This is the time of year when many families host some sort of holiday gathering.
(Photo credit: Wikipedia)
It might be a Passover seder or it could be an Easter Sunday gathering. Our Foodie Friday Fun this week was spurred by that sort of activity. I’m sure you’ve been to gatherings of this sort where the host had it all together. The food came to the table all at the same time and at the appropriate serving temperature. There were no shrieks of “we forgot the rolls” midway through the meal (you rarely hear that at a seder, by the way). The snacks and drinks are out when guests arrive and the entire experience is executed with efficiency.
I’ve been to meals of a very different sort. The food comes out one dish at a time and sits on the table until everything is ready, getting cold in the process. The menu is not quite complete, usually because it wasn’t thought through carefully. That’s really the point this week – the need for thought and preparation in the kitchen. Turns out it’s critical in business too.
The two things need to go together for the cook – or businessperson – to be successful. The hosts who don’t have it all together did think about what to serve. There was thought. The problem is that they didn’t translate that thought into preparation. They didn’t have a real plan. The opposite is also true. You can prepare all you want – make various dishes – but without careful thought beforehand, the odds are that you’ll have a meal that just doesn’t work since no one wants all proteins or to have to make a last minute run to the store for the ingredients you didn’t write on your shopping list.
It’s the same in business. Not taking the time to think a project or situation through before organizing those thoughts into the various types of preparation the enterprise needs to do is futile. That preparation will have to be redone when something that wasn’t thought through comes to light. It’s nice when someone volunteers to “dive in” to a project but it’s even better when they make that dive after thinking through the depth of the pool.
I hope if you end up at a gathering of family or friends this weekend you’ll take a step back and appreciate the thought and preparation that went into the day. If it’s been done well you probably wouldn’t notice it otherwise. It’s when there isn’t thought and preparation – done together – that you do notice because things go horribly wrong. Make sense?
We all do complicated things effortlessly.
If you can think back to when you were learning to drive a car, for example, it seemed incredibly difficult. You thought about how hard to push the pedals. You had to remember to turn on your blinker and to look in the mirrors. Coordinating your brain to hold the wheel steady while looking away from the view in front of you was a challenge. Yep, driving a car is pretty complicated and yet most of us who have been doing so for any period of time do it effortlessly.
Athletes get to a similar place. You’ve probably read some post-game interview in which an athlete described being “in the zone.” That’s a state of mind where they feel as if everything has slowed down. Their focus became incredible and all external noise seemed to vanish. They feel invincible. Psychologists call this “flow” and as Wikipedia states:
Flow theory postulates three conditions that have to be met to achieve a flow state:
- One must be involved in an activity with a clear set of goals and progress. This adds direction and structure to the task.
- The task at hand must have clear and immediate feedback. This helps the person negotiate any changing demands and allows him or her to adjust his or her performance to maintain the flow state.
- One must have a good balance between the perceived challenges of the task at hand and his or her own perceived skills. One must have confidence in one’s ability to complete the task at hand.
This, of course, isn’t limited to athletics. In fact, it’s a pretty good roadmap for business success too. Clear goals, losing track of time due to your total focus on the moment, intense focus on the task you’re doing, and constant, real-time feedback that allows you to adjust your game plan all are places where good businesspeople live.
I’ll add one caveat. While getting to, and living in, “the zone” is a wonderful thing, we all need to venture out of that zone every so often. Maybe it’s more about distinguishing a comfort zone from a flow zone. I’m way less fond of the former than I am the latter. Have you ever been in that zone? Does this make sense?
A few days ago, the media trades (especially the digital media trades) were filled with self-congratulatory fervor over the
(Photo credit: lyk3_0n3_tym3)
achievement of a milestone. This story from Cynopsis is typical:
For the first time, digital ad revenue is surpassing traditional TV revenue. According to new research from Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers, online advertising revenue climbed 17 percent to $42.8 billion in the U.S. last year, compared to the $40.1 billion generated from TV advertising. Although mobile ad spending increased by 17 percent to $7.1 billion, it was still just about 10% of the $74.5 billion cable and broadcast spending reached last year. Variety reports that digital video alone produced $3 billion in ad rev, while search reeled in 43 percent of the total online rev at $18.4 billion.
