Staying Alive

This will be the third post in an unintended trilogy following my last two on why companies that might appear to be “built to last” may suddenly evaporate before your eyes. In response to those stories (Gone So Soon and 8 Warnings That Your Company Is Toast), I received several inquiries wondering if there were ways to spot an imminent mudslide while there’s time to escape.

Executive turnover is something to watch closely, especially the C-suite. Either too little or too much turnstile rotation can be a warning sign. With no leadership change over long periods of time, a company might become entrenched in its plodding, convinced it knows how to do things so well no seismic shift in the landscape requires reinvention of the company’s ways. When executives are repeatedly jumping ship in under a year, the lack of stability in teamwork, embrace of new ideas, or core strategy might be signaling a torpedo crater in the ship’s hull that can’t immediately be seen underwater. Certain presidential administrations come to mind.

An escalating executive dump of equity holdings will usually light up an analyst’s eyes, but what about yours? If your top management is seeking liquidity while proclaiming they are simply reducing concentration and balancing their holdings, ask yourself why now. It’s good to be loyal when there’s a reason to be loyal. Ignoring the siren to go down with the ship will never seem as noble when your colleagues have departed in first class and you are left treading ice water. Much of the dot-com bubble unraveled this way, with most of the stock prices dropping swiftly to zero.

Ever sit in a meeting, listen to a colleague or team of co-workers present an innovative, visionary solution to a core concern the company has long identified as critical to its survival, only to see the framers of the big idea summarily dismissed without adequate explanation? Sure you have, most of us have. Perhaps those framers then quit, go across town and put their concept to work for a competitor, of course without violating their nondisclosure or trade secret agreements, modifying their ideas to a variation on the theme. If you believe they are as smart as they think you are, consider following them. That’s how companies like Intel started.

Do you observe evidence that your company understands its core competency, protects it through a culture of learning, and openly admits its weaknesses as opportunities for improvement? When you go to an offsite, is the point of that retreat an honest evaluation of the company’s strengths and threats, or is the current leadership pontificating on how unlikely it is that your competitors can take your market share? Sears has been dying for decades. I wonder when in each of the past years they thought they were winning.

Are you building a project or a company? A lot of people aren’t sure. Most startups begin with a product offering, but if the company building that product defines itself too narrowly, it may soon cease to be a company when it is folded into a larger company with a lot of “synergies” found in the combination. If the word “synergies” doesn’t ring a bell for you in the world of mergers and acquisitions, it usually means overlapping functions that are removed as redundant costs, possibly you. Look at the string of product builders that companies like Microsoft and Google synergized throughout their history. How many of them can you still name?

Are analytics, diagnostic evaluation, empirical assessment, and primary research core to your company’s self-evaluation? Are key decisions made on gut instinct or debated with facts? Ask yourself if that’s what the top leaders in your company say they want to do or if it’s what they really do. That which gets measured gets done. That which gets quantified gets fixed. If you’re in the room where people are swapping stories rather than interpreting data, you’re probably better off gambling in a casino where the odds are at least known.

Another way to think about this is whether you believe top management in a company is truly focused on staying alive, and whether you can help overcome the challenges to a company you love or want to love. If the decision-makers around you are people you trust who are committed to vetting solutions, perhaps you can be as well. Too often when the axe falls, we acknowledge in hindsight what we should have applied in advance thinking. There are artifacts of knowledge all around you—both positive and negative—if you choose to pay close attention to the reality of your situation.

You can always be pleasantly surprised or devastatingly rocked by good or back luck on the job. Predicting the likelihood of an outcome is a learned task that is likely more tangible than you think.

Gone So Soon

Recently I gave an interview about one of my favorite career projects, Carmen Sandiego. It was being researched by an archivist! I hadn’t been asked in years about the mysterious thief in the red trench coat and fedora. As big as she was in my life and on the national stage, save for a new motion picture in development, few people remember dear Carmen as much more than nostalgia. For that matter, who remembers the massive multimedia magic of CD-ROM computer games with all of 700mb of storage?

