Tag Archives: business thinking

July 9, 2014 · 11:52 am

Squirrels

In the movie “Up”, every so often the dogs interrupt themselves mid-sentence because a squirrel – or even the thought of a squirrel – appears. They stop the conversation or whatever else it is they’re doing to chase that distraction.

Squirrel

(Photo credit: likeaduck)

We don’t call them squirrels in business. They’re more like bright shiny objects or the next new thing. Sure, we call them something else altogether – market opportunities for one. In some cases, they really are. Most of the time, however, they’re just a squirrel that’s dashed across the business plan and provided a major distraction.

Consumers can be fickle.  For example, the typical mobile app is used fewer than 10 times before deletion and over a quarter of people use an app once after downloading.  If you’re working to monetize one of those apps, you have a very limited window in general.  Most businesses aren’t living in that fickle a world unless they choose to be there.  They do that by chasing squirrels.

So how does one distinguish between a legitimate opportunity and a shiny object/squirrel?  As always, it’s a combination of things; some consumer-focused, some business-focused.  With respect to the latter, any new business extension will require resources of some sort, even if it’s the shifting of existing support to the new thing.  Resources are finite in most businesses.  Do you have them?

Ask yourself if customers care.  We can point to any number of examples of being too early for the market.  GO had a mobile operating system and mobile, pen-based computers long before the iPad or iPhone.  NextNewNetworks was doing video long before there was broadband to support streaming.  WebTV was another.  In those and other cases consumers couldn’t understand what was in it for them.  After all, selling is about providing value.  How does the squirrel you’re considering do that?  Does it really provide sustainable growth or just a brief pop in revenues (and maybe not in profits)?

Looking over the horizon is the hardest part of any good business person’s job.  The great ones learn to stay focused on what’s in front of them while taking that peek while ignoring the squirrels.  Can you do that?

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July 8, 2014 · 9:36 am

Let’s Get Physical

Usually on TunesDay we talk about a song and that’s the title of the post.

CD

(Photo credit: grytr)

Today, however, we won’t be examining any old Olivia Newton-John songs and will, instead pose a question.  When was the last time you bought a piece of physical media? A CD or a DVD is what I mean. Well, this TunesDay we’re going to answer that question as well as have a think about what it all means. Maybe we’ll throw in a little point about statistics while we’re at it. Ready?

The good folks at Nielsen Soundscan and Nielsen BDS have some news for us about the amount of musical content consumption over the first six months of the year:

For the first six months of 2014, sales of albums are down 14.9% vs. the first six months of 2013. Vinyl AlbumSales and On-Demand streaming continues to show strong gains – Vinyl LP sales are up 40.4% and overall On-Demand streaming up 42% over last year, with on-demand audio up 50.1% and on-demand video up 35.2%.
 
Wow!  Everything old is new again – look at vinyl.  Here’s the statistics lesson – vinyl grew from 2.9 million albums sold to 4 million.  Yes, it’s up 40% but it’s a tiny percentage of all the content sales (maybe 2%).  Always put numbers into context – on their own they can be pretty deceiving.
On to the bigger point.  Once the music industry stopped fighting consumer demand and allowed the changes brought about by digital technology, I think they got a better picture of what was good and bad in terms of the music they were selling.  Album sales, both digital and physical, continue to fall.  As a heavy consumer of music I can tell you that there was nothing worse that spending $15 (in the old days) on an album to get the 2 great songs you wanted to hear.  That changed with the iTunes model of single track sales and the broader point of letting consumer buy just what they want is not lost in that.  Maybe that fall is about the inability of artists to put together a great album?
What stands out to me in this report is the continued growth of on-demand streaming – Spotify, Pandora, and others.  Audio on-demand streams grew 50% and unlike our vinyl example, the numbers are significant – almost 34 million streams up from just under 24 million.  Assuming each stream is one song, that’s 10 times the equivalent number of albums (10 tracks to an album) as were actually sold.  I suspect a good chunk of that music wasn’t new – the long tail at work.  So we’ve gone from consumers having to buy a physical product which continued excess materials (for which they had to pay to get what they want) and needed to be stored someplace (you should see the piles of records and CD’s in my house) to choice as to buying specifically what they want with no storage issues to paying just to hear what they want without owning or storing anything.  The content is the same, the business model radically different.  Maybe something in there points to a trend in your business?
Some might look at the Nielsen numbers and think music is in trouble.  I think it’s pretty healthy as long as we’re focused on the business music is really in now.  What do you think?

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June 30, 2014 · 10:28 am

Playing Defense

There was a valuable business lesson to be learned from yesterday’s Mexico/Netherlands game.

2010_05_26-NED_vs_MEX_006

(Photo credit: colin.merkert)

I don’t know if you watched it, but the Mexicans took a lead early in the second half. This was more than a bit of a surprise – the Dutch are one of the favorites in the World Cup and the Team Mexico had barely qualified. El Tri have rarely made it past the round of 16, the stage of the tournament in which this game was played.  They didn’t make it this time either and we can learn from what they did.

After a quiet start, Mexico dominated the first half and scored early in the second.  They played attacking football.  Once they scored, however, the went into a shell and were content to sit back on defense, making the occasional counter-attack but mostly allowing the Dutch to come at them.  Holland is one of the best teams in the world and features three of the best players in the world in the attacking end.  It was only a matter of time before they tied the game given many chances to do so.  yet Mexico played defense.  Sure enough, the game was tied after a corner kick (Mexico had kicked the ball out defensively) and lost when a Mexican defender gave the ref a reason to call a penalty on a (perhaps phantom) trip.

Why the sports report today?  Because we often make the same mistake in business.  We get to a point where we’re happy with what we’ve got and then we play defense.  We don’t develop new products or services.  We don’t encourage our people to advance their skill set.  We sit back and allow the competition to come at us and put all of our resources into defending or delaying their attacks instead of making them wonder how to defend ours.

The time to play defense in business is when there are overwhelmingly negative forces in the market and not when you have a lead.  There will always be other companies attacking you and playing defense is part of any business plan.  However, building a small advantage and then expending all your resources to defend it usually puts you out of the tournament.  Thoughts?

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