-Johnson,Media Editor

Published: December 7 2006 02:00 | Last updated: December 7 2006 02:00

Google has taken its first step towards moving its online advertising model into television, launching a broad-ranging alliance with British Sky Broadcasting that the search group said could be its most lucrative deal.

The partnership will at first see Google provide its user-generated video, e-mail, search and targeted advertising tools to customers of BSkyB's five-month-old broadband internet service - the first licensing of the videotools Google bought when it acquired YouTube in October.


The companies plan to extend the partnership to BSkyB's core television platform, however, by replacing traditional 30-second television adverts with targeted commercials stored on the hard drives in BSkyB's set-top boxes." / Companies / US & Canada - Google outlines BSkyB thinking / Companies / US & Canada - Google outlines BSkyB thinking: "Google outlines BSkyB thinking

By Andrew Edgecliffe-Johnsonin London

Published: December 8 2006 02:00 | Last updated: December 8 2006 02:00

Can James Murdoch create a British YouTube? This week's British Sky Broadcasting alliance with Google covered many areas, from putting e-mail accounts on the Google Mail platform to exploring ways of taking Google's online ad model to TV viewers.

The partners' plan to collaborate on a Sky-branded user-generated video portal was the first such licensing of Google's technology, which has been greatly enhanced by its $1.65bn acquisition of the YouTube video sharing site in October. But it may also offer BSkyB new opportunities to exploit its premium content.

Plans to organise the portal, expected to be called Skycast, into themed areas will allow it to appeal to specific groups of sports and film fans, rather than the general audiences drawn to Google Video and YouTube.


Tuesday, December 05, 2006

Retail Medicine - from an NGO's point of view

Health Care in the Express Lane: The Emergence of Retail Clinics - "Health Care in the Express Lane: The Emergence of Retail Clinics

Mary Kate Scott

July 2006

With catchy slogans such as 'You're Sick, We're Quick,' and promises of affordability and convenience, a new wave of retail health clinics located in mini-malls and popular discount stores is making its mark on the health care landscape.

This report examines this innovation from a national and California perspective. It provides an overview of in-store clinics and converging trends in retail and health care, and explores the potential for these clinics to succeed as a viable business model.

Surveys indicate that retail-based clinics appeal most to higher-income consumers willing to pay for convenience, and uninsured consumers, who have few alternatives and limited flexibility. According to the report, national consumer reviews have been positive and retail clinic numbers are expected to skyrocket from less than 100 in mid-2006 to several thousand by the end of 2007.

In California, which has a relative handful of in-store clinics, the lure of a huge consumer market is irresistible. But health regulations and looming turf battles with physicians may limit profitability and scalability.

The complete report is available under Document Downloads at the link.

In the GME, it's about time / Business Life - Pioneers of retail therapy:

"When a truck arrives to deliver a new CheckUps clinic, its contents have been packed so that they can be unloaded in a precise order for assembly. The walls come first, with finished interiors in rich cherry and maple woods. All the wiring is pre-installed. Laboratory equipment, including an X-ray machine, is rolled out, followed by the finishing touches of furniture, computers, medical supplies, doors and decorations.

It takes the company only about nine days from being granted building permission to transform a 800 sq ft space inside the retailer into a low-cost, walk-in medical clinic.

A nurse can then begin to see customers for minor illnesses such as sore throats or preventive measures such as vaccines. Clinics offer routine healthcare with prices of between $30-$50 a visit – significantly less than patients would pay to see a doctor.

Such clinics are not only appearing in supermarkets. Companies such as RediClinic are now setting up operations in city-centre drugstores across the US.

Operators hope that as well as delivering care, their well-appointed clinics will send customers an important message: access to healthcare can be inexpensive, but it does not have to look cheap.

Watch Wall Mart and the Health Business / Business Life - Pioneers of retail therapy:
"to push the cause of the electronic age, Mr Barrett has formed a coalition of at least 10 large companies, including Intel and Wal-Mart. It aims to establish a standard for employees’ electronic medical records, with the data stored at an independent repository.

In the Google Mart Economy, you can get a pretty good idea of what's going to happen, by watching what Google and Wall Mart are doing.

Retail Medicine / Business Life - Pioneers of retail therapy:

"Advocates say they could fundamentally change how healthcare is managed in the US by providing the infrastructure for a nationally accessible system of electronic medical records."

Will it be different this time?

A standard narrative of the post war economy, is that when America sneezes the rest of the world catches a cold.

Now some are arguing that has changed. But they have argued that before.

Only time will tell. / Comment & analysis / Analysis - Europe bets on weathering a US downturn:

"Europe bets on weathering a US downturn

By Chris Giles and Ralph Atkins,

Published: December 4 2006 18:45 | Last updated: December 4 2006 18:45

Currency traders have become convinced over the past two weeks that something big is afoot in the global economy. They are not convinced by the sanguine noises coming from the Federal Reserve and think the risks of a “hard landing” in the US economy have risen. But, in a departure from the old wisdom, they do not seem worried about the effects of a US downturn on European economies – rejecting the old adage that “when the US sneezes the rest of the world catches a cold”.

They appear to be trading on the belief that, while US interest rates will fall in an effort to counter a slowdown, European rates will continue to rise – and, by implication, that Europe’s economic upswing has some way to go. This has led to steep declines in the dollar, which tumbled to a 20-month low against the euro and to a 14-year trough against sterling."

Wednesday, November 01, 2006 / Companies / US & Canada - Google acquires wiki pioneer JotSpot / Companies / US & Canada - Google acquires wiki pioneer JotSpot:

"Google acquires wiki pioneer JotSpot

By Richard Waters in San Francisco

Published: November 1 2006 02:00 | Last updated: November 1 2006 02:00

Google's steady encroachment into the corporate software market continued on Tuesday as it announced the acquisition of JotSpot, a three-year-old private company that runs wikis, or communal web pages.

The acquisition also opens a new front in the competition between Google and Microsoft, further rounding out the internet company's package of 'productivity' and collaboration tools that are coming to resemble an online version of the Office desktop software.


Founded by Joe Kraus - whose earlier creation, the internet portal Excite, experienced one of the most dramatic rises and falls of the dotcom era - JotSpot is one of several 'Web 2.0' companies that have aimed their services mainly at corporate rather than individual users.

Wikis are web pages that can be written or edited by a group, making them a potentially useful tool for workers in different locations who are trying to collaborate.

As such, they reduce the need for large numbers of group emails and attachments, which have become the bane of many office workers' lives.

The acquisition echoes Google's recent purchase of Writely, an online word processing service, which was relaunched last month as Google Docs and packaged with an undated version of the company's spreadsheet service.

JotSpot's service will also be moved onto Google's software architecture, and will be integrated with these and other Google services, said Mr Kraus.

He added that the push for tighter integration was part of a broader effort at Google, begun by its co-founder Sergey Brin, to move from releasing large numbers of stand-alone services to building tighter integration and 'richer' features into the services Google already has,

Google has said that its aim is not to replace Microsoft's Office, but to create a range of services that are more suited to online collaboration between groups of workers. JotSpot has so far sold its service to 2,000 companies, said Mr Kraus, but the fees will be dropped now that it is part of Google.

He added that the wiki service was likely to fit closely with the company's word processing and spreadsheet services, which are aimed at a 'crossover market' of both consumers and small businesses."

Sunday, October 29, 2006

Staples opens digital copy services centers - 10/19/2006 - Purchasing

Staples opens digital copy services centers - 10/19/2006 - Purchasing: "Staples opens digital copy services centers
By Staff
October 19, 2006

Click here!