Woo hoo! Way to go digital ad sellers – even you robotic ones. The folks at Venture Beat did a really good overview of what has occurred and I’d encourage you to spend a minute and check it out. Of course, there was one thing at the end that intrigued me:
Interestingly, performance-based pricing models are down slightly from the previous year. CPM, or cost per thousand views, was up slightly to 33 percent, while performance-based models like CPA (cost per acquisition) dipped slightly to 65 percent. CPM pricing is at its highest point since 2010, the IAB said.
Why is that of interest? CPM pricing is impression based. Now let’s look at digital advertising’s dirty little secret. This is from the Wall Street Journal:
About 36% of all Web traffic is considered fake, the product of computers hijacked by viruses and programmed to visit sites, according to estimates cited recently by the Interactive Advertising Bureau trade group. So-called bot traffic cheats advertisers because marketers typically pay for ads whenever they are loaded in response to users visiting Web pages—regardless of whether the users are actual people. The fraudsters erect sites with phony traffic and collect payments from advertisers through the middlemen who aggregate space across many sites and resell the space for most Web publishers.
In other words, between $6 billion and $18 billion is stolen every year in the US because of ad fraud. So while there is no question about the impact digital has had in the advertising landscape, it probably has a ways to go to catch broadcast TV. The bad news is that a lot of that catching up involves breaking up criminal enterprises. The good news is that imagine how much better off the legitimate business will become with those ill-gotten gains redistributed to the legitimate players.
It’s always good news, bad news, isn’t it?
A business thought for Tax Day found in some dance music! If you were following music as the punk movement hit in the late 1970′s, you were quite aware of The Clash. You might have even shed a tear when Mick Jones, one of the guitar players and a key songwriter, was kicked out of the band. This TunesDay we’ll use a song from his next project – Big Audio Dynamite – as our jumping off point to discuss business. It’s called The Bottom Line and it’s a fun listen if only for the wacky, mid-1980′s video:
This lyric raises our business thought:
A dance to the tune of economic decline
Is when you do the bottom line
Nagging questions always remain
Why did it happen and who was to blame?
It always amazes me how many smart people forget that “margin” is at least as important as “revenue.” They spend a lot of time generating revenue from unprofitable activities while ignoring a part of the business that might have a high margin although the revenues aren’t much. I thought we had all learned about that sort of thing in the dot-com bubble long ago (internet years are like dog years – the intervening 15 years are like a century in real-time).
It takes a fair amount of courage to abandon unprofitable customers or segments of your business which are generating decent revenue. Revenue is always just one aspect of the business story. Cash flow and profit are two others which are far more important. Sure, revenue is the fuel that makes the business engine go, but a leaky gas line almost always results in disaster.
There is also the mistake some folks make in thinking about margin. They forget that in addition to the gross margin (basically the cost to the customer minus the cost to you) there are other things that are “indirect” costs such as advertising and overhead that should be factored in to prevent the business from losing money on many sales. Of course I see the need to scale – to build a customer base and generate cash flow – but if it’s not done in a sustainable manner, it’s just an exercise in futility.
The “gross revenue” line is where the head of sales lives. The bottom line is where great business people reside. Where are you?
I read a disturbing, though unsurprising report this morning. It’s from the Union of Concerned Scientists and has to do with climate change. Since this is a business blog we won’t get into the politics of that issue. I will, however, use my bully pulpit to remind you that unlike many of the challenges we face, money or power won’t buy you a different planet on which to live so you won’t have to deal with Earth’s climate.
Back to business. The report looked at the three main cable news channels and the scientific accuracy of the statements they made with respect to climate change. This is important since CNN, Fox News, and MSNBC are the most widely watched cable news networks in the United States, and their coverage of climate change is an important source of information for the public and for policy makers. Thirty-eight percent of American
adults watch cable news and cable news coverage of climate science often reflects and reinforces people’s perceptions of the science, as the report states. What did they find?
Using specified criteria, we determined whether the individual segments identified dealt with climate science and whether the portrayal of climate science was consistent with the best available scientific evidence at the time of broadcast. Of the CNN segments that mentioned climate science, 70 percent were entirely accurate, while 30 percent included misleading portrayals of the science. Of the Fox segments that mentioned climate science, 28 percent were entirely accurate, while 72 percent included misleading portrayals of the science. Of MSNBC segments that mentioned climate science, 92 percent were entirely accurate, while 8 percent included misleading portrayals of the science.
