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« June 2006 | Main | August 2006 »

Factor L

Another re-run, this one from 2004:

Why do some products and services succeed while others fail? Why do some ideas go viral, rocketing across the marketplace, while others wither and die in obscurity?

It's not the quality of the ideas. Go take a look at X1 (www.x1.com). Here's a really cool utility that can instantly search all your email (I have more than 150,000 on file from the past six years) to find any word. This Google for your hard drive works pretty well, and it's cheap. The Web site is really well done, too. The reviews are good. The trial is free. But do you have it installed? Probably not. Most of the 162 million Internet users in this country don't. I wonder why.

On the other hand, consider "Baby Boy," the top-10 hit by Beyonce. She certainly has talent, but is this the very best song from the very best album by the very best singer in the world? It's been a hit for weeks. I wonder why.

What, precisely, is going on here? I have no idea. You don't, either.

We'd all love to know the series of steps to follow, the calculus we need to run, the hoops we need to go through in order to launch a product or service that is guaranteed to succeed. It would save us a lot of angst and disappointment if we could put our hearts and souls into something with a reasonable expectation of success.

It used to be that way, of course. If you had a very good product and a fairly sophisticated ad campaign (and enough money to keep both of them going), you could buy attention and turn it into market share. Creating new products was largely about having the will (and the means) to get your market to sit up and notice.

Today, it feels like more of a crapshoot.

What is it about Krispy Kreme Doughnuts, for example, that suddenly turned them into a profitable fad--and then a phenomenon? Sure, they're good, but are they that much better than Dunkin' Donuts? Friendster, the online social networking service, is the latest viral rage. It recently turned down a chance to be acquired by Google for $30 million. Just a few years ago, though, SixDegrees.com was offering almost precisely the same service, and it's no longer on the radar.

MoveOn.org has more than 1 million subscribers, while other political sites struggle. Some politicians catch fire; others (with arguably better records) never gain traction.

It's easy to call the game after it's over. It's easy to explain what the market liked about product X. The hard part, of course, is doing it in advance. I don't think we can. I don't think you should even try.

Sure, you should work hard to maximize your chances of capturing the imagination of your market. But all you can do is all you can do. After you've done that, you should stop tweaking.

The L factor is about luck. And as any gambler will tell you, you get to keep playing until your money runs out. After that, you don't get any more chances to win.

As our marketplaces have changed, our approaches haven't. We still overinvest to ensure success. We still make sure we have just a few eggs, in just one basket, and then we watch that basket really closely. Big mistake.

We live in a world of fashion, not rational computation. A world where everything from brake linings and ball bearings to clothes and airlines is chosen for unpredictable reasons.

The way to grow in the future is to acknowledge how important luck is and to diversify your risk. Do that with lots of products, not just one or two. Cut your overhead so you have plenty of chips, ready for another spin of the roulette wheel.

Take the case of Levi Strauss & Co. This company was lucky, plain and simple. It makes a garment that was the clothing of choice for a generation of free-spending consumers. But instead of recognizing the luck, Levi imagined it was smart branding, or its employment policies or even its ad agency that had somehow enabled it to grow. Once the luck ran out (and it always does) Levi shrank fast. In just six years, sales dropped more than 30%, and every U.S. factory was closed.

Every time you launch a product or service, every time you apply for a job or start a nonprofit, you're either going to hit or not. If you get lucky, you're entitled to deny that luck had anything to do with it. But if you fail--and you probably will--understanding the role of the L factor will keep you sane. And if you've planned for it, it will keep you solvent as well. Solvent enough to try again and again, until you make it (and take all the credit).

How to give feedback

Golden oldies week on the blog. All from Small is the New Big.

Blog readers are far more likely to be asked for their input than the average employee. You're frequently required to approve, improve, and adjust things that are about to become real. And yet, if you're like most people, you're pretty bad at it.

In the interest of promoting your career, making your day at work more fun, improving the work life of your colleagues, and generally making my life a whole lot better, I'd like to give you some feedback on giving feedback. As usual, the ideas are simple--it's doing them that's tricky.

The first rule of great feedback is this: No one cares about your opinion.

I don't want to know how you feel, nor do I care if you would buy it, recommend it, or use it. You are not my market. You are not my focus group.

What I want instead of your opinion is your analysis. It does me no good to hear you say, "I'd never pick that box up." You can add a great deal of value, though, if you say, "The last three products that succeeded were priced under $30. Is there a reason you want to price this at $31?" Or, "We analyzed this market last year, and we don't believe there's enough room for us to compete. Take a look at this spreadsheet." Or even, "That font seems hard to read. Is there a way to do a quick test to see if a different font works better for our audience?"

Analysis is a lot harder than opinion because everyone is entitled to his or her own taste (regardless of how skewed it might be). A faulty analysis, however, is easy to dismantle. But even though it's scary to contribute your analysis to a colleague's proposal, it's still absolutely necessary.

The second rule? Say the right thing at the right time.

If you're asked to comment on a first-draft proposal that will eventually wind its way to the chairman's office, this is not the time to point out that "alot" is two words, not one. Copyediting the document is best done just once, at the end, by a professional. While it may feel as if you're contributing something by making comments about currently trivial details, you're not. Instead, try to figure out what sort of feedback will have the most positive effect on the final outcome, and contribute it now.

Far worse, of course, than the prematurely picky comment is the way-too-late deal-breaker remark. If I've built a detailed plan for a new factory in Hoboken, New Jersey (and negotiated all the variances and integrated the existing landscaping), the time to tell me you were thinking of relocating the plant to Secaucus was six months ago, not the night before the groundbreaking.

The third rule? If you have something nice to say, please say it.

