What really happened that caused traditional media to shrink so much over the past decade – and why are so many still struggling to come back?
That’s the subject of this presentation, which I’ve given several times over the past few years.
Value-added is the currency of the new economy. The idea is this: You do business by giving people what they pay for, but you gain and retain customers by adding a little something extra on top.
When the Eat ‘n Park restaurant chain gives each child a free Smiley cookie after dinner, that’s value-added. When UPS and FedEx provide tracking numbers so you can follow the progress of your package, that’s value added.
But beware of providing value-added that fails to add value. That can actually harm your business.
Here’s an example from the business-to-business world: In the course of my work, I recently placed some small advertisements with a local media outlet. Ever since, I have received a weekly e-mail letting me know that my online customer profile has been established and that if I fill it out I will receive a free listing in some under-explained and over-complicated online system. They call it value-added; I call it extra work with dubious benefit for which I won’t be paid. But ignoring it leaves me with the inescapable knowledge that maybe – though not likely – I am shorting my client on some meaningful opportunity.
Here’s another, from the business-to-consumer world: The pharmacy placed four automated calls to my house the other day.
One was important; it directed my daughter to call the store about a question on a prescription she had transferred from another location. Over the next few hours she called several times and nobody ever answered the phone. In the end, she drove to the store and waited in a long line to speak to the overwhelmed pharmacist.
While she was there, I asked her to pick up another family member’s prescription that had been submitted electronically the previous day by the doctor. Not only wasn’t that prescription ready, nobody in the pharmacy could find any evidence it had ever come in. But 20 minutes after my daughter got back home, another robo-call arrived to announce the prescription was ready.
That phone call was intended to be value-added, but instead, it emphasized that the pharmacy is understaffed and has flawed processes – resulting in the inconvenience of another trip to the store.
By the time I returned home, there were yet two more calls – “courtesy” reminders that it was time to refill some maintenance medications.
I never asked for these reminders. In my household, we order refills after observing the pill bottle is close to empty. The pharmacy just assumed my family would value these calls and opted us in.
I’m sure there is a way to change the settings for these automated calls. But why should that be my job? I didn’t ask for all this value-added in the first place. Aside from the momentary pharmaceutical chaos in my household, we’re basically healthy and view our business with the drug store as a transactional necessity.
This, of course, is what the pharmacy corporation hopes to change. By offering all this value-added service, it hopes to turn our transactions into a relationship.
It’s having the opposite effect. So rather than figuring out how to change my preferences, I simply seethe in the background while the answering machine records each call.
The lesson is this: If you’re going to offer value added, make sure it really adds value. Otherwise you’re just spending money on something that actually harms your business.
According to a report in B2B Magazine, the next edition of Microsoft Internet Explorer – IE9, to be released during 2011 – will include a feature that enables users to block 0nline tracking of their internet browsing by marketers.
Thank you Microsoft, for taking our privacy out of the hands of the calcified Congress, and putting it back where it belongs: with each of us. If you’re not careful, people might start to like you again.
I had breakfast with an entrepreneur who is at that point where his young business ought to be gaining traction. But he’s bogged down in building the next generation of software that supports the business.
The problem is that he and the software developer – to whom he has given equity in exchange for the development work – disagree on their vision for the 2.0 version. They’ve been deadlocked for six months as competitors begin to pop up around them.
I suggested he set a two-week deadline to either achieve a shared vision or amicably end the partnership.
Good people become entrepreneurs because they want to get things done without the slow and layered process of corporate decision-making.
Good people work for corporations because they want to get things done without the cash-flow constraints of a small business.
Either is fine. But if you find yourself in a position where you can’t move forward and you don’t have cash, then you need to change position.
Once you get past the viral thrill of rehashing Steven Slater’s “bailout” from a career as a flight attendant that he could no longer stand to hold, the debate – to the degree that any debate is required at all – quickly gets to the question of who was more wrong?
Was it Slater, who cursed at his passengers, deployed the emergency slide on the Jet Blue plane to which he was assigned, and (worst) stole two cans of beer before escaping?
