Near Term - The Enemy of Progress

Reading Harvard Business Review's blog "Is the U.S. Killing Its Innovation Machine" I am reminded of the continual challenge of quality managers and entrepreneurs : the need to balance the near and long term. In fact most, if not all, of the significant challenges facing organizations today result from the failing of leadership to convey the value of long term goals to stakeholders for fear of the near. The "Tyranny of the Ugent" as Hummel wrote.

Its easy for people to "demand" results: particularly when there is so little understanding as to how those "results" might be achieved. Sadly many believe such demands are a sign of leadership: funny as that is. This is faulty thinking that is at the center of huge failings ( think GM and the recent Wall Street debacle as examples).

The principal role of intelligent leaders is to illuminate their organization's and industries about the need to choose between the status quo and a future of greater potential. As the article, "Pleasing Wall Street is a Poor Excuse for Bad Decisions" put it: good decisions rarely have much to do with the near term. No matter if you are a public or private enterprise, for profit or not for profit, the near term result should never be driven at the cost of the big picture. Dr. Ed Catmull, founder of Pixar, who wrote the article notes, among other things:

Managers who focus on maximizing short-term profits end up driving out things that generate long-term value — like R&D. They use all sorts of excuses when they make those decisions, including the need to please Wall Street and create shareholder value. But they're just excuses for poor thinking.

We need business leaders who have a respect for technical issues even if they don't have technical backgrounds. In a lot of U.S. industries, including cars and even computers, many managers don't think of technology as a core competency, and this attitude leads them to farm out technical issues. But we live in a technical society; technology is just fundamental to our way of life. Technical understanding should be a core competency of any company.

Watch Ed's description about how his firm, Pixar, was and is able to innovate. He is a smart man and I concur with his views. Near term results by the way are NOT at the center of their success but other more important things are. What do you think about that ?

How Laws Are Stiffling Creativity & Innovation

This morning I reaquainted myself with some of Lessig's past talks in reaction to a post I was reviewing Steve Lohr had tweeted on transparency. Recently I had an important business meeting with a group of executives to discuss a potential business acquisition, which required their input. The transaction involved a great number of copyright and other issues requiring (or not requiring to the point of this post) voluminous contracts. One of the 5 or so significant reasons the proposed transaction I was attempting was not achieved was, according to this group, my being too "legalistic".

I only use this example to make a point about where our laws have gone and the practical implication this has on commerce; particularly when it applies to innovation and progress. Attempts at progress are being impeded reguarly as the result of laws which have become disconnected from their original intent. Ironically, when I was told I was being too "legalistic" you should know, I am not a lawyer and the opposing group has multitudes of them employed, including one in the room at the time. I simply ask a lot of questions about lengthy agreements, the terms of which are prepared by others and the implications of which are often ignored until something goes awry. If you don't understand where I am coming from, watch this video of Lessig as he shows a good  example regarding a young woman's video on Youtube. So is it me being too legalistic or the world we live in ? Let me know. Perhaps upon viewing this you'll appreciate what I am refering to and next time reconsider where and when you play music and take pictures, these among many actions our law has deemed "illegal".

How Can You Connect With Customers Using Mobile Apps ?

How can you connect with your customers using mobile applications ? A recent WSJ article, "Services Tailor Apps for Small Businesses" written by Riva Richmond shared some important information about using new affordable tools to generate mobile applications. Mobility is surging and customers are increasingly accustomed to having information important to them delivered via their mobile telephones. Mobile Apps can be an effective way to connect with those customers. Here's what the WSJ article had to say:

In general, businesses that rely on repeat customers, like restaurants and retailers, or have intense interaction clients for some period of time, like real-estate brokers and car dealers, are the most likely to benefit from an app, said Greg Sterling, a senior analyst at Opus Research Inc.

"For ongoing, regular contact with customers that are on the go, it makes sense as a promotional or loyalty tool," Mr. Sterling says, since apps enable businesses to send out coupons and event details, including by text message, and customers can easily place orders or contact you for information.

But businesses that are looking primarily to attract new customers, such as doctors, lawyers and contractors, may find an app is a bit of a waste.