There she is. There she isn’t. Nothing lasts forever. Very little lasts long at all. That is the stuff of our culture. That is the stuff of our careers. Hold on too tightly to anything and you find yourself grasping ancient pixel dust.

Creative destruction is increasingly real and accelerating faster than ever. A new company comes, an old company goes. Brands emerge and evaporate before our eyes. In the start-up world, the notion of permanence is almost impossible to envision. Look forward with alacrity or don’t bother looking up from abandonment.

Contemporary taste is fickle. Technology trends are more fickle. Customer loyalty is most fickle.

Earlier this year I watched the National Geographic Channel limited series Valley of the Boom. I couldn’t tell if it was a dark walk down memory lane or an idealist’s time capsule of lost promise. Netscape—the big bang of the internet age—went from conception to extinction in all of about four years. The Globe—the biggest IPO of its time—was practically eviscerated at birth. Pixelon—a scam extraordinaire foiled by its own iBash—today doesn’t even make a decent trivia question on a game show.

Those were just three emblematic stories, real-world cautionary tales of boom and bust. You might remember the history of other exploded rockets, from Pets.com to Webvan. Maybe you don’t want to remember. Of the big consumer-facing internet companies that emerged from dotcom v1.0, it seems Amazon, Priceline, and eBay are the only lauded brands continuing to operate at large scale.

Google emerged in the second wave of the internet, capitalizing on all the failed portals’ inability to understand the essential nature of search, most notably the excruciating death spiral of Yahoo. Can you think of another important round-one bubble survivor? Which will be the next to vaporize? Jeff Bezos has already said Amazon won’t last forever. He knows inescapably it will be replaced by something fast moving and better.

Today there are reportedly 300 or so companies affectionately refered to as “unicorns.” These are start-ups largely in the technology sector with a valuation of more than one billion dollars regardless of revenue or earnings to justify the bragging rights. You are undoubtedly familiar with many of their quirky names: Uber, Lyft, WeWork, Airbnb, DoorDash, Slack, Pinterest, Instacart… these are widely regarded as some of the good ones.

How many of these brands will today’s schoolchildren recognize when they become adult consumers? You know they won’t all still be around. History assures us of that—unless of course this time is different (and when someone tells you this time is different, keep your hands on your wallet).

Early last year I wrote an article titled Is Facebook the Next AOL? At the time I wasn’t sure. Later in the year I wrote about it again. By then Mark Zuckerberg had testified before Congress and I had become sure. Facebook is going to fall hard. The level of cynicism over there is no different from the hubris of America Online. Today cash is pouring in and it has no serious competitors, so hey, it must be invincible, a forever brand!

Facebook only has one major problem corroding its innards: customers don’t trust the people running it. No product or service can last long that way. It’s hard to be a forever brand when your promise is held in contempt. You can pay lip service to addressing the failings in your business model, but if the core concept is fundamentally conflicted, you can’t beat the reaper.

Even General Electric has fallen from grace. GE, the one original Dow Jones industrial average company dating back a century, is no longer in the Dow 30 index. How can that be? Yes, it is still an enormous enterprise, too big to fail, one might say. Does that mean the brand matters a fraction as much as it did a decade or two ago?

Nothing lasts. Creative destruction is consistent that way.

Google will last a long time because it has built a mighty moat, but it won’t last forever.

Apple? Depends on how it deploys its seismic war chest of cash.

Netflix? Hard to imagine, but it seems like a transitional platform. It could be bumped off.

Microsoft is evolving again, truly embracing the cloud, so maybe it will be the new GE. It has lots of runway to continue reinventing itself, but like GE, no runway is infinite.