My point here isn’t to promote to bash one network over another. If you’re making business (or other) decisions based on what you hear from a particular source, you might be missing quite a bit of information. Even worse, as this study shows, you may have quite a bit of wrong or misleading information. If the most accurate network got a bunch of critical information right only 92% of the time, how accurate can your facts be if they come from any single source?
Facts matter. Just because a news organization (or a bright consultant) tells you something doesn’t make it factually accurate. When a few independent sources do so, you’re probably on solid ground. That’s the place we need to find. Are you coming with me?
It’s Foodie Friday and this is the last food-related post before the start of Passover.
Photo credit: h-bomb)
In honor of that, I thought I’d raise one of the most important questions this time of year brings: sinkers or floaters? I’m talking about matzo balls, of course, and the question of whether they should float in the soup like little clouds or sink to the bottom like rocks is a matter of serious debate around the Seder table. As it turns out, the debate contains some instructive business thinking as well.
I’ll preface what I am about to say with an acknowledgment that I am not a neutral party. I have some definite thoughts about matzo balls. I should also add that here in the New York area, many non-Jews eat a lot of matzo ball soup year round so the debate isn’t limited to Passover tables.
The basic recipe for matzo balls is simple. Matzoh meal, eggs, fat of some sort, and liquid. That’s where agreement stops. The primary aspects of the discussion involve the following (almost Talmudic) questions:
- Should the kneidlach (Yiddish for matzo balls) sink or float in the soup?
- Should they contain schmaltz (chicken fat) or margarine or oil?
- Should seltzer be used to “leaven” them?
- Should the egg whites be separated and whipped to add lightness?
- Should they be boiled in salted water or in the soup broth?
- Should they be the size of golf balls or tennis balls?
There are some minor issues including the use of parsley and other seasoning but the above are the main elements. Every family has their own answers and even within a family there is disagreement, especially if there are two grandmothers involved. Which brings us to the business point.
There are few things more simple and yet as complex as these little dumplings. The risk one runs when just assuming they can make them without careful thought to each of the above is that the debate rears its ugly head at the table and a familial brouhaha ensues. The same problem happens in business. We often look at seemingly simple issues without a fully thinking through the many complex underlying issues that can affect how well the final product fares. That can be a huge mistake and it’s always worth a few minutes thinking through those issues before jumping into a problem.
Floaters with a nice “chew”, by the way. Yours?
You’re going to be hearing a lot about the proposed merger of Comcast and Time Warner Cable if you haven’t already.
(Photo credit: LizMarie_AK)
That’s not really what today’s screed is about but it is what triggered the topic. Many people are very outspoken against the merger; just as many seem not to care. Whether you are for it or against it, the interesting thing is that the argument is over “the pipe.” More and more, the pipe – the channel through which content is delivered – matters less and less.
Let’s take it out of digital terms. Take Starbucks. Their “content” is coffee and coffee drinks. Their pipe was initially their stores. Then the content moved to other channels – supermarkets, airports, etc. They also got many of their customers – 7 million of them at latest count – into a Rewards program using phones and other digital assets. They continued to make the content experience appropriate to the channel – you get a nice china mug when you’re drinking in-store, you get free WiFi, etc. What has that meant?
“Holiday 2013 was the first in which many traditional brick and mortar retailers experienced in-store foot traffic give way to online shopping in a major way,” said Howard Schultz, chairman, president and ceo of Starbucks Coffee Company. “As our solid traffic growth and record Q1 results demonstrate, Starbucks unique combination of physical and digital assets positions us as one of the very few consumer brands with a national and global footprint to benefit from the seismic shift underway.”
In other words, it’s the content. If you’re really good at it, the content morphs as needed for the particular channel. In general, however, most of us can access that content though multiple channels, and if we’re unhappy with one we generally have the option to go to another to get the content we seek. Sure, that’s not universally true on a free basis but if you throw in the ability to rent – generally for less than the cost of one Starbucks drink – you’d be hard-pressed to find anything that’s inaccessible (and I’m not including all the illegal availability either).
Yes, it’s important that consumers are protected from monopoly control. Yes it’s important that the Internet remain open and equally accessible to all. Those discussions are worth having but if the concern is that one pipe will be less attractive, believe me there are other ways to get to what it is we’re really after – the content. The demand for that will drive the market to find a way around any pipe that gets blocked.