Andrew Hargadon

A grain of salt for the long tail...

Guy Kawasaki offers a good counterbalance to the hype surrounding (or soon to surround) Chris Anderson's new book, The Long Tail. The idea of the Long Tail is that, in a single market, the combined size of many niche products can be as big as from a single (or relatively few) mass-market products. Anderson's original idea stemmed from comparing the sales of pop hits and artists to niche songs and singers on iTunes and Amazon. Of course, this was also how General Motors ate Henry Ford's lunch in the 1920s, by introducing multiple makes and models against the mass market-driven Model T.

The threat: Big companies are caught between a rock and a hard place. On the mass market side, Walmart and others are squeezing their margins to nothing. On the other end, smaller companies are increasingly stealing away niche chunks of their more profitable, lower volume products.

The promise: Companies that master the long tail will see their revenues and share grow where those that can't will watch theirs wither.

The grain of salt: The long tail may hold vast riches in many markets but, as Guy points out, before a company can exploit the long tail, they (and their market) must meet a serious set of requirements...read his post for these.

However, I think there is one area where the Long Tail still may hold promise for big companies: The back catalog. The hundreds, if not thousands, of SKUs that companies have maintained if only to avoid the trouble of formally killing them off. These are the countless products dating back decades which someone, somewhere still needs or wants.

It may be difficult for a company to find, contract for, or develop new products to build themselves a brand-spanking new long tail. But the ideas behind the long tail may still enable companies to find new value in their back catalogs in the same way that eBay has enabled so many of us to find new value in our attics and garages.

The trick will be finding those customers you had neglected before--the mom & pop shops, the weekend users, the 40-year old virgins, who still want whatever you first sold them 20 years ago.

Finally, and unrelated to the rest of the post, Guy utters a classic line:

"Everyone knows that the innovator’s dilemma is to find a tipping point in order to cross the chasm."

Sums up management thinking in the 1990s.

A call to action, not theory...

Bob Prosen just published a very nice book, Kiss Theory Goodbye, on the need for action--and actionable advice--rather than another theory of how business works. It's refreshing in its call for returning to the basics, sort of like how I imagine Bobby Knight might view management: if you can't dribble with both hands, master the bounce pass, and shoot the jumper, all the rest doesn't matter. After my post on "How to read a business book", we got to talking. Here's the jist of the conversation:

1. If you could ask one question (or look at one behavior) to gauge the "execution" skills of an individual, what would it be?

I would ask this simple question, "Can you tell me your top three objectives and, as of today, how are you performing against each of them?" Every leader should be able to answer this on the spot without hesitation.

2. If you could measure one behavior to gauge the "execution" skills of a company, what would it be?

The most important measurement is the company's track record at meeting their profitability objectives. Increasing positive net cash flow is king of the hill. A great way to gauge a company's execution skills is the number of "effective" meetings they have. If meetings have an agenda, are time bound, action items are captured and completed on time and people are willingly offering assistance to one another, that's a company focused on results.

3. You've spent a lot of time working with individuals and organizations--helping them be more effective. What have you learned about making your own consulting more effective?

Two important things come to mind.

1. Pick the most important things to work on and see them through to completion. Don't get distracted. Stay focused on the significant few, not the important many.


2. Do what I do best. In other words, only work on customer opportunities that are right in my "sweet spot". And, outsource tasks to other professionals whenever possible so I can spend my time doing what I do best--teaching and speaking.

4. Your book focuses on managing execution in existing companies--what are the critical execution skills in managing innovation, where clear directions and constant measurement can run up against uncertainoutcomes, productive failures, and non-linear progress?

Great question. In some areas such as R&D, measurements and results are applied a bit differently. First, it's important to determine how many resources will be devoted to these areas. This allows boundaries to be established and expectations to be set. Goals such as the number of patents received, papers written in top journals, and new products brought to market on time are potential areas to measure. Often, it's best to measure these items over time to evaluate the trend. This allows for the inevitable swing in results inherent with innovation. Another way to evaluate performance is via reviews. This allows the company's manufacturing and development groups the opportunity to evaluate if products were delivered as agreed. Customers can assess quality and usability and, senior management can see if the ROI is meeting expectations. Even thought it may be hard to apply traditional productivity measures, companies still need to hold the leaders ofinnovation accountable.

5. What's the most important execution skill every MBA should graduate with?

As you know, I'm fortunate to teach the nation's only EMBA business execution course at The University of Texas - Dallas which provides me a unique perspective on this question. My advice for MBA grads is to understand and maintain the proper balance between planning and doing. Leadership is the relentless pursuit of vision and results. Both are needed. Perhaps the best way to sum it up is "At the beginning of the day, it's all about possibilities. At the end of the day, it's all about results". Finally, be hard on performance and easy on people. Done well, people will judge us as someone who is fair (Here are some comments from recent EMBA grads).