More >>

As a way to help purchasing further consolidate its supply base, Staples now offers its contract customers digital copy and print services.

Through Staples Digital Copy Services, office buyers at mid-sized to large businesses can get high-quality on-demand copy and print services with quick turn-around and delivery, says Lisa Hamblet, vice president of business-to-business services for Staples in Framingham, Mass.

Staples has opened two new digital production centers equipped with digital technology. One in Edison, N.J., serves customers in the mid-Atlantic region of the U.S., while the other in City of Industry, Calif., serves customers on the West Coast.

Staples started offering Digital Copy Services to contract customers in December, 2004, when it opened its first pilot center in Sharon, Mass. The center provides customers with marketing collateral and brochures, training manuals, employee handbooks, college course guides, full-color presentations, signage and postcards. In the 18 months it's been open, the center has experienced double-digit sales growth which the company expects to continue over the next five years.


Friday, October 27, 2006

no money to be made with the dinosaurs, back to the mammals

News - Hoover's: "10/23/2006 10:43:57 AM EDT
Commercial Appeal, The (Memphis, TN) (KRT)

Oct. 19--FedEx Kinko's is done trying on hats and seeing little change on the balance sheet.

Last week, it told 175 account executives that their positions were being reassigned as the company focuses its energy chiefly on small businesses and providing a mobile office to the growing number of Monday-Friday road warriors."

Wednesday, October 25, 2006

Advertising Age - Draft FCB Wins Wal-Mart's $580 Million Ad Account

What's going on at Wall Mart's?

Advertising Age - Draft FCB Wins Wal-Mart's $580 Million Ad Account:

"Seismic shift
The decision marks yet another move in Wal-Mart's seismic shift in corporate image and physical presence. The review, managed by Catherine Benison, CEO, Select Resources International in Santa Monica, Calif., and captained on the client side by Wal-Mart's senior VP-Marketing Stephen Quinn, highlights a year of changes as the retailer moves away from a consumer-product-marketing approach to a retail-marketing approach focused on its 'store of the community' program. "

Sunday, October 08, 2006

Google Book Search sells books

Boing Boing: Google Book Search sells books:

Publishers attending the Frankfurt Book Fair this week have gone on record thanking Google for its controversial Google Book Search program, which makes searachable indices of millions of books available online. They say that making their books visible to Internet users searching for answers converts these searchers into customers. They also say that Amazon's likewise controversial Look Inside program has been good for sales (duh -- Amazon isn't interested in programs that reduce sales of books).

'Google Book Search has helped us turn searchers into consumers,' said Colleen Scollans, the director of online sales for Oxford University Press...

'When we looked at the first six months of stats, we saw that 30 percent of Google Book Search clicks went directly to our site, while roughly 40 percent went to Amazon,' said William Shepherd, Osprey's managing director.

'Our sales through the Web are steadily increasing in proportion to our total sales, and we're confident that Google Book Search will accelerate this growth.'

Walter de Gruyter/Mouton-De Gruyter, a German publisher, said its encyclopaedia of fairy tales has been viewed 471 times since appearing in the program, with 44 percent of them clicking on the 'buy this book' Google link.

One of its many scientific titles, 'Principles of Visual Anthropology', has seen about one-quarter of the 1,206 views click on 'buy this book'.


Friday, October 06, 2006

Time zone is a competitive advantage

In article about Chicago, and the role of 24 hour derivative exchange and the wealth it has brought to the city, this paragraph caught my eye..

The two executives’ travel plans in September reflect how the introspection has been reversed to leverage the demands for 24-hour global trading, using Chicago’s advantage of a time zone capturing parts of the business day in Asia and Europe as its hub.

...Chicago may have lost its mantle as manufacturing capital of the world, but has been honest and nimble enough to groom itself as the pre-eminent derivatives centre”.

The link

And then there is the infrastructure business

The Link to the FT Story - Engines of globalisation: the story of Maersk:

In fact, Maersk reveals little more about its activities than the minimum required by the Copenhagen Stock Exchange and says almost nothing about its corporate strategy. But the Copenhagen-based group’s $38bn annual revenues last year make it not much smaller than Microsoft, the software giant.
As the largest company in the sector, Maersk is a key driver of the reduction of the costs of ocean shipping that has been under way since the container was invented in 1956. The process has been crucial to making globalisation possible and has driven costs down so far that it often now costs more to ship a container by road 100 miles from a port to its final destination than it does to move the container by sea from China to Europe.
When it costs less to move a container across the ocean than 100 miles inland, what does that do to the definition of space?

The most important goal they identify is that Maersk should control as many as possible of the companies that influence its containers’ movement from country to country. The other is to pursue scale – both in the size of the company’s main businesses and in its ships.

The company can be single-minded in pursuit of these objectives because it is largely immune from short-term shareholder pressure. The founding McKinney-Møller family holds 55 per cent of the shares and 75 per cent of voting stock, with 49.8 per cent of the shares all held by a single family charitable trust.

When a private company can be this successful, what does that mean for the comparative advantage of a public corporation?

Saturday, September 23, 2006

"Image" = Brand? = Trust = Sales?

Brad DeLong's Semi-Daily Journal: How Bad Is Wal-Mart's Image?:

"How Bad Is Wal-Mart's Image?

Well, the big retailer’s image is better than President Bush’s, Defense Secretary Donald Rumsfeld’s, Vice President Dick Cheney’s, but not as good as Secretary of State Condoleezza Rice’s.

Here’s what the Wall Street Journal/NBC News poll found when it asked respondents to “rate your feelings” toward the following.
Very or somewhat positive Very or somewhat negative
Wal-Mart 45% 31%
Rumsfeld 31% 43%
Bush 42% 49%
Cheney 43% 50%
Rice 55% 28%

And for comparison…

Target 51% 10%

(Rows don’t add to 100 because remainder were neutral or weren’t sure.)"

Thursday, August 24, 2006

Ads Coming to Texbooks?

Ads Coming to Texbooks - New York Times:
Published: August 15, 2006

Textbook prices are soaring into the hundreds of dollars, but in some courses this fall, students won't pay a dime. The catch: Their textbooks will have ads for companies including FedEx Kinko's and Pura Vida coffee.

Selling ad space keeps newspapers, magazines, Web sites and television either cheap or free. But so far, the model hasn't spread to college textbooks -- partly for fear that faculty would consider ads undignified. The upshot is that textbooks now cost students, according to various studies, about $900 per year."
Textbooks are a model waiting to be broken. So... suppose the Open Source community has a way to monetize efforts that don't need the publishers?

This may not be the winning model, but textbook delivery is broken and outmoded. Sooner or later the system is going to change. This may the disruptive innovation that moves it to tip.

Thursday, August 17, 2006

Wal Mart and Politics

Some have suggested that in the developing global economy, nation states will be joined by global corporations as political actors. The following longish article from Today's FT may be a description of how this can happen on the ground.

FT is subscription only, so I've pasted the full article below:

Wal-Mart takes the fight to its critics

By Jonathan Birchall and Holly Yeager

Published: August 16 2006 19:40 | Last updated: August 16 2006 19:40

John Edwards, Democratic vice-presidential candidate in 2004, was in Pittsburgh this month doing his bit for the party ahead of November’s midterm elections to the US Congress. His agenda included addressing a rally against the shortcomings not of the Bush administration but of Wal-Mart, the country’s biggest retailer and largest private-sector employer.

“Wal-Mart needs to be a more responsible employer, by offering decent wages,” Mr Edwards told a crowd who had turned out to support Wake Up Wal-Mart, a campaigning group funded by the UFCW grocery workers’ union that, along with others, the company staunchly refuses to recognise. Mr Edwards also attacked the company’s record on health benefits, arguing that the dependence of some Wal-Mart employees on state-funded Medicare programmes meant the chain was being unfairly subsidised.