I've been working with someone for about a year, and in that entire time, he's never once prefaced his feedback with, "This was a really terrific piece of work," or "Wow! This is one of the best ideas I've heard in a while." Pointing out the parts you liked best is much more than sugarcoating. Doing so serves several purposes. First, it puts you on the same side of the table as me, making it more likely that your constructive criticism will actually be implemented. If you can start by seeing the project through my eyes, you're more likely to analyze (there's that word again) the situation in a way that helps me reach my goals. "I think it's great that you want to get our quality ratings up. Let's see whether the added people you say this initiative requires are really necessary, and whether beginning your report with staffing needs is the best way to get this past senior management."

Second, it makes it so much more likely that I will come to you for feedback in the future. It's easy to interpret the absence of positive feedback as the absence of any sort of approval or enthusiasm. Finally, being nice to people is fun.

If I haven't intimidated you with my other rules, here's the last one: Give me feedback, no matter what.

It doesn't matter if I ignored your feedback last time (maybe that's because you gave me your opinion, not an analysis). It doesn't matter if you're afraid your analysis might ultimately be a little shaky. It doesn't matter if you're the least powerful person in the room. What matters is that you're smart; you understand something about the organization, the industry, and the market; and your analysis (at the very least) could be the kernel of an idea that starts me down a totally different path.

No stoplights

Even the libertarians among us aren't opposed to stop lights.

And, as my friend Zig Ziglar points out, they really should be called 'go' lights, because if you take them away, the traffic stops.

Self-organizing systems are terrific, but more often than not, systems don't self-organize. Try to get nine kids to agree on a batting order in Little League and it'll take a week. You could do it in ten seconds and they'll whine and then thank you for it.

Stop lights are essential in almost all marketplaces.

While individuals might moan about how they were treated, we all realize that without some sort of central allocation of scarce resources (like a piece of tarmac or a booth at a trade show), chaos ensues. And the chaos hurts everyone.

Too often, the central authority tries to exert too much of a tax, tries to profit from a market rather than make one. Smart traffic cops realize that facilitating an efficient transaction for enough people for long enough is almost certain to generate a terrific return.

What's your favorite biz book?

Most important? Overrated?

Squidoo is starting to do lenses about lenses. They're easy and quick and they aggregate content around a topic. Check this out: The Best Business Books Headquarters on Squidoo. If you click the Build My Own Lens button, your thoughts are automatically added to the group.

Search, very loud

Paige sends us to: Huckabuck search interface. The cool part is the "search tuner" just under the bar. Here, you get to pick which sites (from Google to Digg) get accessed for your search. The temptation, of course, is to turn them each all the way to the top!

Just like those graphic equalizers we had in college. Of course, if you turn all of them all the way up, you're not really accomplishing much.

I like the way Huckabuck lets you get past the first page problem. Most searchers look at a page or two of results and then give up. If you use the sliders, though, you can radically change the texture of the first page, exposing you to ideas you would have missed otherwise.

Blogging is the new poetry

This report: Pew Internet: Pew Internet - Bloggers makes it clear that there's a huge number of bloggers (no surprise) and that a large percentage are under thirty.

What I found interesting is that more than half of all bloggers are doing it for themselves. (Always a good reason to do something). In other words, it's not for commercial gain or to find a large audience of strangers. Instead, it's a form of self-expression, a chance to be creative or share some ideas.

Just as we don't spend a lot of time worrying about how all those poets out there are going to monetize their poetry, the same is true for most bloggers.

Careful Consideration and Analysis

Most organizations view business development opportunities as a threat.

A threat because a mistake could upset the status quo, could cost money or time, or even get someone in trouble.

After an initial screening, the typical bizdev proposal is given Careful Consideration and Analysis. Which means that lawyers work hard to make sure (among a hundred other things) that the trademark licensing deal is accurate and appropriate (SM instead of TM, please) and that they've done their job and that nothing bad can happen.

The problem, as you've already guessed, is that fashion is unpredictable. So, if the very point of the bizdev deal is to engage in a search for a hit, to do something new and inexpensive that may or may not work, then Careful Consideration and Analysis is probably completely inappropriate. Careful Consideration and Analysis leads to high overhead, slow turnaround and plenty of "no".

The alternative might be, What's the Worst That Could Happen? Look at a deal. Decide if there's enough upside possibility. Do the What's the Worst That Could Happen test. Figure out how to avoid the most egregious outcomes. Then do it.

Repeat.

My guess is that Starbucks' digital music efforts didn't pass the Careful Consideration and Analysis test. But they did it anyway. And it failed. No big deal. Why? Because What's the Worst That Could Happen was pretty low.

3,000 times a day

Jennifer Bain quotes Jim Leff,

"Encourage people to stop compromising 3,000 times a second. Spotlight the good guy who nobody else is paying attention to. Run a site with really discerning and trustworthy information contributed by people who care as much as I do about the credo of refusing to settle for mediocrity — ever."

If you can't make it, fake it

Paull and Trevor point us to: NewPR Wiki - AntiAstroturfing.HomePage.

Astroturfing is the practice of creating fake grassroots (get it?). Hiring supermodels to walk into bars and order a particular type of vodka, or get hundreds or thousands of people to write letters on a given issue--without mentioning the coordinating body.

The issue for me is transparency. There's close to zero trust of marketers these days (which is why my book title was so misunderstood). Astroturfing makes it worse. It feels wrong at a very deep level.

I have no illusion that their site all by itself will be sufficient to slow down the practice, just as being anti-spam didn't help with that. But I'm pretty certain that if you do it, you'll get caught, and when you get caught, you won't have much hope of earning back the trust you lost.

Bring a wheelbarrow

MarketingVox today reports that more than 50% of all the display ad impressions online in June came from just two sites.

Wow.

Yahoo Mail and MySpace together account for more than half of all online display ads.

« June 2006 | Main | August 2006 »