A great cause, a great speaker

The TED conference has been making its speakers available for viewing by the masses (e.g., me), and this talk by Majorca Carter about greening the South Bronx is worth forwarding on. Guy Kawasaki posts about her first, so apologies to anyone who reads Guy before me (and a questioning look for anyone who doesn't...).

Majorca's talk is riveting for her passion, commitment, and perfect mix of polish and promise. This is must-see TV for anyone with a cause. Study it, mimic it, channel its spirit into your own projects.

Guy's comments on her speaking style were also informative--about both her and Guy. Great speakers like Guy are clearly great students of speeches, but it's not easy to see them in action. Now TED's collection offers a great set of training tapes for the rest of us.

The ethanol mousetrap (and moonshot)

As Ethanol, the solution du jour for our energy needs, comes into the spotlight, it reveals itself to be as realistic a near-term solution (and long-term panacea) as its predecessor, hydrogen. Ethanol will not now, nor may it ever, provide the energy independence people seek. As Julia Olmstead writes in Counterpunch:

Improving fuel efficiency in cars by just 1 mile per gallon -- a gain possible with proper tire inflation -- would cut fuel consumption equal to the total amount of ethanol federally mandated for production in 2012.

Many others have made this same point before. What's interesting, to this innovation-obsessed blogger, is the underlying impact that the concept of ethanol and other innovations has on the innovation process itself--especially when that process requires public effort and political will. What does the thought of a simple, clean solution just around the corner do to our ability to act with the solutions we hold in our hands (like raising mileage standards by 1 mpg)?

If a bird in hand is worth two in the bush, why is a technological solution in hand worth less than one around the corner? Is it the promise that this next one will take less effort and will to implement than the ones we have available today?

That promise of the better mousetrap that sells itself undermines more than just green technologies. It undermines innovation in organizations big and small. The possibility that tomorrow's idea will be easier to implement than todays keeps us tolerating the status quo. It's just like Annie sings: "The sun will come out, tomorrow. You can bet your bottom dollar." Or was she pushing solar?

Racing the organic train

Remember in the old movies when a car was racing the train to cross the tracks? The same race is underway right now between organic, the concept, and organic, the marketing feature. Nowhere was this made more clear to me than this morning, when I saw Kellog's new Organic Rice Krispies.

The consumer market is undergoing a rapid shift towards "organic" food. The sign of the times is Walmart's declaration of providing organic alternatives in their food offerings. Organic used to be a fringe market. Its acceptance by mainstream retailers and producers is creating a race between consumers who are asking, with their dollars, for more confidence in their food supply (from mad cow, to factory farms, to GMO foods, to Bovine Growth Hormone, to trans-fats, and on and on) and producers who are asking, with their dollars, for broader legal definitions of terms like "organic" in order to keep doing as much of what they already do as possible.
Will the shift in consumer demand create meaningful changes in the food supply? Or will the train that is the established food industry crush the concept into nothing but another meaningless marketing feature?

Michael Pollan (author of Omnivore's Dilemma, the nearest thing to Silent Spring in the current debate) wrote a wonderful essay in NYT (6-4-06; Mass Natural) recently about the implications of Walmart's lurch toward things organic:

Beginning later this year, Wal-Mart plans to roll out a complete selection of organic foods -- food certified by the U.S.D.A. to have been grown without synthetic pesticides or fertilizers -- in its nearly 4,000 stores. Just as significant, the company says it will price all this organic food at an eye-poppingly tiny premium over its already-cheap conventional food: the organic Cocoa Puffs and Oreos will cost only 10 percent more than the conventional kind. Organic food will soon be available to the tens of millions of Americans who now cannot afford it -- indeed, who have little or no idea what the term even means. Organic food, which represents merely 2.5 percent of America's half-trillion-dollar food economy, is about to go mainstream.

Pollan raises the critical issue: if Walmart insists on charging only 10% more for its organic foods, it will be virtually impossible for the concept of "Organic" to survive. What's left will be the Organic Rice Krispies of the world: old wine in new, green, bottles.

Fortunately, my race-with-the-train analogy is not the only one that applies. The mass market often coopts emerging fringe concepts (like locally brewed beers into "macro-micros," italian cafes into Starbucks, and Tex-Mex into McChipotles). And there is good evidence that this helps, rather than hurts, the cause. The very superficiality of marketing features legitimizes fringe behaviors, turning them into more acceptable desires for more people. One study found, for example, that when a Starbuck came to town, more people began buying coffee (and hanging around) at local coffee shops too. Who used to meet friends at a coffee shop (any coffee shop) before Starbucks?

The question on my mind: did Snap, Crackle, and Pop really go green or do they just drive their SUVs down to meet at the nearest Starbucks for a Free-Trade latte?