John Akerson's Thoughts

Are You Stale?

Are you stale? Is your business stale?

I was in a wonderful quaint gelato shop earlier this evening – Café Gelato. I enjoyed the chocolate and amaretto gelato, and I was amazed to see the clerk there (Sara) reading a copy of “Always On.” For those who haven’t read it, “Always On” is a slightly dated but very useful book that describes the impact of the internet on marketing and advertising, from a customer perspective.
Always On” talks about looking at the customers viewpoint, listening to the voice of the customer, and it was fairly predictive, even though it is a few years old now. The book does NOT explain how the Old Spice guy could put about a hundred videos on YouTube, and DOUBLE sales of Old Spice products… But the book explained how that could be done, before Old Spice executed it. The book emphasized the importance of customer-focused advertising and marketing. That is absolutely essential.

So back to the question – Are you stale? You may never want to ask the question, “Are you stale?” It sounds like a negative question. Nobody wants their business to be stale, nobody wants to be seen as unchanging, static, or inflexible. Nobody wants to be wearing an five-year-old dusty suit or dress and nobody wants to give the appearance that they are caught in the 20^th century. But what about your business? Is it stale?

You might not want to ask that question either – so try asking this: “Are you fresh enough?” Think about what that means. Are you new enough? Are you current? Are you fresh? Are you fluid? Are you flexible? Are you responsive? Most importantly, are you as fresh as you need to be to keep your current customers, and deepen your relationship with them? Are you as fresh as you need to be to get new customers? Ultimately, are you as fresh as your customers want you to be?

If it is important to be fresh, and important to not be stale, how would you measure it?

This is pretty easy. If you have never asked this question before… you are stale. If your website hasn’t changed in 6 months, you are stale. If you haven’t tweeted this month, you’re stale. If you’ve never put a video on YouTube, you are stale. If you are only now realizing that Facebook has gone from 53 million users to 500 million users in the last two years… you are stale.

If you put a new sign up at a brick-and-mortar business every three years, that might be frequent enough to keep it fresh. But the internet is always on. The news cycle is always on. Advertising and Marketing is always on. The great effect that has is that social media, internet and all of its tentacles are a living breathing thing that works for your business 24 hours a day, every day, every week. The not so great effect is that if your business’s online footprint is stale, your octopus might as well be wearing a five year old dress.

Is that an unattractive picture to paint?

Fixing it is up to you. Painting it is up to you. It is up to you to make your online marketing and advertising fresh. Make the decision to ensure that your online presence is always fresh. Keep it fresh. Be fresh. Your customers will know, your revenue, and your success will reflect that.

DO something about your online presence. Do it today.

September 4th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement, Marketing | one comment

FOUR FACTS YOU MUST KNOW (to make your business fail)

I’m a fan of Bob Parson’s charisma and his videos. I think they explain powerful, simple, intelligent ways to improve business, to succeed, and I like it that he gives advice to anyone who wants it, whenever and wherever they are willing to listen.  He is also a former Marine, an 0311, I suspect – and I respect his service. 

You may not know Bob Parsons, but you know his company. Bob runs GoDaddy.com.  You’ve probably heard of them, seen their Superbowl advertisements, and their spokespeople.  You might not know that he was also behind Parsons Technology - Bought by Intuit for $64 million in 1994.
In short, he is a proven entrepreneur.

In his video blog Episode #36, “FOUR FACTS YOU MUST KNOW (if you’re going to sell anything)” he lays out 4 secrets for creating the sorts of enormous successes he is used to building.  He lays out these success secrets, but he could also explain the dark side of his secrets. they are …

FOUR FACTS YOU MUST KNOW (to make your business fail)  His secrets lead directly to 4 things NOT to do. 

His FOUR FACTS, paraphrased, are: 

1) A business cannot succeed by being exactly like its competitors.

2)People resist changing buying patterns.

3) To succeed, Give customers compelling reasons to change their buying habits.

4)Being better is not enough, you must let your customers know that you are better.

So – these are each great ideas.  I do not disagree with any of them. I think it is important to also highlight the dark side.

1a) If you are exactly like your competition, and nothing good separates you from your competition, why should anyone use your products or services?

2a) Help your customers make you their habit.

