One thing we can predict about the new ways that people will interact with television is that the new uses will surprise us. As has been the case with the way many new technologies have been adopted in the past.

I think we can expect significant shifts in people's television consumption patterns. I think we will see totally different time usage patterns, from snacking on little 5-minute clips here and there to all-out binging, such as seeing an entire season of shows in one or two sittings.

Consumers are going to be increasingly impatient with having schedules, formats and content dictated to them, and will be more interested in personally tailored experiences.

Such changes certainly will shift the funding model for television, in which network executives seem to think you are some kind of criminal if you skip their ads. One outcome is that advertising itself is going to have become more like entertainment than the ads we in the States are used to (which by and large are boring and an interruption). I think we will see higher prices to place finely tailored ads.

I think one trend that will surprise us is that many people will volunteer to receive ads – but only for products in which they are deeply interested. For instance, if one has a passion about a hobby or interest, you might volunteer to be informed of new products and services that are relevant. In this way, ads will become one more way to bond a community together.

What will get zapped are stupid ads for things we are not in the market for at all, and that is as it should be.

Advertisers and the media in general are going to have to create communities around their outputs. I don’t think that threatens mass market phenomena, by the way. I mean, if you add up all the *who wants to be a millionaire* watchers worldwide, it would be a significant number. Which reminds me also that traditional TV will probably have to retreat for primary to events that are time-specific, such as sporting events or contests. Everything else, I think will be consumed by people on an on-demand basis.

Quick, do you believe that smaller, leaner corporate headquarters are associated with higher performance? A recent study published in the Strategic Management Journal suggests that such a taken for granted belief may not make sense. A very insightful bit of research -

Here's the citation:
Collis D, Young D, Goold M. 2007. The size, structure and performance of corporate headquarters. Strategic Management Journal 28: 383-405

Posted by my colleague, Bob Cooper, for Driving Organic Growth group.

In an effort to further the discussion comparing competitive advantage vs. separation, I would like to introduce a very powerful tool developed by McGrath and MacMillan that is summarized in perhaps the greatest business book ever written – The Entrepreneurial Mindset. The tool is the Attribute Map and it shows the dynamic nature of how your target customers react to your offering’s attributes:

The labels going down the table POSITIVE, NEGATIVE, OR NEUTRAL describe the type of reaction from the customers. Obviously, the more positive and less negative the better. The labels on the top of the table BASIC, DISCRIMINATORS, and/or ENERGIZERS define the intensity of the reaction.

For the BASIC category:
- A POSITIVE defines table stakes – you need these attributes to play and you are conspicuous by their absence (Non Negotiable)
- A NEGATIVE defines attributes that the customer is willing to tolerate (Tolerable) if there is no other alternative.
- A NEUTRAL is one that has no or little impact (So What) on the customer but does add cost

The DISCRIMINATORS
- Differentiate between competitors to influence the purchase decision. The POSITIVE (Differentiator) attribute is in the positive direction and the NEGATIVE (Dissatisfier) is in the negative direction.
- The NEUTRAL is an influencer to the purchase decision but is not directly related to the purchase

The ENERGIZER:
- Attributes are so powerful that they overwhelm the purchase decision either positively –the Exciter – or negatively – the Enrager

An example, I usually illustrate the power of the Attribute Map using the history of the Big 3 auto dealers in the 70”s and 80”s when the Japanese initiated their onslaught of the U.S. market. At this time the U.S. consumer TOLERATED the poor quality of their automobiles from Detroit because there was no alternative. The Japanese came in pushing their superior quality and created a revolution since their new offering EXCITED the U.S. consumer toward their cars and shifted the attitude towards the Big 3 from TOLERABLE to a negative DISCRIMINATOR or even to ENRAGERS. Your ideal move against competition is to EXCITE your customers with a new offering while at the same time shifting their attitude towards the competitors to the negative. Interestingly, car quality is now considered a BASIC attribute. This dynamic shift usually occurs over time – this dynamic is what drives the Fair Value Line discussed in the last positing to the right in the Value Map.