“Every consumer should know when they walk into Wal-Mart their tax dollars are going to provide healthcare for Wal-Mart workers...while the people who own Wal-Mart are making billions of dollars,” he proclaimed. The retailer struck back immediately. A Wal-Mart official denounced the Pittsburgh event as part of “a union-funded publicity stunt that’s more about politics than anything else”.

Then Working Families for Wal-Mart, officially a non-profit lobbying group, hit even harder, pointing out that the former senator’s family had previously held Wal-Mart shares. “Now he and other political candidates are telling working men and women that they can’t save money or take jobs at Wal-Mart? This is all about special-interest politics. And that’s sad,” said a spokeswoman for Working Families.

This is the world of Wal-Mart, the political retailer.

Under Lee Scott, chief executive, the company has in the past year expanded beyond the usual realm of corporate lobbying to wage a fully-fledged campaign in the mainstream of American politics. “When a company is as large as ours, we’re certainly going to have a lot of interaction with both politics and government,” says Bob McAdam, vice-president of corporate affairs.

On Tuesday it sent 18,000 “voter education” letters to its employees in Iowa, pointing out what it said were factual errors made by politicians who had attacked the company. The group is to despatch similar letters to its staff in other states.

But Wal-Mart’s embrace of some of the darker arts of US politics – it has set up a campaign-style “war room” at its Bentonville, Arkansas headquarters – also attests to the success its critics have had in turning the “big-box” retailer into a political issue at local, state and, increasingly, national level.

In January, Maryland passed a law aimed at making Wal-Mart increase the amount it spends on its workers’ health benefits – a move that has led to similar legislation being proposed elsewhere. In July, in an initiative aimed at large national retailers including Wal-Mart, Chicago’s city council passed an ordinance intended to raise the minimum wage for retail workers.

John Kerry, to whom Mr Edwards was running-mate, cited Wal-Mart and the family of founder Sam Walton in a speech this month on the failings of the US healthcare system. “It’s unconscionable and it is unacceptable that five of the 10 richest people in America are Wal-Mart stockholders from the same family – worth double-digit billions each – but they can’t find the money to secure health coverage for their own workers and their families,” he complained.

Senator Byron Dorgan in his new book, Take This Job and Ship It , uses the company to illustrate what he sees as bad consequences of globalisation. He devotes a chapter to Wal-Mart’s business practices in China, which he calls “the most obvious example of what has gone terribly amiss on the way to a healthy and truly free market”.

For Wal-Mart, all this raises an unwelcome possibility – that it will become a focus of debate during the 2008 presidential election campaign as well, something that its union critics are eager to bring about. “It’s going to be so important in the presidential cycle,” says Chris Kofinis, of the Wake Up Wal-Mart campaign. “Everyone is going to talk about this issue . . . about where you stand on corporations that make $11bn a year in profits and say they can’t afford to pay for healthcare for their workers.”

Wal-Mart’s evolving political strategy, shaped with advice and support from Edelman, the public relations consultancy, has been twofold. First, it has attacked its critics – arguing that it is the victim of an unholy alliance between Democrat lawmakers and the unions they rely on to deliver votes and campaign financing. Second, it is seeking to make the argument that the company is good for America.

It is doing this by mobilising its own political constituency, seeking alliances with local community leaders and businesses – in particular, black and Hispanic groups – that accept Wal-Mart’s argument that the company helps low-income Americans by offering low prices and jobs with the prospect of advancement.

Working Families for Wal-Mart, funded mainly by the retailer, is part of both strategies. Operating with more personal animosity than might be appropriate from the company itself, it is attacking the store chain’s critics. For instance, it has just launched a website called, aimed at exposing what it says are special-interest links between the anti-Wal-Mart campaign, the unions and politicians in the Democratic party (Wake Up Wal-Mart struck back with its own site – Abunch­

Working Families has also set out to mobilise support. It is chaired by Andrew Young, the pro-business former mayor of Atlanta who served as the first black US ambassador to the United Nations. Its board includes Hispanic business figures, while its recently created state organising groups include leading black clergy.

“There’s a large majority of people out there who support Wal-Mart and who have had no vehicle to voice their opinions on what they see as Wal-Mart’s positive impact on their lives and on the economy,” says Kevin Sheridan, Working Families campaign director and a former spokesman for the Republican National Committee.

At the same time, Wal-Mart has reorganised its own community relations operations and has announced plans for “Wal-Mart jobs and opportunity zones” in inner-city areas, aimed in part at encouraging businesses owned by people from ethnic minorities.

In an indication of the strategy’s potential, the black caucus on Chicago’s city council was evenly split on the move to set a minimum wage for workers in the city’s big stores – with opponents saying depressed inner-city areas needed Wal-Mart’s investment and tax revenues.

The vote in Chicago also highlights the risk to the Democrats of trying to use Wal-Mart’s record to galvanise support in the run-up to 2008. While Mr Kerry and Mr Edwards might see Wal-Mart’s low-paying jobs and healthcare record as a rallying point for voters who feel left out of the American dream, other elements of the party will take a different view – including New York’s Senator Hillary Clinton, who in 1986-92 served on the board of the retailer based in Arkansas, her home state.

John Zogby, the pollster, argues that focusing too much on Wal-Mart “means no net gain”, because union voters already favour the Democrats and the party must seek other support if it is to recapture the White House in 2008. “When are the Democrats going to talk to Wal-Mart shoppers?” he asks (see below left). Mr Zogby, who has done some polling work for Wake Up Wal-Mart, says Democrats still lack “a strategy that deals with Joe and Mary Middle America – and Joe and Mary Middle America are at Wal-Mart”.

Polling shows that people who shop at Wal-Mart do care about human rights and worker healthcare, he adds. Democrats therefore need a more subtle message “about trouble in paradise, without carpet-bombing paradise. There are too many people who shop there”.

Mr McAdam counters that the recent criticisms from the Democrats are instead tied to the party’s own battles in the primaries. To win union support, candidates are prepared to deliver an anti-Wal-Mart message that will often not be carried through in the coming midterm campaign.

“There’s abundant survey data that says that attacking Wal-Mart for the population as a whole is detrimental,” he argues. “So if they persist in doing this as the general election approaches, they may find themselves doing more harm than good.”

Wal-Mart is meanwhile taking no chances. It is pursuing a broad effort to enhance its public image, including its record on environmental sustainability. That might drive a wedge in an alliance between its union critics and environmental groups such as the Sierra Club, which have faulted the company on issues ranging from waste water management to its stores’ impact on urban sprawl.

In a sign that political Wal-Mart is here to stay, Leslie Dach, a former political adviser to Al Gore’s failed 2000 presidential campaign, this month becomes head of its government relations and corporate communications. Mr Dach, who will serve on the company’s powerful executive committee, joins Wal-Mart from Edelman, where he became the retailer’s top politics tutor.

His appointment shows just how far the chain has come, with its small army of consultants and political advisers, from the days when Sam Walton argued that if you gave the customers low prices and good service, everything else would look after itself.

Mr McAdam, who will work for Mr Dach, argues that the retailer had no choice. “I think any company that is faced by the kind of campaign-style attacks would be naive not to respond in kind. It became clear to us that, to maintain our ability to do our business, we needed to have a similar style of response.”

But here's the kicker...

A purchase on psephology

By Holly Yeager

Published: August 17 2006 03:00 | Last updated: August 17 2006 03:00

What does where you shop say about how you vote? In the case of Wal-Mart, John Zogby, the highly regarded pollster, thinks it says a lot.