3a)DO NOT give them compelling reasons to change their buying habits once they are a loyal customer. Do not give them compelling reasons to pick someone else if they are a prospective customer.

4a) If you don’t tell your prospective and current customers why you are better, they will never know, and they will not become or stay customers of YOURS.

What do you think? Are there other business maxims that mean more when you consider their polar opposites? Why? How can you use them to help you with YOUR success?

August 16th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement | no comments

Netflix, Reed Hastings, Mark Cuban and Customer Service.

Mark Cuban is a billionaire, and is also a big fan of Reed Hastings.  I am a very big fan too, 

– because Reed has a strategy for competitive advantage that cannot be duplicated or beaten by any inauthentic company. Reed’s strategy is here, and also on SlideShare.

Mark points out one key element of Netflix success is that  ”almost no customers leave cable for Netflix” That is important because it means that subscribers value Netflix in addition to cable. But why not?  The most important competitive advantage that gets to the heart of “why.”   The complete question – to be articulate – is WHY do customers value Netflix, and why will they continue to value Netflix?

Reed reveals that on slide 21 with a simple yet effective philosophy. His philosophy is to provide the best customer service. He stakes Netflix’ success on the ability to be a service of choice, to perform with and deliver to Netflix’ customers, to lead customer satisfaction across all of his current and potential competitors. He understands the amazing depth of competition coming at him from all directions. He understands where his business is going. He thinks that having the best customer service will be his singular competitive advantage.

Even if other companies never get the value of superior customer service, it would be to everyone’s advantage if they would try.  It worked for Zappos, it is working for Netflix. I guess the real question is why WON’T other companies try harder?

In this presentation, Reed gives a great overview Netflix’ history of customer service leadership, and their go-forward strategy for “running fast” as he puts it. For Netflix, running fast is a race to provide the best customer service.  They win when their customers win. 

I like that and admire pretty much every business that uses innovation and superior customer service as a competitive advantage. Unfortunately, I suspect the effectiveness of superior customer service as a competitive advantage is only valuable because it is so rare.  

How could that be changed?

June 4th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement | no comments

Passion

I was reading Kyle Lacy’s guest post in Dan Schawbel’s Personal Branding Blog this morning.  In it, Kyle talks about reading Seth Godin’s blog post: “Sing It”.  That feels like a horribly derivative place to begin.  But neither Kyle nor Seth focuses on the right kind of Passion. 

Passion is essential and it is elemental. Passion comes through crystal clear in writing and in life. Passion pushes words out like the Old Faithful geyser – prolifically, frequently and most of the time it pushes them in the same direction, with great forceful power. Passion is fire below the geyser. Without passion, writing becomes a slow dripping faucet, simply irritating listeners, creating nothing but distraction. That provides zero appeal for the writer, and translates to zero appeal for readers. Without passion, ANYTHING you do will work in sort of the same way. Think about that. Without passion, you are just going through motions that you don’t even care about.

Passion is essential, necessary and sufficient.  It cannot be simulated or faked and like Tom Cruise said about Porsche in “Risky Business”, there is no substitute.  Kyle writes in his blog post, “Devote time and energy to the process and you will experience return.”  That is wrong because it misses the point.   I think it is important to:

Find a process that inspires you so that time and energy flow out with passion.  Find a subject that stokes the creative fires under your personal geyser until the pressure forces your ideas out – repeatedly, powerfully and prolifically.

February 18th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement, Life | no comments

Brand Value, Apple Style

So – What is brand value and how much can it really help or hurt a product?

Brand Value is everything, and Apple’s iPad is the best, latest example.  Apple has enormous brand value. That value is sufficient to take a concept, be second or third to market, and instantly dominate.