So how can you create mobile applications ? Technology is driving the cost of creating and deploying mobile applications down. Services including MobileAppLoader, SwebApps, Mobile Roadie (as shown above) and Kanchoo have emerged to help any sized company create apps. With easy-to-use online templates, much like those used to make low-cost Web sites, a basic iPhone app can take as little as 15 or 20 minutes to make and cost as little as $15 a month in hosting charges.

Hulu's Business Model Dilema

Hulu, yet another example of an industry trying its best to maintain its business model with minmal innovation in the face of a rapidly changing world. "Remember that Woody Allen movie "Take the Money and Run" where Woody's character keeps getting his glasses broken by bullies and finally in one scene when he is confronted again he takes them off himself and smashes them? Well, that's the kind of logic the industry used on Hulu." This according to Joe Flint of the LA Times yesterday morning and Joe's right...But there's more.

As the LA Times reported, Hulu, the popular online site for watching television shows, is preparing to execute the toughest maneuver in digital media: moving from free to pay. The service will begin testing a subscription offering as soon as May 24, according to people with knowledge of the plans.

Under the proposal, Hulu would continue to provide for free the five most recent episodes of shows such as Fox's " Glee," ABC's "Modern Family" and NBC's "Saturday Night Live." But viewers who want to see additional episodes would pay $9.95 a month to access a more comprehensive selection, called Hulu Plus, these people said.

Its important to remember something when you consider Hulu , its owned by a consortium of content creators, News Corp., NBC Universal and Walt Disney Co., who want to preserve the cable and satellite fees that pay for the high cost of TV production. In other words these guys want to make certain they continue to be paid vast sums of money for what they make. They don't want their business model to change; its too profitable. Therein lies a bit of Joe's analogy and therein lies the pickle Hulu is in. They have to control the distribution channel to realize their goals.

According to the LA Times story on the topic "Television executives don't want to suffer the same fate as music industry or newspapers, which saw revenues plummet after users flocked to free access to songs, stories and classified ads online. Already, Hulu fans are decrying the proposal and threatening to turn to Internet pirate sites to watch their favorite shows."

With all of the alternate means of distribution emerging, the days of owning both content creation and its distribution will become harder, without of course sacrificing FAT margins. The existing scheme of content creators owning distribution channels should be discouraged to increase competition and improve quality and diversity. In the end the consumer will decide, no matter the media industry's continued manipulation of the government to protect its interests (watch Lessig). To this point read  the "Economics of Free" and "Kindle vs. Publishers, the Wrong Debate".

The essence is competition and value. Competition for content and the value extracted by organizations who are mainly middle men; intermediaries between creation and the utlimate consumer is coming under attack in all industries. As I wrote in Kindle vs. Publishers, the Wrong Debate, "Its all about economics. In a business where barriers to entry used to be up front costs in promotion, development, distribution and production, new business models have emerged to render the past value of publishers increasingly mute." There is a reason Apple is one of the largest distributors of content in the world now - economics.

Many people believe that "The challenge will be whether Hulu Plus has enough ‘added value' so that consumers perceive that it's worth the price," said Michael McGuire, media analyst with research firm Gartner. While true that is really a near term problem. The challenge for the owners of Hulu is wether they can keep extracting their margins for what they do given the rise of so may distribution and content alternatives ala Netflix and others.

Apple Posts Record Profits as iPhone Sales Surge

Mobile devices continue their surge and Apple's vision of the rapid emergence of the mobile environment for computing is paying off. iPhone sales doubled to nearly 7 million units in Q2 - largely from internal sales improvements. Mac sales also improved. As the WSJ noted Apple's Earnings Call Reporting a "Staggering" jump in iPhone sales. Here's an excerpt:

The results were well above Wall Street expectations; analysts had expected a rise of about 37%, compared with earnings a year ago adjusted for an accounting change.

“We’re thrilled to report our best non-holiday quarter ever,” said Chief Executive Steve Jobs in the company’s release.

On its earnings call, expect Apple to give more details on sales of iPhones and Macs, as well as its newest product, the iPad, which launched this spring. Apple Analysts also will be looking for information on Apple’s guidance for the next quarter. Apple said it expects fiscal third-quarter earnings of $2.28 to $2.39 a share on revenue of $13 billion to $13.4 billion, but the company is typically conservative in its forecasts.

Here is the recording of the 2010 Q2 earnings report. Watch the video overview from WSJ below.