As he reviewed data from the 2004 US presidential election,


Mr Zogby noticed something unusual: a strong correlation between how often people shop at Wal-Mart and how conservative they are.

The figures are stark: 76 per cent of voters who shopped at Wal-Mart every week voted for George W. Bush, while 23 per cent voted for John Kerry. By contrast, 80 per cent of those who never shopped there supported Mr Kerry, while just 18 per cent voted for Mr Bush.

"Wal-Mart is more than retail. I think it has become a culture unto itself," says Mr Zogby, who is writing a book about what he calls "the new American consumer". That culture is seen in the books and magazines the retailer puts on its shelves and those it keeps off. "You walk into a Wal-Mart and you're walking into the moral equivalent of a spiritual revival tent for born-again Christians."

Just as "soccer moms" and "Nascar dads" drew the scrutiny of pollsters in past elections, Mr Zogby is now paying close attention to weekly Wal-Mart shoppers.

African-Americans and Hispanics who shop there frequently are significantly more conservative than their cohorts who do not, he says. And he knew that Mr Bush was in deep trouble with the public when the president's standing slipped among weekly Wal-Mart shoppers, who had been among his strongest supporters.

Mr Zogby has placed other US retailers on the political spectrum. Firmly on the left are Neiman Marcus, Bloomingdale's and Macy's. Target, he says, is near the centre, "a hair to the left", and in the centre-right are Sears and JC Penney.

But none are as strong a predictor. "Wal-Mart's pattern is just incredible."

Monday, August 07, 2006

Costco can...Wallmart Can't

The Neighborhood Retail Alliance: Chicago: Up Against the Wal Mother...:
"In a striking decision that is certain to reverberate throughout the country, the city of Chicago ordered 'big box' stores to raise the wages of their employees by the year 2010. As the NY Times reports this morning, 'The ordinance, imposing the requirement on stores that occupy more than 90,000 square feet and are part of companies grossing more than $1 billion annually, would be the first in the country to single out large retailers for wage rules.'

The response from the Walmonster: 'It means that Chicago is closed for business.' Yet it seems that the onerous requirements are not barriers for Costco, a box store that currently offers wages and benefits that exceed those of Chicago's statute."

Tuesday, August 01, 2006

Earthdance: Chapter 20 - Sustainable Society:

"In this light it is interesting to consider historian Arnold Toynbee's observation, after studying twenty-one collapsed civilizations, that what they had in common was inflexibility under stress and the concentration of wealth into few hands. We cannot deny the current stress. Will we remain inflexible in maintaining a system that concentrates wealth to the increasing detriment of most humans?"

But the logic of successful global business suggests that the requirement for sustainability might also be the requrement for global business success.

Monday, July 31, 2006

And from the Huffington Post

Hooman Majd: The End of Empire | The Huffington Post:

Hooman Majd is a writer based in New York. He is a contributing editor at Cargo magazine (Conde Nast), has written for GQ (Conde Nast), the New York Times, The New Yorker, and the New York Observer.

Hooman Majd has had a long career as an executive in the music and film businesses. He was Executive VP of Island Records, where he worked with a diverse group of artists including U2, The Cranberries, Tricky and Melissa Etheridge; and Head of Film and Music at Palm Pictures, where he executive-produced James Toback’s “Black and White” and Khyentse Norbu’s “The Cup” (Cannes 1999).
"September 2005: the end of Empire. It matters not who or what is to blame other than nature’s ugly daughter Katrina, one war of retribution, and another of pre-emption. What matters is that the United States of America, the richest and most powerful superpower of all time is no longer particularly super.
Not in the eyes of our enemies, not in the eyes of our friends. Is Sri Lanka mocking us with an offer of 25 grand in aid? Surely not. Or is Nigeria, with her offer of a cool mil? What about Iran, ready to airlift aid workers and ship five tanker-loads of oil; is she mocking the ‘Great Satan’? Fidel Castro wants to send doctors; maybe they can bring us some cigars. And Hugo Chavez? Good thing the CIA didn’t listen to Pat Robertson, for dead men can’t offer aid.

The Empire accepts the offer of aid from the U.N., yes, the U.N., where John Bolton was just rolling up his sleeves. Lop off how many stories of the U.N. Secretariat building and it wouldn’t matter? Perhaps not, Mr. Ambassador, the floors where aid is decided and dispatched.

Iran rejects the latest European demands they cease uranium conversion just as National Guard troops are flown from the Persians’ gulf to ours. Who’s afraid of the big bad wolf? We are in shock, the world watches in awe. There is no spectacle quite like the spectacle of an empire on her knees. And Caesar can do nothing but fiddle." - That End-Of-Empire Feeling:
"That End-Of-Empire Feeling
David Corn
December 07, 2005

David Corn writes The Loyal Opposition twice a month for Corn is also the Washington editor of The Nation and is the author of The Lies of George W. Bush: Mastering the Politics of Deception (Crown Publishers). Read his blog at

Is the United States in the last throes of empire? That sounds like an ideologically loaded, fatalistic and defeatist question. But it's what I've been wondering about at the start of this holiday season. Might future historians look back at the Bush II days and ask if this was the point when the country started slipping? Might the war in Iraq be regarded as a desperate act of a superpower that had already peaked? Will economists of the latter 21st century examine our economic decisions and say, 'What were they thinking?' Or has the Grinch gotten to me?"

Google-Mart and the End of Empire?

Kirkpatrick Sale
is the author of twelve books, including Human Scale, The Conquest of Paradise, Rebels Against the Future, and The Fire of His Genius: Robert Fulton and the American Dream.

All empires collapse eventually: Akkad, Sumeria, Babylonia, Ninevah, Assyria, Persia, Macedonia, Greece, Carthage, Rome, Mali, Songhai, Mongonl, Tokugawaw, Gupta, Khmer, Hapbsburg, Inca, Aztec, Spanish, Dutch, Ottoman, Austrian, French, British, Soviet, you name them, they all fell, and most within a few hundred years. The reasons are not really complex. An empire is a kind of state system that inevitably makes the same mistakes simply by the nature of its imperial structure and inevitably fails because of its size, complexity, territorial reach, stratification, heterogeneity, domination, hierarchy, and inequalities.....

In my reading of the history of empires, I have come up with four reasons that almost always explain their collapse. (Jared Diamond's new book Collapse also has a list of reasons for societal collapse, slightly overlapping, but he is talking about systems other than empires.) Let me set them out, largely in reference to the present American empire....

First, environmental degradation. Empires always end by destroying the lands and waters they depend upon for survival, largely because they build and farm and grow without limits, and ours is no exception, even if we have yet to experience the worst of our assault on nature....

Second, economic meltdown. Empires always depend on excessive resource exploitation, usually derived from colonies farther and farther away from the center, and eventually fall when the resources are exhausted or become too expensive for all but the elite....

Third, military overstretch. Empires, because they are by definition colonizers, are always forced to extend their military reach farther and farther, and enlarge it against unwilling colonies more and more, until coffers are exhausted, communication lines are overextended, troops are unreliable, and the periphery resists and ultimately revolts....

Finally, domestic dissent and upheaval. Traditional empires end up collapsing from within as well as often being attacked from without, and so far the level of dissent within the U.S. has not reached the point of rebellion or secession-thanks both to the increasing repression of dissent and escalation of fear in the name of "homeland security" and to the success of our modern version of bread and circuses, a unique combination of entertainment, sports, television, internet sex and games, consumption, drugs, liquor, and religion that effectively deadens the general public into stupor....