My opinion is that Apple did not really invent the iPad concept. They were not first to market. They did not set the pricing, the product details, the look, feel, or really anything else about the product.  They will sell billions of dollars of their Apple-branded iPad product, but essentially every key characteristic of a circa 2010 iPad – was built by Microsoft in 2006. Microsoft called it Origami. Here’s a picture of Microsoft’s Origami Ultra-Mobile PC.  (UMPC)

Here is a link to a video of Microsoft’s Origami.  Compare that with Steve Job’s introductory video of the iPad.  The Kindle-like function wasn’t highlighted in Origami… but everything else is there.  Here’s another Origami Demo video. I’m amazed at the similarity in function and features…

So – The iPad has a design that is synonymous with the iPhone, and a name that comes from Apple’s ubiquitous naming and branding family. The “iPad” name fits in perfectly with iTunes, iMac, iPod, iPhone, etc. The iPad’s design carries forward the same features, look, feel, design, and ultimately, it carries the Apple brand into a 2010 product that replicates Microsoft’s 2006 Windows Origami UMPC experience.

Apple’s look, feel and brand essentially takes a product that made essentially nothing for Microsoft from 2006-2010. Wall Street projects that it will sell 1 to 4 million units during the first year.   Analyst Robert Cihra recommends buying Apple because of “Apple’s ability to leverage the unique in-house core abilities ranging from hardware and software engineering to the existing iTunes ecosystem”

I think the value goes way beyond the 125 million users of iTunes, the potential of the new iBooks function, and it goes way beyond what Microsoft had envisioned for its Origami.

Apple’s recipe was to take two cups of Microsoft’s Origami, a spoonful of Amazon’s Kindle, and their a pinch of Apple’s own iPhone and iPod Touch into a blender. The ingredient that made the difference was when they poured a cup of their own unique brand. That added incredible value.

So – going forward, what other competing products can Apple monetize with a similar recipe?  Where do they want to go next?   Does anyone else use brand value like that?  What do you think?

technorati:code:F22ZC8GM2WJB

February 1st, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement | no comments

Calls to Action

SLOW… Calls to action!  B to B magazine published an interesting article  on calls to action. They pointed out that the average time that passes between someone sending an email, and someone reading it is 25.9 hrs.

There’s another detail. Emails are not necessarily instant-delivery. 3 times since Thanksgiving 2009 I’ve gotten blast-email from Dicks Sporting goods with details on time-limited sales. I was VERY interested in those sales, but in each case, I got the “24-hr sale” email after it had expired. I’m really connected, and check my email many times daily so missing those emails was troubling.

I checked the headers and saw that the emails were sent just a few hours before I got them, and in 2 of the 3 cases, I could confirm that the emails were SENT after the sale ended.

I attempted to contact Dick’s Sporting Goods marketing department to let them know there was a delivery issue with their marketing email system. I went so far as to track down likely people in their Corp HQ on LinkedIN. (I really was interested in a unique Ascender that they had on sale.) I could not ever connect to anyone who really knew what was going on. It was kind of ironic – like they had outsourced their interest in selling products.

I assume their email sales were seen internally as unsuccessful because of a lack of response – but given their time-limits and email performance, the email failures were essentially self-inflicted. The call to action was combined with a time limit that ended before the call to action was sent.

Given the 25.9hr email to read parameter listed in the B to B magazine, I would recommend that everyone sending timed-sale email blast campaigns should extend those sales to at least 72hrs or so.  It would probably also be good to track those emails by setting them up so that the marketing people responsible for the blasts receive the last email in each campaign – so they could monitor not only the success of the sale, but the success of the call to action for the sale.

What do you think? Has this ever happened to you?

January 28th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement | no comments

My 6 Targets in 2010

How do you succeed?  How do you define your success?  How do you measure it, track it, and control it?

I have a formula. At the beginning of each new year, I look at what I did during the past year. I look at the things that I was successful at, and what I have failed at. I try to learn from the failures and successes, so that I continually improve – shrink failures, and expand successes. I am targeting 6 things to succeed at, during this wonderful new year. I have 6 targets in 2010.  Those items target a variety of my needs and wants. They fall into these 6 categories:

• Personal
• Financial
• Professional
• Physical
• Spiritual
• Emotional

For me – when I find something I want to succeed at, it is essential that I make a list. I need to attach times, dates, and metrics that I can measure to the list.  I won’t explain all of my goals for this year, but here is a sample of my first 4:

Personal

1. Be a better husband.
2. Be a better father.
3. Be a better son.
4. Be a better brother.
5. Be a better friend.
6. Be a better time-manager.