What’s the point? Think about your own Carmen Sandiego, that gig you love that will be gone someday, and plan your career accordingly. Are you ready to lose the inevitable and discover what comes next? The ship you are on may appear to be built out of steel, but steel eventually rusts. Are you looking beyond the bow?

Creative destruction wins every single time, but don’t despair. Where old jobs become obsolete with antiquated value propositions, new jobs emerge requiring fresh ways of looking at the world. I doubt that will change. While so many companies have come and gone in the last quarter century, the planet has lifted two billion people out of abject poverty. There are new pockets of middle-class workers emerging all over the world in an increasingly shared global economy. That seems like a decent enough tradeoff for a few trampled unicorns.

Maybe someone will even capture Carmen Sandiego. You never know what can happen when you let go of everything you don’t need anymore.

But We’ve Always…

It’s December. For those of us who make our living in any form of consumer business, that usually means two things:

  • We have made it through Black Friday and Cyber Monday, with our projections now being evaluated against actuals.
  • In less than a month it will be a new year, where we can either make the same mistakes again or invent new ones.

That leads to two takeaways I would like you to consider before the year ends:

  • Customer behavior tells us almost everything we need to know to be successful in business, particularly when we study data and benchmark assumptions against metrics.
  • We ignore the realities of customer behavior at our own peril, but darn it all if we don’t come up with really good reasons to flagrantly repeat our mistakes with passion and conviction.

How does our eye come off the ball precisely when it is crossing the plate and our bat is in swinging position?

It all begins with three wretched words:

BUT WE’VE ALWAYS.

Perhaps you’ve heard a few of these pronouncements before:

I know our customers complain when we send them too many emails, but we’ve always sent them at least four offers on Thanksgiving Day.

I know our customers don’t trust our pricing, but we’ve always jacked up our regular prices in the weeks before Christmas so we can mark them “50% off.”

I know it’s irrational to cover the cost of free expedited shipping and lose money on every sale, but we’ve always managed to convince our boss that losing money is the only way we can compete with Amazon.

I know our brand promise is what matters most to our company, but we’ve always managed to slip in a few low-quality products with our best inventory to even out our margins.

I know we believe our customers are loyal and have a lifetime value, but we’ve always cut our customer service costs to force our bottom line into compliance with our budget.

Yep, we know what we are doing is wrong, but we’ve always found a way to justify our shortcomings, weak logic, or poor decision-making because we’re out of time, out of patience, or out of energy to argue for doing what’s right.

Earlier this year I attended the third-annual ShopTalk conference in Las Vegas. It had grown 50% over 2017 with more than 8400 attendees. Ecommerce remains an escalating magic buzz word. There were two types of presentations:

  • “People may think our proud, established, vastly well capitalized legacy brand can’t adapt to new technology, but we’ve always been a customer favorite and there’s no reason anyone should bet against us.”
  • “We’re a new brand and will lose our jobs if we don’t succeed, but our investors are betting that if we brainstorm new experiments and focus on customer behavior, the results will tell us what works and what doesn’t.”

Which bet would you place with your own money?

Let me restate the choice:

  • “We’ve been around more than fifty years, we know exactly what we’re doing having coined a business model for hard-won success, we’re a household name, and we’ll still be a household name fifty years from now.”
  • “We have no idea if we’re going to be around in two years, but we’ll take whatever runway we have to figure out how to do what’s never worked successfully before.”

Don’t bother answeringit’s a trick question. The truth is you need some of both to win the long game, some of the newbies and some of the dinosaurs. Yet too many people convince themselves there’s little downside to a buy-and-hold strategy with “forever” companies like GE or GM. They won’t invest in a risky start-up with a funny name and an unproven business model like Amazon or Apple until it’s a fully valued blue chip.

No one knows what companies are going to win in the future, whether cemented or emerging. They all have unpredictable choices to make. It’s supposed to be that way. It’s how new companies are born and old companies die, or old companies are reborn through reinvention. It’s called creative destruction.