Jared Diamond's recent book detailing the ways societies collapse suggests that American society, or industrial civilization as a whole, once it is aware of the dangers of its current course, can learn from the failures of the past and avoid their fates. But it will never happen, and for a reason Diamond himself understands.

As he says, in his analysis of the doomed Norse society on Greenland that collapsed in the early 15th century: "The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity." If this is so, and his examples would seem to prove it, then we can isolate the values of American society that have been responsible for its greatest triumphs and know that we will cling to them no matter what. They are, in one rough mixture, capitalism, individualism, nationalism, technophilia, and humanism (as the dominance of humans over nature). There is no chance whatever, no matter how grave and obvious the threat, that as a society that we will abandon those.

The experience of the UK is not mentioned. They seem to have made the transition form empire to non empire rather well. While no longer a world power supported by their military might, they continue to deliver a decent citizen experience to those lucky enough to be within their borders. Whether this is enabled by their reliance on the American military adventure or there are other more replicable reasons, it is a history worth understanding.

Sunday, July 30, 2006

Google the Government in 2008

Tapscott's Copy Desk:
"U.S. Senators Tom Coburn, M.D., R-OK, Barack Obama, D-IL, John McCain, R-AZ, and Tom Carper, D-DE, today urged the full Senate to pass S. 2590, the 'Federal Funding Accountability and Transparency Act,' a bill that will create a Google-like search engine and database to track approximately $1 trillion in federal grants, contracts, earmarks and loans. The Senate Committee on Homeland Security and Governmental Affairs approved S. 2590 unanimously today. The House has already passed similar legislation that is limited to grant disclosure only.

'Passing this bill will help end the culture of secrecy in Washington and restore some measure of the public's confidence in government. Technology has made it possible, like never before, to fulfill our founders' vision of enabling all citizens to understand our nation's finances, investigate abuses and hold elected officials accountable,' Dr. Coburn said, adding that a hearing being held today in the House Government Reform Committee on abuses in homeland security contracting highlights the urgent need to include contracts in the database.

'All Americans deserve to know where their money is being spent. 'Googling' the government will not only help expose and eliminate waste, but dispel misconceptions about the scope of our commitments. Many Americans, for example, assume we are spending a large percentage of our budget on foreign assistance when we are not. Whether you're on the left or right, there is no worthy argument against transparency,' Obama said."

War in the GoogleMart Economy

Hezbollah - Lebanon - Israel - Middle East - New York Times:
"The United States and Israel have each fought conventional armies of nation-states and shadowy terror organizations. But Hezbollah, with the sophistication of a national army (it almost sank an Israeli warship with a cruise missile) and the lethal invisibility of a guerrilla army, is a hybrid. Old labels, and old planning, do not apply. Certainly its style of 21st-century combat is known — on paper. The style even has its own labels, including network warfare, or net war, and fourth-generation warfare, although many in the military don’t care for such titles. But the battlefields of south Lebanon prove that it is here, and sooner than expected. And the American national security establishment is struggling to adapt.

“We are now into the first great war between nations and networks,” said John Arquilla, a professor of defense analysis at the Naval Postgraduate School, and a leading analyst of net warfare. “This proves the growing strength of networks as a threat to American national security.”

In a talk that Mr. Arquilla calls Net Warfare 101, he describes how traditional militaries are organized in a strict hierarchy, from generals down to privates. In contrast, networks flatten the command structure. They are distributed, dispersed, agile, mobile, improvisational. This makes them effective, and hard to track and target.

A net war differs from all previous wars, which were about brute confrontation of forces, mass on mass — what Matthew Arnold called bloody contests of “ignorant armies” meeting on the “darkling plain.”

Net war is the battle of the many, organized in small units, against conventional militaries that organize their many into large units. These network forces are not ignorant. They are computer literate, propaganda and Internet savvy, and capable of firing complicated weapons to great effect.

“The pooling of information is certainly a characteristic of these kinds of insurgencies,” said Daniel Benjamin, who served on the National Security Council under President Bill Clinton before joining the Center for Strategic and International Studies. “In Iraq, for example, the lessons on how to build and place I.E.D.’s have spread and been assimilated in record time. There is certain to be the insurgent equivalent of a PowerPoint presentation on Hezbollah’s successes that will make the rounds of the insurgent and terrorist Web sites.”

and... at the end of the column, the most prescient quote:

“Most critically, we have to get better at — it’s such a cliché — winning hearts and minds,” said a military officer working on counterinsurgency issues. “That is influencing neutral populations toward supporting us and not supporting our terrorist and insurgent enemies.”

"Winning hearts and minds" is also the central business problem of customer facing business in the GME.

The Old is News

Join Wawa!:
"Simplifying our customers' daily lives

Wawa's vision is 'to simplify our customers' daily lives.'

To achieve this, we hire the best people, build world-class facilities and provide an overpowering offer.

Now, while all of these things are important to our success, the number one reason our customers 'gottahava Wawa' is the special relationship our associates have with our customers. A relationship built on the 'Wawa Values' each associate lives every day. Our values are: Value People, Delight Customers, Embrace Change, Do Things Right, Do the Right Thing and Passion for Winning.

At Wawa, every customer is a valued friend who is always welcomed back with a warm smile and a friendly greeting.

When we talk to our customers, they tell us they like to shop at Wawa because our associates like each other and work together as a team and because our associates always include them as part of our store family.
The 'Cheers' of Convenience Stores

Wawa has been called the 'Cheers' of convenience stores by our loyal customers -because we are a friendly neighborhood store where everybody knows your name. A place where you can see familiar faces, a place where you can leave your worries behind for a few minutes each day.

We all live in a hectic world - too much to do - not enough time - Our associates attempt to simplify our customers' life and make their day just a little bit better, from a fresh cup of coffee - to a great tasting hoagie a friendly smile .... to making a new friend - the effort and personal connection with our customers is what makes Wawa so special.

No matter what an associate's job at Wawa is, the number one goal will always be the same, to simplify our customer's life by fulfilling this goal, each and every day, creating an atmosphere of trust, friendship and brand loyalty that few companies can match.

To our customers, our associates are Wawa."

Sunday, July 23, 2006

Is this the disruptive innovation for automobilles

Electric sports car packs a punch, but will it sell? | CNET
"Asked about the EV1, a General Electric electric car that was summarily shut down, Musk said the car's short life wasn't likely the result of a conspiracy between car manufacturers and oil companies. Instead, he said, the car probably failed because of big-company inertia.

'Don't conspiracy what you can explain by incompetence,' he said."

Friday, July 21, 2006

In the GME ..state boundaries change their meanings

Ballots and Bullets - New York Times:
"The fact that Hamas and Hezbollah pursue democratic legitimacy within the state while also employing violence on their own marks a watershed in Middle Eastern politics. For one thing, the boundary between state and nonstate violence has essentially been erased. Has the Palestinian government demanded an exchange of prisoners with Israel, or has the Hamas militia? Israel has been acting as if it were at war with Lebanon — its targets have included a Lebanese Air Force base and Beirut's international airport - but Hezbollah began the hostilities, not the Lebanese government."

Thursday, July 06, 2006

It's Not Personal or Political, It's Business

It's now become pretty clear that the US political system is dysfunctional. Many are involved in trying to figure out how to fix it. Perhaps it's so difficult because people are using the wrong language, combined into an inappropriate narrative, to shoe horn the new reality into the conventional wisdom.

Red state, blue state, moderates, left, right, middle, extremes, base, conservative, liberal are all word concepts that are based on a world is disappearing.

Maybe a more useful narrative comes from the world of the net and business. In the GME all businesses are moving to understand that success comes from focusing on the transaction. Success comes from making the transactions easier, faster, simpler, and standards based. The web has demonstrated that brand loyalty and the customer purchases that derive from them can all be thought of as transactions. And every touchpoint has to deliver value to the customer.