Financial

1. Set and make targeted retirement contributions to 401k, Roth and IRA.
2. Update Will, Power of Atty, Estate and Medical legal papers.
3. Monitor and manage existing retirement and investment accounts.
4. Perfect and market the Personal Professional Competitive Advantage system.

Professional

1. Be published again.
2. Add another 500 followers on Twitter.
3. Write 36 high-quality blog entries during 2010.
4. Develop my business – adding at least 12 customers during 2010.
5. Develop my website – adding at least $1000/mo in revenue by December 2010.
6. Develop successful partnerships with other industry professionals.
7. Complete at least 4 ivy-league college courses.
8. Perfect and market the Personal Professional Competitive Advantage system.
9. Be a better time-manager.

Physical

1. Participate in more charity events.
2. Lower my weight by 25 lbs by the end of 2010. (12 lbs by June 30)
3. Lower my cholesterol – targeting sub-195 for total cholesterol.
For nearly all of these listed items, I have developed some targeted dates, goals, and in many cases, some sub-goals also.  This is what works for me.  In some of those cases, it is very difficult to quantify. How do I decide what it means to be a better husband? How do I measure that? Those things are incredibly complex and maybe nobody really understands them.  Yet, for me, putting them on the list, ordering them and thinking about them is sure to help me to address them. For other goals – they are not really within my control. How can I FORCE a company to publish what I write? How can I force readers to read it?  I really can’t. All I can do is to continue writing. I have to look on writing as a bit of a field of dreams. “If I build it, they will come.” (Perhaps another way of looking at it is like this: “If I build it really well, and advertise it, and market it, and have unique and high-quality content, and ask them to visit, I really hope they will come”) So – I will build it – and ADD IT TO MY LIST OF GOALS. I don’t think that adding it to my list will ensure it, but I think it makes a HUGE difference.

So – my personal questions for you are: How do you map out and plan your success? How do you break it down, monitor it, and manage your successes?
In 2010, how will you reach your goals?

January 4th, 2010 Posted by admin | Business, Competitive Advantage, Continuous Improvement, Life | no comments

Personal Professional Competitive Advantage

Personal Professional Competitive Advantage

Dan Schawbel  is eloquent and persuasive when he advocates personal branding. He evangelizes personal branding like it is the be-all, end-all. He is perhaps the foremost expert, a syndicated columnist, and he is intelligent and extremely professional. I think that he is right about the importance of personal  branding… to a point.

His dream is to “To become the bridge, where qualified applicants can cross to land the positions they deserve.  To create a personal branding class in every school internationally, helping students follow their passions”  That is a good star to shoot at, but he is slightly misguided.

The important thing in finding a job and building a career is not to build a brand. There are dozens of examples. There are hundreds of examples out there – Jeff Bullas, Ashton Kutcher, Mark Cuban, Matt Cutts, Guy Kawasaki, and Danny Sullivan each have a fantastic personal brand. Collectively they have billions of dollars and millions of followers. They have people who are evangelists of their personal brands. They have originality, intelligence, and each is unique.  Building those personal brands, to be sure, were important. I’d argue that the brand wasn’t the absolute essential component of their success, but rather that it was only one important component.

The most important thing in finding a job and extending a career is building a Personal Professional Competitive Advantage.  Think about that for just a minute:

• Personal. It is about you. It is unique. It is synonymous with you. It is elementary to you. It was Michael Jackson’s moonwalk and infectious beats. It is Beyonce’s … uh, voice. It is Obama’s ears. It is Tiger’s Wood. (sorry, couldn’t resist)  It is something about you makes you who you are. It could be as simple as where you are from, or as complex as where you are going. It could be as static as where you are, or as whirling as what you are about.  Danica Patrick is a driver. Sean Connery is an Actor. Morgan Freeman has Gravitas. Mark Cuban is that eccentric personal billionairre who is willing to dance with stars, and wrestle. What does that mean to YOU? Think about yourself, from other people’s perspectives. Is there ANYTHING that is that personal?  There should be. Think about it. Make it happen. Decide what the unique personal qualities are, within yourself, that make you a rock star, every day. Accentuate those qualities, Refine them.
• Professional. It is about your job. It is about your profession. It is about your career. It is about your path. It is about the passion that pays you, in whatever way you want. There must be something
• Competitive.  It is about a burning torch inside you, flaring up at the sight of the next torch. It is about Usain Bolt’s speed. It is about you. You must seize a job search like a competition. Someone else is going to spend 10 hours researching a company before a job interview. Someone else is going to figure out who the people are. Someone else is going to remember the names, make eye contact, dress to impress, perfectly craft a resume. Somebody else is going to write thank you letters, is going to send follow-up emails, is going to be sincere, thoughtful, and is going to fight with every ounce.  Fight harder. Spend 20 hours. Figure out who the people are, what schools they went to, who their families are, what their hobbies are, what charities they lead. Know everything there is to know, and know it as well as it can be known.   As for your job – your career, profession, your gig… be the best. Simply be the best. Work the hardest, the longest, the strongest and be the most devoted – and to tip my hat to Dan Schwabel – ensure everyone knows that you are.
• Advantage. Be first. Be the best. Don’t just do enough to get by. Do enough so that nobody can get by you. Don’t just keep your place, keep your status quo, and keep your own rut. Be better, faster, bigger, stronger, smarter, and be far, far ahead of your competition.