My point has nothing to do with improving your stock portfolio. My point has everything to do with recognizing the death knell of an established brand and bringing life or invigoration to a challenger brand.

It can be a fair fight. An established brand can be a challenger brand when it acts like an underdogwhen it stomps out the status quo and humbly looks to customers for confirmation or rejection of any working thesis.

I am willing to bet few employees at Amazon or Apple wander the halls uttering the words “but we’ve always” as a response to why they aren’t trying something new. Who knows, maybe I’m wrong, maybe they are becoming slow, cynical, and comfortable that they know what they are doing. I doubt it, but if they are, an opportunity for a challenger brand is out there for the taking.

I’ll bet they said “but we’ve always” a lot at Sears.

I’ll bet they said “but we’ve always” a lot at Toys ‘R’ Us.

When was the last time you said it? Still feeling good about that?

This year’s holiday shopping strategy is already behind us. There’s nothing we can do with history except study and learn from it.

The new year awaits all big ideas, particularly those focused on truly delighting customers with a sustainable business model and a resonating brand promise.

My advice going forward in whatever you are doing?

Eliminate the phrase BUT WE’VE ALWAYS from your company’s vocabulary before it eliminates you.

Erase those three words entirely from all conversation.

BUT WE’VE ALWAYS is defensive, uninspiring, and telling.

Try something instead that hasn’t worked, something that you think might work because you have reason to believe in a thesis. Measure the results. If there’s promise, hone it with precision. If it starts to work, stay humble. Stay inquisitive. Question the potential interpretation of every collected data point. Remember that every successful idea has a life cycle, and a bad idea yesterday might be reformed under changing market forces as a good idea tomorrow.

When an idea works dependably and someone questions it in a future review, just don’t say BUT WE’VE ALWAYS done it that way. You haven’t always done it that way. It had a beginning. It can have an end. What can’t end is innovation.

_______________

Image: Pixabay

More Fallout from the Zuckerberg Files

Should the unintended consequences that emerge in the course of a company’s evolution be a primary concern of management?

Is the exponential creation of shareholder value still the overriding force when a wildly successful company grows even faster than its own outsized vision?

Are the naive philosophical aspirations of under-experienced entrepreneurs a get-out-of-jail-free card from the ramifications of otherwise noble intentions?

In answering these and similar questions, is Facebook somehow a different animal?

These are some of the issues examined by a new Frontline documentary recently aired on PBS that frames a deeply damning critique of Facebook and its leadership team. While purposefully steering past the warm-and-fuzzy aspects of Facebook’s innocent exchanges of family photos and recipes, The Facebook Dilemma dives into Facebook’s structural roots.

The critique presented is strident but not unfair: Why didn’t Facebook as an enterprise heed the many early warnings of the pervasiveness of its influence and more strongly consider mitigation strategies, and now that the political chaos has been unleashed, is there any possibility of getting the bad genie back in its bottle?

When Facebook launched, founder Mark Zuckerberg braved a bold and curious global community manifesto:

“Our mission is to make the world more open and connected.”

That sounds good on the surface, and it sounded so good to so many of Facebook’s early employees that they rallied around the life-affirming purpose. They believed they were building a platform toward the betterment of humanity.

Simultaneously, the size of the audience embracing the platform created a media opportunity unlike any other in history. No company has ever thought about achieving monetization of a billion (heck, now two billion) individuals. To make sure no money was left on the table, Zuckerberg hired Sheryl Sandberg from Google to build that side of the equation.

The inherent conflicts soon became apparent. Facebook claimed to be a technology company, not a media company, even though its business model was selling advertising, which is what a media company does. To be the most valuable media company it could be, it needed two things: the world’s most in-depth data warehouse, and a rule set of utilizing that data with the fewest possible restrictions.

As a business, this all made sense. As you can see every day in the public company’s enterprise value, it worked beyond all expectations. The problem remains, it was initially fueled by another slogan:

“Move fast and break things.”