Now lets discuss competitive advantaged vs. competitive separation in the context of the Attribute Map. If you have a strong competitive advantage, i.e., you are superior to competition, in an attribute that is considered a DISCRIMINATOR or an ENERGIZER by your customers, then you will achieve competitive separation. If your advantage is in an attribute that is BASIC or even worse, a NEUTRAL, you will not achieve competitive separation!! The goal should be competitive separation, not just advantage. Never assess your competitive position without real insight into what your customer really wants/needs.

Another issue is when is “just good enough” ok versus “best in class” or “unique in class”; the latter two usually costs vs. the first. Again, realizing that competitive separation is the goal, you should focus your added efforts to achieve “best or unique in class” for DISCRIMINATOR or ENERGIZER attributes, not BASIC or NEUTRAL categories.

I was recently asked to comment on whether Web 2.0 is a 'bubble' - here's what I think.

Both web 2.0 and the dot.com surge are/were driven by a common human bias: this is to over-state the implications of major societal/business/regulatory changes in the short term and to under-state them in the longer term. The dot.com era companies were, in many cases, prescient. The problem was that they did not quite factor in how long the changes would require to generate cash flows in the near term.

If you look at the statistics, a lot of the predictions made for the dot.com era have by now come true. The Web is destabilizing industries ranging from media to retail to telephony. More and more people all over the world are buying via e-commerce. I believe something like 30% of retail transactions have some e-commerce aspect to them (whether it is searching or getting information as well as actually ordering on line). Efficient markets for everything from the stuff in your closet (eBay) to obscure sound tracks (ITunes and other sites) and even your mate (think match.com) have been facilitated by the Web. It just took 13 years, not 3, for the changes anticipated to become a reality.

Swiss Reinsurance, one of Rita's clients, has capitalized on a brilliant play in what we've sometimes called new market tectonics. What's come together is the increasing relevance and urgency around global warming with a market mechanism that creates financial incentives for trading in carbon credits. The Swiss Re folks realized that the Kyoto Protocol imposes legally binding commitments to reduce or offset greenhouse gases on the 36 countries that have joined. Where does Swiss Re come in? Realizing that some projects may fail to meet Kyoto targets and providing protection for investors. This further's Swiss Re's traditional role of making risky projects more affordable, while at the same time supporting investment in green projects. A great MarketBusting move!

In the February, 2007, Harvard Business Review, there is a wonderful short piece on Entrepreneurial Japan. It notes how many trends -- the end of guaranteed lifetime employment, changing governance structures, the changing social attitude toward independent entrepreneurship and an increase in the number of successful role models - are coming together to create a far more exciting environment for those who would like to do things differently.

This is such a wonderful development to hear about. And I'd like to draw attention here to one of our colleagues, Dr. Takeru Ohe, who has been trying to get Japanese business to think more entrepreneurially for several decades now. One of his latest ventures is to run a summer camp that teaches entrepreneurial skills to youngsters, hoping to take that next generation even further.

To put in a plug for Columbia - we are running a course on creating strategy in July (24-26) that I direct (which means I'm there the whole time) which hopes to draw on some of the entrepreneurial energy now infusing the economy. See the web site http://www0.gsb.columbia.edu/execed/open/programs/japan_strategy.cfm

Our colleague, Walter Derzko gives some interesting insights into why good ideas don't get results - see his blog at - http://smarteconomy.typepad.com/smart_economy/2007/02/why_good_ideas_.html

With respect to innovation, one study suggests that you need 3,000 ideas to get one commercial launch - see this article: Stevens, G.A., J. Burley. 1997. 3000 raw ideas - 11 commercial success! Research Technology Management 40(3) 16-27.

In a recent study my colleague Thomas Keil and I have just finished, we found that very different management processes are needed to make sure that outcomes other than launch result in good ideas getting circulated in a company.

I was recently asked how one creates a more innovative culture within a company, with specific reference to Kodak.

The difficulty is that as companies become successful, their performance increases to the extent that they stamp out those people, practices and methodologies that don’t fit the success model. In a word – they get very fixed and rigid on perceived right way to do things, which makes it extremely difficult to embrace change when it happens. In Kodak’s case, this was coupled with an entitlement culture which meant that people never thought there was any risk of things going wrong in the core business.