So – this seems like lots of flowery language and motivational clichés – what is a Personal Professional Competitive Advantage?

Here’s an example.  In the last 3 years, I’ve completed about 60 classes across a broad range of professional, technical, management and leadership topics. I’ve completed an ITIL V.3 certification, and taken courses at Stanford and Notre Dame. I have a strong belief that technical and business changes are moving so fast that if I don’t take a huge number of classes in those areas, my baseline of knowledge will become obsolete in about 18 months.  I have developed a presence on Twitter, written a blog, attended chamber of commerce meetings, built a business, consulted with some local companies, and I have done essential things at work.

But that isn’t enough. It is not enough to develop a Personal Professional Competitive Advantage. What I’ve done is more than most people in my career field do, but to me, what I have done is really just enough to keep up to speed. It is not enough to be right at the bleeding-cutting edge. To do that, I probably need to complete a minimum of 4 Ivy League courses annually. I probably should edit or write a book or two.   

Perhaps I should write something on Personal Professional Competitive Advantage as a an essential component of career development.

What do you think?

December 15th, 2009 Posted by admin | Business, Competitive Advantage, Continuous Improvement, Life | 2 comments

Metrics and Life

We track what we care about – We track metrics that matter in our lives. If we care about something, it is important to HAVE metrics that we can track – metrics that measure improvement or not.

I had a doctors appointment yesterday. For the most part I just wanted to get some renewed RX’s, but as part of every visit, my doctor’s office checks weight, blood pressure, heart rate, and temp. My BP was a bit high, probably because I worked past 3am the night before, and started at 7am yesterday – probably because I’ve got 3 dozen projects simultaneously in need of care and feeding – probably because I was stressed about trying to get to the doctor’s office on time.  For the slightly elevated BP, I have rationalizations.

But I was also up 11 lbs since my last doctor’s visit, and that was only 3 months ago. I was shocked. For many years, I’ve made it a practice to check my weight daily. I’ve checked it in the morning, checked it in the evening, checked it randomly almost every day.
When I look at the results – the bare measurement – and the factors involved in reaching those results, I am left with 2 emprical findings:

1) I stopped measuring my weight
2) My weight went where I didn’t want it to go

These two things are connected. As a whole, in life and in technology, people measure what they care about.  Everyone watches their 401k, their annual salary… Everyone watches metrics about things in their life that are important to them.  The first big company website I managed increased its traffic over 500% in the first year that I managed it. I know that particular statistic because that metric was one that I cared about.

Over the last two months, I’ve sold a house, bought a house, moved from one house to another… I’ve painted 4 ceilings, 3 rooms, and climbed on the roof to blow leaves out of gutters 3 times. I’ve also started a new gig, gained several hundred twitter followers and gotten my latest business almost ready to launch.  The weight metric has escaped my monitoring because everything in my life has overwhelmed my time-limited and adhd-rattled attention-span.

I treated my weight as if it was less important.

We track what we care about – We track metrics that matter in our lives. If we care about something, it is important to HAVE metrics that we can track – metrics that measure improvement or not.
My point is – when you care about something, when something is important to you, make sure you have some measure of it. Make sure you have some metric that you can measure and monitor to ensure the thing that you care about is going in the direction you want it to go.   Monitoring that sort of measurement, that sort of metric is the best way to correct course when things aren’t going your way.

