The Pivot

The Pivot. That key moment when a business needs to change its business model, target, product - sometimes all three - dramatically to either survive or thrive. At larger companies, it can be wrenching to acknowledge that it is needed and even more difficult to follow through. The entire enterprise is build around a business model, and the realization that it's not working anymore is akin to (especially if the founder is still in control) to acknowledging their beautiful child has turned into a monster as an adult. Kodak had to transform itself with the rapid demise of film cameras (see http://buswk.co/8EEIae for an overview, http://bit.ly/mVcA63 for the details from a financial standpoint, and http://bit.ly/g5Hpmf for the most recent update). Jeffery Hayzlett is making a nice career writing books and lecturing about Kodak's success. IBM also pivoted, moving from a hardware to a services company. But for every big company success, there are legions of failures, in some cases because the pivot to the new business didn't match the speed at which the old business model was collapsing (GM and Chrysler, which survived only because of US bailouts, are two examples. So is Borders, which didn't get a bailout). To a large extent, that's what is happening in publishing today, particularly to newspapers. Newspapers are a Baby boomer item - people under the age of 35 simply don't read them in there paper form. I wrote a couple of years ago that the New York Times was making a critical mistake not charging a subscription fee (http://lewisgoldman.blogspot.com/2009/01/why-nytimescom-should-charge.html), which they finally corrected more than a year later. Their most recent financial results touted 224,000 online subscribers in the first quarter of launch. They've even started to advertise the digital version seperately from the print subscriptions. With the Ipad version, you'll see an acceleration of digital subscribers and, most importantly, re-engagement with a younger demographic which will pay off in advertising dollars. To complete the Pivot, they need to acknowledge their print version is for Boomers, increase the typeface (Please!), and focus on stories and news that that demo is interested in reading.

While big companies have trouble with the Pivot, start-ups can also struggle with it. The biggest impediment tends to be the passion and focus of start-up CEO's. They had a vision which they sold to investors, employees, the press, customers. Admitting that vision either won't work or is missing a bigger opportunity is an admission of failure, and many start-up founders struggle and delay the Pivot as a result. Having worked in business that wouldn't or couldn't Pivot, both big and small, it's clear to me that acknowledging the need for a pivot and then moving as rapidly as possible towards the new business model is critical for success. Otherwise competitors without the baggage of another business will pass you by.

The ignored digital baby boomer

I'm a digital immigrant, as are all Baby Boomers. We grew up with 5 or 6 channels of TV, black phones with cords, and 8 Track tapes. Defined as people born between 1946 and 1964, Baby Boomers are the largest segment of the US population, have the most wealth (despite the setbacks of the last few years), and should have more available time to spend online given their kids are grown and some are approaching retirement (ok, maybe not so much given the economy). For the first time in history, there are more people over the age of 65 than under 5. But reading about technology and business, it seems that the Baby Boomer generation which got so much attention in the 1980's and 1990's has disappeared. They're not on Foursquare, they don't tweet. They've learned to text, at least those with teenagers, and they like iphones but still don't use the mobile web very often. They watch TV on, well, a TV. And the vast majority of startups don't seem to be targeted to them.

Fact is, Facebook only became big when the baby boomers started going on and using it. Zynga's games, particularly Farmville, took off when 40 and 50 something women became obsessed about getting a tractor. The growth of Flash Sale sites (and to a lesser extent daily deal sites) have been driven by boomers. And LinkedIn's valuation (and value) is a direct result of baby boomers connecting with one another. Baby boomers drive the Internet economy, but there is still a dearth of products and services specifically targeted to support them. For example, a recent report indicated that the most expensive keyword to buy on Google is Insurance. Think Gen X or Gen Y is driving that? Boomers have been distracted for the last decade dealing with paying for kids in college and aging parents, with little help from the Internet. Where is a a one stop resource for elder care? A good financial planning site besides Mint? Advice on funeral preparation to help with dealing with lost parents. When marketers start to figure out products and services for Baby Boomers, you'll see another step function jump in E-Commerce and Internet advertising revenue.

Great uses of Mobile

I've struggled with smartphone versus desktop Internet for a while, but now I'm seeing some great uses of mobile that truly address customer needs. My new favorite is a simple SMS txt service - CooCoo (266266) - offered by Metro North. You txt where you're going (for example, Grand Central or GCT to Larchmont), and it gives you the next four trains to that station (departure and arrival). When you're in New York and on the run, its a lot better than fiddling with a paper schedule. They now offer cross-street information through the same service. Now wouldn't it be cool to offer plane and Amtrak information in the same way? How about movie times (for example, Clearview Cinema, Mamaroneck and back comes the next two showings of each movie. Or do it by movie through Fandango by just inputting the movie).

Another good one is "Skip the Line", a trivia game created by Ask.com in conjunction with Six Flags (http://bit.ly/imaQAy). Game does just what you'd expect - you answer some trivia questions successfully, and you get to move up the line at a Six Flags ride. Great use of geolocation to solve a customer pain point. Of course, you have to have an iphone and download the app to play.