This ethos is not unique to Facebook. One of the tenets of Silicon Valley is to drive value from what is called an MVP, a minimum viable product. The point is to get a functional offering in the market quickly, find where it is successful, worry little about its failings, and start to iterate while building cash flow. Success is defined first by penetration (audience reach) and second by monetization (lifetime customer value). When things go sour, startups try to fix them, but because success is winner take all, most teams unapologetically expect there will be a lot of sourness to sweeten.

The question Facebook has encountered is unsettling: Is its very business model antithetical to fixing the byproducts of its success?

The Frontline documentary illustrates many of the ways Facebook has gone sour. Arab Spring. Fake news penetration in the 2016 U.S. presidential election. Russian intervention in media buying in the same election and outrageous exploitation of privacy by Cambridge Analytica. Violence in Myanmar.

Even Roger McNamee, a celebrated early investor in Facebook, took it upon himself to act counter to his own financial interests and ask Facebook management to step back and rethink the implications of its mindset. They did not heed his warnings. They were either too optimistic, too idealistic, too hooked on winning, too greedy, too ambitious, too arrogant, too busy to see the light of day, or a combination of all of those.

Facebook management has been reactive on all these fronts and done what it can to play whack-a-mole as crises emerge. Executives and managers there admit repeatedly they have been “too slow” to address the ramifications of their global viral adoption. The “too slow” apology parrots Zuckerberg’s appearance before Congress. It was a well-played chess move. It reveals no ethos of a fundamental commitment to a proactive playbook of innovative solutions. It’s a cost center, not a profit center.

Traditional media companies work under the direction of a qualified, responsible editor. When a journalist makes a mistake, the media brand runs a retraction. Facebook doesn’t want to be a media company, and it doesn’t want to be an editor, but any way you slice it, the algorithm that sits under News Feed is a robotic editor more likely to show you what it thinks you want to see than what is true or real. Then a perfectly targeted ad is inserted. That is how the game has been won at Facebook. It’s a winning formula. Any risk to changing that is far riskier to the company’s stock price than a few incidents of political unrest.

The real question remains: If Facebook’s mission requires that the company remove most obstacles to the free flow of information, the result of which is to facilitate unfiltered speech, the result of which is chaos, can it both stay true to its values and smooth over the chaos? And if the company is selling some of the most valuable ads in the world because the vast archive of privacy data is what makes those ads click, how can it impose limits on the interests of its ownership?

It’s a greater good question, one that capitalism believes is best left to the free market to solve, but in this case, it’s almost impossible to see how that gap is bridged.

Zuckerberg likes to say that Facebook is an “idealistic and optimistic” company. He said it when we was hauled before Congress to address the breach of privacy trust. When he was a younger man, it was a quaint proclamation I could have believed were it not for the true origin of Facebook as a college hook-up site. When he says it today, it sounds cynical. People who work for him might still be drinking the Kool-Aid. He’s selling advertising, justifying it, and trying to dodge regulation. To wit, he’s doing his day job as CEO.

Part of the problem might be social media itself. Its greatest strength is its greatest weakness. While pure democracy of publishing without a filter is liberating, audiences can easily be misled and mislead each other in chaotic exchanges of raw opinion. Add in bad actors buying access for covert agendas and the danger can become uncontainable.

Shortly before Zuckerberg testified earlier this year, I wrote a post entitled Is Facebook the Next AOL? At that time I wasn’t sure. Now I am. The byproducts of Facebook are so pernicious and likely unresolvable, I do think at some point the vast audience will abandon the platform. The cost of trading one’s privacy for family photos and recipes is too high. I don’t know when that will happen, and Facebook has a ton of cash so it can last a long time, but I expect the devoted masses will eventually exit their loyal addiction in self-defense. I don’t think this invention can adequately address the inherent conflict of interest it has created to thrive. Creative destruction will replace it with a better, more respectful product.