Creating more time by eliminating unnecessary, unprofitable activites seems to be the key to sustainable efficiency. Eliminating anything that does not directly contribute to an improved customer experience is the key to an expanding profitable market position.

And so with politics in the US.

Consider the poltical industry using the terms that are commonly used to think about the auto industry. Let's say the GM is the Democrats and Ford are the Republicans.

General Motors (The Democrats) are presently trying to stay alive. Management has blamed everyone else for their persistant failures. It's the legacy expenses, it's global competition, it's the high cost of labor, it's the union. (In politics, it's the ruthless, unfair competition from the Reupblicans).

In fact, the real problem was that they were unable to produce a product that people wanted to buy.

Just to continue the metaphor....

The internet removed information advantage. Few people buy a car without searching the web for price, feature comparisons. The traditional channel model had to be changed very quickly. Then competition for market share, for GM and Ford (the only American competition), increasingly depended on massive advertising. To make matters even worse the "advertising" was mostly in the form of rebates and should have been seen for what it was - lowering prices.

GM management focus was on their most profitable item, SUV's, innovating around emission requirements by calling their SUV's trucks. In retrospect for management,this was clearly unsustainable as everyone understood that energy efficiency was the wave of the future. But it produce some profit for the quarterly reports, and so the reality of secular trends was ignored.

Top managment was focused on the stock price, the quarterly profits,and somehow keeping the whole thing going. My guess is they defined "insuring access to oil" as the most serious challenge of the 21st century. From their limited narrative it's only common sense.

But if management was focused on that, they didn't focus on the central problem-
make a product that people wanted to buy.

Toyota is the counter example. They didn't have to resort to rebates (lowering prices). They seem to be doing just fine, opening plants, creating jobs in America and all over the world. Increasing market share through internal growth, not purchases.

The GM management lived in a pretty protected world. No matter how much they failed, as long as they were able to hold onto their jobs, their comp didn't go down. Until private capital came into the game. It's likely that after Kerkorian finishes with these folks, they're going to be working for Renault/Nissan.

How might this narrative apply to politics?
The traditional political business is essentially no growth. Based on the number of people who regularly participate, it seems the entire industry has about a 25% market share (that's the number that typically vote in a non presidential election.

The industry is managed by professionals who are relatively insulated from risk, as long as they stay in the game. Even if one loses a particular election, the career benefits of having been an elected or non elected player are high. There is a very complex supply chain for the industry that has been growing quickly as the political parties have become revenue generators that keeps everyone satisfied with the status quo.

An innovative way for winning elections started being developed in the late 70's. It was an incremental improvement, but seems to have lead for predictable results for the Republicans. Use any means necessary to get customers loyal to your brand to vote (the central transaction), and do everything you can to keep the other brands loyalist from voting. Being able to consistently win, is a very effective revenue generating tool. Much easier to raise money, if you can offer a reasonable certainty that the money will be well spent.

This was an incremental improvement as this has been the way the industry has worked for a long time, perhaps since it's inception. The first innovation was the insight that in a stable market, you can consistently win elections by motivating a very,very small number of voters. The second innovation was the willingness to use any means to get those small number of brand loyalists to vote. Not surprisingly, an appeal to fear and greed can be very effective. The use of the best technology was not really an innovation, just a normal practice of a good technician. Technology is hardly ever a sustainable advantage. But it does give a major first mover advantage.

These incremental innovations have now become the primary technique of both the Democratics and Republicans, as rebates were the primary technique of the traditional Auto industry. They will continue to be the primary technique, because in a stable, almost niche, market, it works time after time. It delivers the "quarterly results". It is very difficult, as we can see from GM. Toyota was spared the problem. Probably becuase they decided at their founding that they could only become a global powerhouse by building a better product at a competitive price. (A similar situation to many big businesses now growing in India,Korea and China and other developing economies.)

The fact that the unintended consequences might lead to wholesale taking of power from top management was hard to see when all time and mangement focus is devoted to doing the wrong thing, faster and cheaper. But, once the information advantage was taken away and the industry was exposed to true global competition, most interested, but even casual observers saw the coming problem pretty clearly.

And, for the auto industry, when one person, with the resources and interest, believed that the risk of unlocking the underlying value of the enterprise was worth it, he joined the game. ( Perhaps this is analgous to Bloomberg, Cosine and other billionaires who have recently joined the political game.)

The immediate result is that the top management no longer lives in a risk free environment. The possible end result is the disappearance of GM as an entity, becoming instead a subsidiary of some network driven by Nissan/Renault.

If this analysis makes sense, the way to fix politics, might come from a truly disruptive innovation, that expands the market in internet time.

It's likely that from the conversations taking place on the web coupled with the wide access to communication tools, and the now impossible to ignore dysfunctionality of the present system, a truly disruptive innovation is already in formation.

It's always important to remember that Google was started and grew from 2 graduate students - albeit very, very talented - at Stanford.

Sooner or later, a team, a group, a person, will build a functionality that delivers the appropriate customer experience for the non consumers of politics. It will probably be based on delivering useful (that is understandable) information, within an actionable time frame. It will probably focus on real things - how much money am I spending, who benefits from that money, and am I getting value received for the money I'm spending. It's essentially IAI, instantly accessible information.

And it will not be as simple as a rebate. It's clear that people understand and value, perhaps even more than money, a lowering of risk and a increase in their individual possibility of pursuing happiness. In an information scarce society, the underlying expectation was that no one would willingly agree to spend money on making the society as a whole a better place. In an information rich society, there is enough evidence that voluntary giving, at all income levels, is a natural human impulse. The outpourring of money and time after Katrina or the Tsunami are the most recent examples.

As in business, so in politics.

Love the customer, trust the customer, do everything you can to make sure the customer is getting value at every touch point. Management in business has already seen the long term advantages to them of this approach. Sooner or later, professional politicians will probably get it, or a new management team will be brought in to unlock the value in the American enterprise.

Monday, July 03, 2006

IAI is moving from the economy to the society

Instantly Accessible Information (IAI) is a central feature of the Google-Mart Economy. As Toffler points out in Revolutionary Wealth, the society's relationship to time is changing in a fundamental way.

Time delay has always been a central strategy of maintaining the information advantage. Decisions have to be made in real time. Information delivered too late to inform a decision is no longer useful information. As the expectation of IAI becomes mainstream, it will become much more difficult to claim authority merely by claiming to have access to better information.

We saw it first in the financial industries, where time is most clearly related to money. It is now moving quickly through retail, service and manufacturing industries. The wave is just now starting to reach some of civil society's central institutions - education and government.

The enterprises in these sectors are particularly vulernable. They were formed in information scarce environments, and many have based their value creation on their information advantage. As that advantage slips away, the very basis of their power and authority will inevitably be redefined in fundamental ways.

They will be forced to innovate to maintain their position. As in business, so in education and government, flawless execution and information based decisions will be increasingly demanded by the customer.

The story is starting to appear in the mainstream media.

On Higher Ed:
Which colleges are really delivering $30,000 per year of value?

Panel's Draft Report Calls for an Overhaul of Higher Education Nationwide - New York Times:
"Nearly every aspect of higher education in America needs fixing, according to a draft report of a national commission that calls for an overhaul of the student financial aid system, better cost controls by colleges and universities and more proof of results, including testing.

The report by the panel appointed last year by Education Secretary Margaret Spellings was highly critical of the nation's institutions of higher education. It said there was a lack of accountability to show that students were learning, that college costs have risen too high, and that 'unacceptable numbers of college graduates' were entering the workforce without skills that employers say they need.