These two, plus seeing my daughter's friends obsessively "check in" via Foursquare to get local coupons and freebies, have made me a lot more bullish on mobile.

Crowdsourcing a revolution

On February 11, a revolution in Egypt culminated in President Hosni Mubarak resignation as President. As stated by CNN, "Inspired by a revolt in Tunisia and a page on Facebook", over 18 days mass protests coordinated predominantly through social media and cell phones (Twitter, Facebook, texting) brought down a dictatorial leader who had been in power for 30 years. The role of Social media in Mubarak's downfall has been hotly debated. On the one hand are the legions of news media outlets and bloggers who view Egypt as the first (but not the last) crowdsourced revolution (see The Instrumental Role of Social Media in Egypt on http://www.cbsnews.com/8301-503544_162-20030611-503544.html and E. B. Boyd's How Social Media Accelerated the Uprising in Egypt in Fast Company http://www.fastcompany.com/1722492/how-social-media-accelerated-the-uprising-in-egypt). They argue that the speed and efficiency of the revolution was directly attributable to the social media tools available to the drivers of the revolution, disenfranchised 18-24 year old Egyptians. If not for these tools, Mubarak would have rounded up and captured the leaders of the movement before they got traction with the general populace, and he'd still be in power today.

On the other side of the debate are those who feel social media's role is grossly overstated(see Malcolm Gladwell's article "Does Egypt need Twitter" in The New Yorker http://www.newyorker.com/online/blogs/newsdesk/2011/02/does-egypt-need-twitter.html#ixzz1CwFMDA3b, and Jaikumar Vijayan of Computerworld at http://blogs.computerworld.com/17810/is_the_role_of_social_media_in_egypt_being_overstated). They point out, quite rightly, that crowd based revolutions have occurred throughout history (French Revolution anyone?) without any electronic social media tools.

While both sides have a valid point, it is clear that crowdsourcing and social media tools played a key role in the overthrow of the Government. With the speed of news dissemination and the ability to engage others quickly for protests, social media played a key role in moving from first protest to resignation within 18 days while providing a level of anonymity for the leaders until momentum clearly pointed to Mubarak's downfall. The key point here is anonymity for the leaders of the movement. With obscure Twitter and Facebook ID's, Mubarak's secret police didn't know who to round up. Traditionally despots have found and silenced opposition leaders before they could gain traction. In this case, without cooperation from two US based companies several thousand miles away, they couldn't find the individuals to arrest and interrogate. Finally, Social media tools are public (Twitter is publishing "Tweets from Tahir", a book of tweets that occurred during the revolution), which provides international support, sympathy, and ideas to help a movement succeed.

It took 4 years for the French Revolution to move from the storming of the Bastille to beheading Louis XVI. Wonder how much faster it would have happened today?

Why The Daily will work

Newscorp launched the first iPad specific media property, The Daily. It's the first major news publication to be designed from the ground up specifically for the iPad, and while its success or failure will be determined in the marketplace, I think it will work. Because it is designed from the start to present information the way the reader/viewer wants it, with video, pictures, text, and interactive elements seemlessly woven together, it will be more engaging than a series of articles. While the business model matches the offline world (dual revenue stream from subscriptions and advertising), the design isn't linear. It was built to move where your interest takes you, and you can drill down into stories and images for more detailed information (see the video at http://www.thedaily.com/). The only thing that needs to be enchanced are the social media aspects (you can post to Facebook and Twitter, but I'd like to see reader comments added), but that is a nit.

Bottom line - The Daily is the start of a new wave in publishing, and I applaud Newscorp for making the investment and taking the risk.

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Social Networks and the Ah Ha moment - from Serendipity to systematic research

Remember your first focus group. I'll admit that my memory is a bit fuzzy. I think it was sometime in 1985 when I was working at Foote, Cone, and Belding, an advertising agency. We were listening to people discuss laundry detergent, looking for that "Ah ha" insight that would help us reposition Dynamo and make it relevant again. As the respondents gave their feedback on different positioning concepts (recommended by DuPont as effective at preventing future stains!), we sat in the back room eating M&M's and hoping for that great quote, that key moment when someone said just the right thing for us to move forward with advertising.

Now 25 years and literally hundreds of focus groups later, it all seems so quaint in the world of digital social networking. Thanks to Facebook, Twitter, Survey Monkey, and a host of other tools, we no longer have to rely on the serendipity of catching an individual respondent at just the right moment. You can survey virtually all of your customers, or at least the ones that matter most, and get their insights in a systematic way through sentiment analysis or harvesting verbatim comments and organizing them by keywords. The biggest challenge is no longer collecting - every customer comment about your brand or product is captured digitally for all eternity. The challenge now is sorting. At 1800flowers.com, we did bi-weekly customer surveys with thousands of respondents, and the challenge was always how to review the answers to open ended questions. Like Google, algorithms are being developed to sort, parse, and refine the customer comments, like panning for gold in a stream. These algorithms can help provide a ranking system to be used systemically for product positioning, new product development, loyalty building programs, and improvements in customer experience. Qualitative has become Quantitative, and as a result we now have "Ah ha" moments to choose from as long as we are willing to invest the resources to find them.