How to spread a new culture throughout the company? Well (perhaps unfortunately) a near-death experience has a way of focusing the mind and overcoming resistance to change. So you need to create or capitalize on a compelling case for making the change.

I heard a fascinating statistic the other day that really should give all of us pause. It seems that 2/3 of all jobs in America require a college education, yet only 1/3 of the potentially eligible population goes to college in this country. Either we are going to have to drastically ramp up our numbers enrolled, or we will face an even more serious skills crunch than we already have for employees with sufficient skills to work in our new economy. That was really interesting.

Another issue that I don't think we have grappled with very well is the fact that as the economic basis of our businesses change, the skills we need to deploy change as well -- and yet we make few provisions for upgrading skills throughout the life of an employee, consistently and on a planned basis.

So XM and Sirius satellite radio have announced that they are finally going to merge. We called that one years ago! What the two have been doing is engaging in a competitive war of attrition that is guaranteed to end with one killing the other off, or in a desperate bid to avoid the ultimate game of competitive chicken, a merger such as the one proposed.

What is fascinating is how companies get themselves into these situations over and over again. Almost the exact same scenario played out years ago with British Satellite Broadcasting and Rupert Murdoch's Sky TV satellite network. The two went head-to-head with incompatible systems, losing millions of pounds each month, until a merger deal was finally forged, combining the two into B Sky B.

Our good friend Phil Rosenzweig has just published a terrific book, called The Halo Effect. It's main thesis is that we come to a lot of erroneous conclusions because knowing the outcomes biases our reasoning. It's a fascinating read.

For more on Phil and the book, check out his website -

http://www.the-halo-effect.com

I ran across the following mind-blowing numbers - and came to the conclusion that there are vast sums of money out there if one is creative enough to capitalize on what people are willing to buy!

$38 Billion - Amount Americans spent on pet food and care in 2006, nearly double that spent 10 years ago

$2,000 - cost of a doggie nose job in Los Angeles

$395 - cost of a Burberry dog bed

$50 - price of an oatmeal body wrap for big dogs at LA Dogworks, a doggie spa

47% of dog owners say they buy holiday or birthday gifts for their pets.

Yet another great company (in this case, Dell) has fallen victim to a failure to engage in business model innovation when times are good. We see this all the time - hugely successful corporations get so wrapped up in exploiting their own business models that they fail to invest in the innovations that will help create their future success. Then, when things start to go wrong, they go on an all-out quest to find new sources of growth FAST, condemning their growth leaders to rushed, desperate and usually failed innovation efforts.

About three years ago, I was having a conversation with two CEO's of major computer manufacturers who observed that Dell's strategy was simply piggybacking off their R&D and other investments in innovation in the computer industry. They feared then that Dell would stunt the growth of the entire PC category be rendering innovation un-economic. Looks as though the model has actually come back to hurt Dell - its competitors have innovated not only in their products but in their production prowess. Moreover, turns out that many customers actually like to interact with a real salesperson when purchasing complex or new equipment. So advantage to HP, Best Buy, and other retails, disadvantage to folks like Dell.

As I do every year, I'm in the midst of reviewing papers for the upcoming Academy of Management in August. The quality of the writing has always bugged me, but I particularly notice it when I go through a lot of papers. Typos, grammatical errors, spelling mistakes and mis-citations galore. What is disturbing is that this material is being sent to an academic conference on the presumption that it represents high quality social science, and that we as consumers of that research should believe what the authors are saying. And yet, they can't even write properly and in correct English. As I said in my review comments to one author: If something as simple as typing text is so error-prone, how can you expect me to believe that the rest of your research is not as sloppy? Just amazing.

A perennial question that comes up with respect to organizing innovation is whether ventures should be set up far apart from core business or within it? Unfortunately, both approaches to organization are problematic. While so-called skunkworks and separate structures have been popular as a way of helping those working on innovation projects to avoid being smothered by the rules, politics and processes of the more established lines of business, their track record is spotty. Among the downsides are that essential connections are missing that would permit the venture to be re-integrated with the rest of the corporation if it is successful. At the same time, the struggles venture teams experience when within a larger entity that doesn’t understand them are terribly real.