This morning, before I started work, I stepped on the scale.

What do you think? Do you have metrics for things that matter to you? Do you monitor and manage them?

December 9th, 2009 Posted by admin | Business, Continuous Improvement, Life, Other Stuff, People | no comments

Higher Bars and Changing Times Require Changing Metrics

I originally called this “Higher bars, Changing Times, and how BusinessWeek misses the point of the Big Shift.”  I still think that BusinessWeek misses the point but I think the requirement for changing metrics is more important.

John Hagel III, John Seely Brown and Lang Davison wrote a wonderful paper: The Big Shift: Why it Matters.  You can read it here.  I highly recommend it. It is insightful analysis and clear original thought. That is too rare.

Late last night I read a brief description of the Big Shift paper on page 10 of the November 23, 2009 BusinessWeek. (although I could not find the article on BW’s site)  I was struck by the conclusions drawn from the “Return on Assets” chart, which BusinessWeek pulled and perhaps distorted slightly from page 12 of the 24 page “bigshiftwhyitmatters.pdf”   BusinessWeek suggested that the report, and in particular the findings on Return on Assets (ROA)      “provides fodder for those, like BusinessWeek’s Michael Mandel, who argue that the woes of the US Economy extend(s) beyond the financial sector and began showing up well before the housing bubble”

 That small chart is such a minor part of the report. (I reproduced it here from and with credit to their paper) – The paper is delightfully brilliant, but I immediately thought that the pessimistic BusinessWeek conclusion that I quoted above was mistaken, perhaps even backwards. I think that changing

Chart from "The Big Shift"

times, and inflation, when combined with the paper’s ROA chart, suggest that our economy is very strong – amazingly strong, and extraordinarily robust and resilient.

My three points:

 1)     The rate of inflation is not trivial given a chart that goes back to 1965, and economy of scale has fundamentally shifted due to technology, and the rest of our ever-changing world.

 Adjusting for the rate of inflation wouldn’t necessarily make the Return on Assets chart look more flat – but considering an actual company, its asset value and returns, AND its changing requirements might lead to a different conclusion. 

 The Bureau of Labor Statistics’ inflation calculator: http://www.bls.gov/data/inflation_calculator.htm shows that over the time of that chart, $1000 of 1965 dollars equates to something like $6835.02 of 2008 dollars.  Excluding the recessionary pops in the tech bubble in 01-02 and the pop in the housing bubble in 08-09… ROA looks like it is gone from just under 5% to about 2%.  Regardless of the consumer price index or the perhaps more appropriate producer price index, a percentage is a percentage – but consider a fictitious company that is making 5% ROA in 1965 with $1,000,000,000 of assets. Thats a return of $50,000,000. Adjusting for inflation using the consumer price index suggests a  company with $6,835,020,000 in assets in 2008. That company would have a return of $341,751,000 with a 5% ROA – but only a return of $136,700,400.  Is that a decline from 5% ROA? Is it a decline from $50m to $136m? (when adjusted for inflation) 

 2)     Given the advances and changes in regulations and particularly in technology – which are CLEARLY covered in the Big Shift paper – the bar is simply set higher, everywhere. Any company has higher requirements to earn sales – to get returns – to exist.  Enormous Seismic changes in business have emerged and been adopted across the entire economy. These changes initially provide competitive advantages to companies, but many are now essentially baseline requirements for doing business. These changes don’t happen without extraordinary increases in total assets.

 Take any company from 1965 – say a bank. In 1965, a bank had costs for buildings, technology, people, marketing, and processes. All of those fixed costs are now an enormous order of magnitude larger than they would have been in 1965. That bank has to be equipped, staffed, and technologically able to meet customer’s expectations in 1965 and today, but those expectations and regulatory requirements and competitive forces are orders of magnitude both greater and more complex.  In 1965, for example, checks written on the account of one bank, cashed at another bank might ordinarily take 5- 10 days to clear.  Today the float is almost always less than 24 hours, and in some cases, can be only seconds. In 1965, there were no ATM’s, online banking, online bill payment, online monthly statements. There was no Sarbanes Oxley. There were very different legal and practical considerations for interstate and truly national banks. A bank with $6b in assets, today, has vastly different requirements – and it must staff to meet those requirements.  So – if you look at that bank today, and say that it only has a 2% return on assets, that suggests a return of $136,700,400, in a world in which they have legal requirements that may include, say, keeping 7 years of electronic statements that can be accessed online instantly by their customers – and customer expectations that require them to have a thousand ATM’s, an online banking platform that is secure, scalable, and approaches or exceeds 99.99% availability. 