In addition, the draft said, 'rising costs, combined with a confusing, inadequate financial aid system, leave some students struggling to pay for education that, paradoxically, is of uneven and at times dubious quality.'"

And in government
Here is an issue on which both left and right agree. There are no cultural divides. It is only the professional politicians who have problems with it.

But what will happen to a political system where many of the primary incentives are based on the power to control resource allocation, with almost no personal accountability?

On Right and Left, a Push for Government Openness - New York Times:
Published: July 3, 2006

WASHINGTON, July 2 — Exasperated by his party's failure to cut government spending, Senator Tom Coburn, Republican of Oklahoma, is seeking cyberhelp.

Jamie Rose for The New York Times

Mark Tapscott of The Washington Examiner has promoted the spending database in that newspaper and on his blog, Tapscott's Copy Desk.

Mr. Coburn wants to create a public database, searchable over the Internet, that would list most government contracts and grants — exposing hundreds of billions in annual spending to instant desktop view

Type in 'Halliburton,' the military contractor, or 'Sierra Club,' the environmental group, for example, and a search engine would show all the federal money they receive. "

Monday, June 26, 2006

Buffet to give nearly $31 billion to Gates foundation

Buffet to give nearly $31 billion to Gates foundation:
"In an interview with Fortune magazine, Berkshire Hathaway Chairman Warren Buffett announced he will give nearly $31 billion -- most of his wealth -- to the Bill & Melinda Gates Foundation.
As the world moves from an information scarce to an information rich environment, the concepts that organized 20th century reality become a little less useful.

When Bill Gates and his foundation will control $60 billion dollars in the service of fixing the world's health and education problems, what does that potentially do to the common wisdom of nation states and big NGO's as the only formal networks capable of focusing on the big issues?

Saturday, June 24, 2006

Letter: Not a better mousetrap

Letter: Not a better mousetrap:
"In regard to your editorial (“Closed primary means low turnout,” The Daily Astorian, May 25) you correctly point out that there are a number of reasons for low voter participation in the primaries. Your solution is to allow the independent voters to participate in the partisan political process. Unfortunately, this defeats the purpose of primary elections.

They were originally set up to allow party members full participation in their party’s selection as opposed to the decisions of a few powerful men in a smoke-filled room. This has generally been successful. Yes, it does exclude the uncommitted independent, but then this was also true under the old system. Should Oregon institute open primaries, I will not vote in them, since they no longer serve the purpose for which they were intended."
C'mon.. most of the folks who are "independents" are not consumers or fans of the political industry. They don't vote because they don't care. Whether that's a good thing or a bad thing can be legitimately argued, but a mediocre product, with a terrible customer experience, will not attract grow it's market. even with huge infusions of cash.

The Morning News :: Opinion Page

The Morning News :: Opinion Page:
"Election day will come, and it won't matter how many people rallied in the park.

Springdale saw 5,000 people in the park in April. Another large rally for immigrants' rights took place in May. Then a couple of months passed. Thursday, Republican party nominee for governor Asa Hutchinson came to Springdale to announce how he'd curb illegal immigration."

Tougher laws in Arkansas won't slow immigration to the United States but could divert it to other states. That's victory enough for many. My problem is this: There is no way to be tough on immigrants who arrived today and not be tough on immigrants who arrived years ago.

The people who arrived years ago broke our laws too. However, we showed little interest in enforcing our laws until this election year. Even the most ardent anti-immigration forces acknowledge that. It's a sore point with them.
As long as the election system is based on the niche market that votes, it doesn't supply a very sustainable incentive structure for finding the best solution for the most people.

And it's NOT the politicians fault. What would you do in the same position. If you don't get elected, it doesn't matter what you believe.

Friday, June 23, 2006

International IDEA | Electoral System Design

International IDEA | Electoral System Design:

"The choice of electoral system is one of the most important institutional decisions for any democracy. Electoral systems define and structure the rules of the political game; they help determine who is elected, how a campaign is fought, the role of political parties, and most importantly, who governs. "

It's the rules that create the strategies that win. Within our rules and history. MVC has been the best strategy to win.

International IDEA | Voter Turnout

International IDEA | Voter Turnout

And here's a place to find international stats, that are not about winning elections, but about using participation rates to say something about the political industry.

NOW with Bill Moyers. Politics & Economy. Election 2004 — America Votes | PBS

NOW with Bill Moyers. Politics & Economy. Election 2004 — America Votes | PBS

A great resource for why people do or don't vote. But still it concentrates only on the cost of voting. Not the benefit that is received.

According to NOW, America participation in elections has rarely reached 50% in the US.

SpringerLink - Article

SpringerLink - Article:

Like other administrative reforms designed to make voting easier, postal voting has the potential to increase turnout. However, the expanded pool of voters will be limited most likely to those already inclined to vote but find it inconvenient to go to the polling place. This conclusion is consistent with the growing body of research that suggests that relaxing administrative requirements is not likely to be the panacea for low turnout among the disenfranchised."

You can lower the cost of playing to almost zero, but if the product still stinks, nobody is going to play.

Pasadena Star-News - Draw California voters back to the polls

Pasadena Star-News - Draw California voters back to the polls:
"IN the recent election, voters were asked to cast ballots in a statewide primary election. Less than a third of registered voters cast ballots.

This was one of the lowest turnout gubernatorial primary elections in California's history.

Why were most voters no-shows?

It is hard to know what was driving such miserably low levels of voter participation. But a few hypotheses are floating around that merit research in coming months.

First, low voter participation in statewide primaries is not a new phenomenon. In fact, as I've written recently, since California's experiment with the 'blanket primary,' voter interest in statewide primaries has dropped considerably.

In 1998, when the state used the blanket primary in a gubernatorial primary, 42.5percent of registered voters participated. But in the 1994 and 2002 primaries, with more restrictive participation rules like those used in the recent primary, voter participation was 35 percent or less.

So one important explanation for low voter turnout in our recent primary is how participation is restricted for primary-election voters. If voters can't cast meaningful ballots, they don't turn out to vote.

Second, for many registered voters in the state, given the rules restricting which primary they could cast ballots in, there was little on the ballot to drive them to the polls. Republicans (making up around a third of registered voters statewide) had few choices to make on the ballot. So, after the final tallies are completed, we'll likely find that participation by registered Republicans was slight.

Third, registered Democrats (and the 'decline-to-state' votes who could cast ballots in the Democratic primary if they wanted) had important choices to make in a number of statewide races. But in general, unless they were political junkies, it was impossible for them to figure out which Democratic candidate might be best suited for a particular statewide seat, as there are few differences between most Democratic candidates in California.

Further, the campaigns that Democrats ran didn't help. Even though many millions were spent in the Democratic contests on candidate advertising, little of it was informative. Instead of informative campaign communications, the advertising blitz was mainly mudslinging. It's also worth noting that a lot of the campaign money was spent on uninformative mailers and those idiotic recorded telephone messages that turn voters off."
So how much does this sound like a "blame the customer" excuse of a failed marketing campaign?

It's hard to acquire customers, when your product is sub optimal and your process is broken. It's very hard to grow a market, when customer acquisition costs go through the roof to try to make up for a bad customer experience. News Articles: Readers Identify Issues, Preferences for Upcoming Elections News Articles: Readers Identify Issues, Preferences for Upcoming Elections

Here's the outlook for the folks who actually do the work of government. FedSmith is an information website for federal employees.

The Smoky Mountain News

The Smoky Mountain News

One of the best descriptions i've ever read of life on the ground for state legislators. It's no wonder it's so hard to get it right!

