In The Zone

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:

  1. One must be involved in an activity with a clear set of goals and progress. This adds direction and structure to the task.[11]
  2. 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.[11]
  3. 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.[11]

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?

 

 

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Digital’s Dirty Little Secret

A few days ago, the media trades (especially the digital media trades) were filled with self-congratulatory fervor over  the

Kakashi And Yamato

(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?

 

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The Bottom Line

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?

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Why Facts Matter

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?

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Sinkers Vs. Floaters

It’s Foodie Friday and this is the last food-related post before the start of Passover.

matzah ball soup

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?

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Put This Thought In Your Pipe

You’re going to be hearing a lot about the proposed merger of Comcast and Time Warner Cable if you haven’t already.

pipeline

(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.

Thoughts?

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Read All About It

How do you find out what’s going on?

English: London Newsboy Selling Pall Mall Gaze...

(Photo credit: Wikipedia)

I have a pretty good idea how you do so with respect to your family and friends and business colleagues.  That would be via social networks and email or maybe even (Lord help us) a good old-fashioned phone call or (gasp) face to face encounter.  IRL – what a concept (“in real life” for the less digitally inclined among us). But what about finding out about the news?  How do most people do that these days?  Is it 24/7 news channels?  Newspapers or their websites?  Local TV and their digital presences?

As it turns out, it’s pretty much the same way we get the “other” news.  According to the good folks over at the Pew Research Journalism Project three in ten adults get at least some news while on Facebook.  Not that they’re actually looking since 78% of Facebook news users mostly see news when on Facebook for other reasons.  The Pew folks aren’t picking on Facebook but since Facebook reaches far more Americans than any other social media site it therefore allows for the most in-depth study.

Just 34% of Facebook news consumers “like” a news organization or individual journalist, which suggests that the news they see there is coming from friends – the same friends likely sending them posts about everything else.  Entertainment news tops the list of topics Facebook news consumers report seeing and is, unfortunately, indicative of our focus these days. This is followed by ‘people and events in my community’, sports, national government and politics, crime, health and medicine, and local government and politics. Even international news reaches roughly one in four Facebook news consumers.

Not only are social network users sharing news stories, but, particularly with the growth in mobile devices, a certain portion is contributing to the reporting by taking photos or videos.  In fact, the study showed that on Twitter, groups of people come together around news events they feel passionately about. But opinions expressed on Twitter often differ from broad public opinion.   That’s not a shock given that Twitter’s user base is not really representative of the public as a whole.  Finally, in honor of “whatever”, visitors who come to a news site through Facebook or search display have far lower engagement with that outlet than those who come to that news website directly.

How do you find out what’s going on?  Turns out that it finds you for the most part.  But given the source – your chums who may be finding it out from a friend of a friend, it’s more incumbent than ever that we do a little more due diligence.  After all, taking anything as gospel – even what you read here – in an age when there are no barriers to the great digital megaphone is shortsighted.  If you really want to know, go find out!

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