 This comparison extends across industries – I picked banking because I know it more intimately. (disclaimer: Since leaving Deloitte in 1999 as the Corporate Internet Technology Manager I’ve worked on Internet, Intranet and online banking elements for 3 banks via merger and acquisition.) Pick any other industry or business concern – and change has been enormous. In medicine, for example, in 1965, there was no HIPAA, no mail order pharmacies, no HMO’s, no outsourcing, no offshoring, etc. Hollywood didn’t have digital piracy, digital movie transmission, Redbox, and a cluster of cable companies waiting to first run their movies. The music industry had payola but no MP3′s or internet. Every industry has global competitive forces, global competition for talent and complete shifts. Pick almost any industry, and there are simply higher bars and different bars that companies must clear to succeed. Those higher requirements have resulted in larger asset requirements, but meeting those requirements, to me doesn’t really equate to lower efficiency.  It is a maintenance of Return on Assets regardless of changes.

 That’s critically important.

 Rather than the gloomy BusinessWeek (Michael Mandel) type-suggestion that your chart reflects underlying woes that exist in our economy – I would argue that given the changes in the economy, in customer expectations, and in government regulations, it is amazing that companies manage to meet those expectations and requirements and yet have only declined from 5% ROA to 2%. From the other perspective – the 2% ROA is delivered while meeting significantly larger competitive, organizational, regulatory requirements in essentially every business that still exists.

 3)     Companies have invested in knowledge assets that cannot be tracked on balance sheets. This is nothing new, but knowledge assets are a larger percentage of total

Growing Knowledge Assets

assets – and perhaps that means that ultimately ROA percentages have dropped even more than suggested.  The Big Shift addresses this knowledge requirement (see chart) but more importantly than mentioning it is – how can we quantify it?

 Those steeper requirements – higher bars – greater requirements – are not a symptom of an economy in woes – they are merely a reflection of changing times.  Across the economy, companies meet those requirements, grow, expand, and produce, and continue to return on assets…amazingly. Distilling it to Return on Assets can be justified, but conclusions from that distillation can’t assume “other things being equal” because the current return is based on the higher bars that changing times require.

 To quote The Big Shift

“The answer is not to find ways to squeeze creative talent and customers in a zero sum battle to capture more of the existing pie, but rather, as we will see, to discover new ways of organizing and operating to more effectively create and capture new value.”

 Michael Mandel writes in  BusinessWeek (link here)  that he “told Hagel that he didn’t want to write about his “big shift” until (he) saw industry data, so (he) could understand which industries were driving the corporate performance decline”

 Does Mr. Mandel start with the premise that there is a corporate performance decline – wanting only evidence to support that premise? I can’t tell. If declining ROA equates to declining corporate performance, he is right. I think the world has changed too much since 1965

Perhaps the big shift is also a big shift in the way that we should evaluate corporate performance metrics, and in how we define success. Should we have more capable methods for tracking knowledge assets? That will be frightening for some executives because it might entail that a company that has significantly outsourced and offshored has significantly less assets (essentially that it has lost significant assets) when compared with a similar company that has outsourced less or not at all…

What metrics could be developed to track the value of knowledge assets? should those assets be monitored, and valued in ways similar to other business assets?

To me, it is obvious that there are higher bars and changing times.  The Big Shift that John Seely Brown, Lang Davison, and John Hagel III write about – is a shift that may require changing metrics – at the very least. This Big Shift brings Big Questions…  and I believe the answers will be essential because the shift reflects a clear paradigm shift. 

What do you think? Am I right? Am I missing the point?

November 18th, 2009 Posted by admin | Business, Competitive Advantage, Continuous Improvement, People, Technology | no comments