Or was it a still-unnamed woman passenger, whom he accuses of berating him and hitting him in the head with either the door of an overhead compartment or one of the bags in that compartment?
How about this third option: It’s the airlines.
They have to accept responsibility for helping to turn passengers into snarling beasts with overbooked flights, endlessly punitive fees, optimized fares that make no sense to consumers, and a practice of setting flight schedules that they can’t possibly maintain. Then they exacerbate the effect of all these insults by bombarding us with irreconcilable advertising campaigns to convince us how much we’re going to love the experience.
Further, they have to accept responsibility for their role turning flight attendants and other customer-facing personnel into recalcitrant and uncaring bureaucrats. The tools? Serial layoffs, confrontational union negotiations, low pay and a general disregard for their value. (When stranded near Chicago O’Hare during the 9/11 crisis, I met a dozen flight attendants from a handful of airlines – all of whom told me the hotel and meals were on their own dime during the unscheduled grounding.)
I’ve flown enough to know the truth of the matter. Some passengers, maybe even many, are simply boors who shouldn’t be out in public. And some flight attendants should probably find another line of work before they give their next safety briefing.
But for the rest of us, the airlines need to shape up. I can only imagine how complex and difficult it is to operate in this industry. Executives throughout the industry make incremental decisions that help the bottom line, and they are skilled at justifying why these decisions are in the long-term best interest of the customers.
But it’s simply not the case; there is no justification for selling a ticket and then notifying the passenger a day later that the flight is overbooked and an extra $25 will guarantee he isn’t bumped (this has happened to me a handful of times).
It’s simple really: Each airline needs to figure out a way to make money while treating passengers and employees like something other than refugees and wardens, respectively.
For a fee, Frontier Airlines is now allowing people to bring their caged pets into the passenger cabin to fly along. In doing so it joins United and Southwest in liberating dogs, cats, rabbits, hamsters and small birds from the dark chill of the hold.
It’s all part of a larger strategy. Between narrower seats, reduced legroom, baggage stuffed in every cranny, elimination of in-flight meals and every other nicety, the airlines are getting closer to their end-game.
For yet another additional fee you’ll soon be able to buy a seat and meal service for your beloved pet, and forgo the noise and discomfort of the main cabin with your own spot in the cargo bay.
Win your side.
On days when the wind is shifty, the winner of a race usually comes from one side of the course our the other; rarely from the middle.
That means you have to choose which side you’re going to sail. No remorse allowed. Eventually, you may realize you’ve picked the wrong side; the winner is going to come from the other side.
What do you do? Experience teaches you not to cross the course and get to the other side. In doing so, you’ll probably end up as the last-place boat on the right side of the course.
Instead, focus on winning your side. If you do, the worst you’ll end up is in the middle of the fleet. And often, the winners on the wrong side still finish better than the losers of the right side. So there’s plenty of upside potential in just winning your side.
How does it translate to business? Back in the ’80s, IBM and Apple took opposite sides of the race course – IBM choosing a common platform (MS-DOS) on which to build its computers, and Apple choosing its own proprietary operating system.
IBM chose what turned out to be the right side, allowing it to build computers for the largest share of the desktop/portable computer market.
Since that decisive moment, dozens of companies on both sides of the platform debate have fallen away; even IBM has exited the PC businesss. Apple, meanwhile, won its side; it became the best among proprietary operating platforms.
As a result of its earliest decision, Apply may never become the largest producer of computers. But because it concentrated at winning its side, Apple today has one of the most admired brands – and P&L statements – in the business.
Never chase the wind.
In many racing conditions the wind is always changing – in both velocity and speed. The boats that are winning are probably those that find themselves in the best patches of wind.
When things aren’t going so well, it’s usually because you’re not in the good air. But if you see another part of the course where the wind looks better, it will invariably be gone by the time you get there.
The lesson is to find your way to the part of the course where the wind is going to be – not where it is now.
It’s the same in business. When your toughest competitors leap ahead of you, you can’t catch up by simply doing what they’re doing.
Instead you need to figure out the next thing a good company should be doing. When you figure it out, you don’t need to set your course for where your competitors already are; you can set it for where you want to be.