Lebanon Daily News - Update from the 48th District campaign trail

Lebanon Daily News - Update from the 48th District campaign trail:
"Out on the campaign trail, there has been a significant change to Folmer’s staff. Joe Sterns, a political consultant for West Lawn Graphics, has taken over as Folmer’s press secretary and spokesman, replacing Laurel Lynn Petolicchio of Mt. Gretna.

Petolicchio and husband Louis are close friends of Folmer and with him founded the Constitutional Organization of Lebanon political-action committee last year. Folmer said the couple played a key role in convincing him to run, and then in organizing his campaign.

It was a mutual decision for Laurel Lynn Petolicchio to step aside.

“They are dear friends of mine, and they have a life to get back to,” Folmer said.

Sterns began working for Folmer during the primary. Although just 31, he brings a wealth of political experience to the campaign.

He worked four years for the state House Republican Caucus as a speech writer and was campaign spokesman for Pat Toomey during his unsuccessful run for U.S. Senate against incumbent Arlen Specter in 2004. He is a director on the board of the Schuylkill County Young Republicans and a former chairman of the Pennsylvania Young Republicans. He also currently serves as the vice chairman of grass-roots coordination for Young Conservatives of Pennsylvania.

While Petolicchio was no political novice on the local level, Sterns said his experience in handling a major campaign should help Folmer, whose political experience is limited.

“It is important to have somebody with experience in dealing with the media these days,” he said. “You need a full-time professional to help a candidate manage his time.”"

So a relatively unknown mounts a grass roots campaign and scores a stunning upset..And then fires the manager who got him there and hires a "Professional".

When will people learn that professionals can do the wrong thing for years, and call it experience?

Professionals trained in 20th century forms, are usually exactly the wrong folks to lead a 21st century enterprise.

The Norman Transcript - Illegal aliens, family values featured on campaign trail

The Norman Transcript - Illegal aliens, family values featured on campaign trail:
"For Republicans, the goal is be as conservative as possible — think Ronald Reagan. “Republican themes will hit on immigration, tax cuts and Christian values,” said Don Hoover, a campaign consultant. “They will play as far to the right as possible.”

For Democrats, the goal is outreach and the middle ground — a replay of Bill Clinton. “Democrats want to talk about investing in the future and, to a lesser degree, bipartisanship,” he said.

The goal, Hoover said, is to get the undecided voter to pay attention. And those voters are only about half-listening. “Right now the undecided voter isn’t too focused on the campaign — yet. But, slowly, they are beginning to pay attention.”

To turn those heads, candidates will need money — lots and lots of money. “It takes resources to campaign,” he said. “Especially on a statewide level.”"

"Independent voters" are more accurately thought of as non consumers of the poltical product. Getting their "attention" is non trivail because the product is sub standard. It's a normal business problem in the GME.

Cantwell's lead over McGavick nearly gone

Cantwell's lead over McGavick nearly gone: "Dwindling voter support for U.S. Sen. Maria Cantwell's re-election bid has put her in a statistical toss-up with her Republican opponent, according to a new poll announced Wednesday.

Rasmussen Reports, an independent national polling firm, said a survey of 500 likely Washington voters June 13 showed the Democratic incumbent leading challenger Mike McGavick 44 percent to 40 percent. The margin of error was plus or minus 4.5 percentage points."

So if the general picture is correct that politics has about a 20% penetration of the market. Then 50% of 20% is 10%.. so Senator Cnatwell's future is in the hands of 10% of eligible voters.

Politics is a tough business.

Internet-Based Software Helps Political Candidates to Get Out the Vote and Cut Campaign Costs by 80 Percent

Internet-Based Software Helps Political Candidates to Get Out the Vote and Cut Campaign Costs by 80 Percent: "According to Voter Lists co-founder Donald Quaid, 'GOTVoters Online levels the political playing field. Even independent candidates on limited budgets can use it to get elected. Our advanced filtering of voter information enables political campaigns to target voters based on their specific concerns and interests. This is considerably more effective than targeting all voters on all issues. In a primary, a candidate can focus on just the 20% of voters who always turn out, saving money and more efficiently utilizing their time."

Go for the most valued customer. Based on this story the stable customer base for politics is about 20% of the potential market.

You would think that 80% of the population would qualify as underserved market that could possibly be a site for explosive growth.

Internet-Based Software Helps Political Candidates to Get Out the Vote and Cut Campaign Costs by 80 Percent

Internet-Based Software Helps Political Candidates to Get Out the Vote and Cut Campaign Costs by 80 Percent: "Voter Lists LLC announced a new Internet-based service today called GOTVoters Online(TM) that helps political candidates to Get Out The Vote (GOTV) on Election Day. GOTVoters Online(TM) cleverly combines state-supplied registered voter records with Internet-based software developed by Voter Lists LLC.

Brunswick, ME (PRWEB via PR Web Direct) June 22, 2006 -- Voter Lists LLC announced a new Internet-based service today called GOTVoters Online(TM) that helps political candidates to Get Out The Vote (GOTV) on Election Day. GOTVoters Online(TM) cleverly combines state-supplied registered voter records with Internet-based software developed by Voter Lists LLC.

Public voter data and our GOTV Internet software make it even more critical for voters to vote often. Political campaigns are evolving to target only those who vote regularly and to safely ignore those who do not vote. Only the interests of frequent voters, not those of the general population, will be represented by elected officials.
GOTVoters Online(TM) allows political campaigns to manage voter information online. Campaign managers can filter voters by gender, ethnicity, age, and other criteria and assign them to campaign volunteers, who gather voter opinions on key issues. Candidates then use the data to get only their supporters to the polls on Election Day.

Online at, the new service cuts political campaign costs by allowing political campaign workers to use their own computers, Internet connections, and phones. GOTVoters Online(TM) eliminates the need for large campaign offices with dozens of phones and computers. GOTVoters Online(TM) works with any computer through any Internet browser.

GOTVoters Online(TM) targets candidates with 5,000 to 200,000 voters. Those mid-sized political campaigns have never before had access to advanced Internet-based technology. Typical costs, which include both the Internet-based software and many states' voter lists, are about $1,600 for a small mayoral campaign with 5,000 voters or $5,500 for a large judicial campaign with 200,000 voters."

And the marketplace will supply the technology to get to most valuable customers, better, faster, cheaper.

RIC - News and Events

RIC - News and Events:

"Cranston Mayor Steven Laffey is in a virtual tie with U. S. Senator Lincoln Chafee for the party’s nomination for Senate in the September Republican primary, according to a new statewide survey of 256 likely Republican primary voters conducted by the Bureau of Government Research and Services at Rhode Island College. If the September primary for the U.S. Senate election were held today, 39 percent of voters would support Chafee while 38 percent would back Laffey, if half of those voting in the primary are Republicans and the other half unaffiliated voters. One in four likely primary voters say they are undecided.

Among men, Laffey leads Chafee by 44 to 34 percent, while Chafee’s lead among women is only 37 to 35 percent. Regionally, Chafee appears to be strongest in Providence (73 to 27 percent), western Rhode Island (43 to 21 percent), and in the East Bay (44 to 33 percent). Laffey is strongest in Blackstone Valley (50 to 40 percent), Newport County (46 to 23 percent), and in the Providence suburbs south of the city (39 to 31 percent). Among age groupings, Chafee is strongest with voters older than 64 (49 to 37 percent), while Laffey’s greatest strength comes from voters 39 or younger (55 to 33).

According to the survey, the key to the primary outcome will be the number of unaffiliated and Republican voters coming out on election day. "

In a protected low growth market, you have to focus on your most valued customer. Every smart business knows that.