A brand is a promise. When trust is eroded, a brand dies.

I remain active on Facebook, but the broad notion that the world would be better as an open and connected place has always troubled me. Maybe it’s because I grew up as a kid learning of Nixon’s enemies list. Privacy to me always seemed to matter. Today’s political climate almost makes the Nixon era seem welcoming.

I’ve long subscribed to the notion that technology is advancing much faster than our ability to understand its implications. I saw that in my early career with the addictive nature of computer games. We see it all around us with people’s attention glued to mobile screens as they bump into each other and fall into fountains. We don’t really know what this stuff is doing to us. We buy it and use it and another tech company goes public.

Silicon Valley moves fast and breaks things because it’s good for business. Collateral damage is expected and as long as a company survives and grows few real tears are shed. Expecting it will change is unrealistic. It’s a form of realpolitik. Expediency wins over ideology because of the vast money at stake.

Since you’re probably staying on the social media playing field indefinitely, protect yourself. No one else will.

_______________

This article originally appeared on The Good Men Project.

Image: Pixabay

Is Facebook the Next AOL?

 

I used to like AOL. Back in the day we called it by its full name, America Online. Prior to the broad penetration of the Internet, it was how we connected with each other. It was the company we paid on a subscription basis for both access to digital connectivity and content. For the ownership of AOL, it was a very, very good business, so explosive that it frightened the old guard in media and was merged into an even bigger entity, AOL Time Warner. If you were born after that wildly failed merger, it is difficult to convey just how powerful and influential AOL had become. Truth be told, I still have an active AOL account and get teased about that by friends. I wound it so tightly into my life it is still hard to completely unwind despite its deterioration.

I also like Facebook. As an individual enamored with words, I find it an irresistible way to communicate with a circle of acquaintances on everything from politics and social causes to MLB, The Beatles, wine, and business opportunities. As an author of fiction, I find it an essential tool to communicate with readers, let them know a new book is coming, tie that book into news of the day, and connect all of that with the monthly postings on my blog. Another confession: I was one of the earliest adopters of Facebook over the age of 40, invited for business reasons to create an account back when it required a .edu email to become a member. Companies I’ve led have been active buyers of advertising on Facebook at every stage of its evolution. Yet even with all that passion, I have been an ardent critic of Facebook. It reminds me of AOL. I hope it won’t suffer the same fate.

Is it alarmist to think that Facebook could collapse at the level of AOL simply because of its latest data breaches? Yes, I think that would be overstating the calamity of its current situation, and if Facebook does implode, it will likely be a slow and painful process much like AOL with a long-tail legacy business lingering into the digital future. I am not predicting that will happen. I am suggesting that it could if Facebook does not radically rethink its business in real time and take immediate action to course correct.

I am not specifically reacting to the gross abuse of Facebook’s members by Cambridge Analytica, but if ever there was a wake-up call to Mark Zuckerberg this bell is tolling awfully loudly. The sound of that alarm is the crying out of customers reminding the leadership of Facebook that they are not users as the descriptor goes, but human beings who have chosen to enter into a relationship with a brand. As I have mentioned here many times before, a brand is not a logo, a brand is a promise. When that promise is violated, all bets are off for the future of the brand. I believe AOL broke its promises way too many times and then sadly faded away. Facebook is now breaking many of its promises, real or presumed, and if the leadership there doesn’t do something material about it soon, they are rolling the dice against fate.

Here are the three most obvious areas of overlap I see between Facebook and AOL, and how addressing them now aggressively might change the course of history for the social network that changed our lives in the last generation much as the online access ramp that carpet-bombed the nation changed it in the previous generation.

DUMP THE MVP

I am at odds with many of my colleagues on the topic of “minimum viable product,” but I have always vastly disliked the MVP acronym and concept. I know how much Silicon Valley treasures the notion of The Lean Startup, and I suppose if a fast path to cash generation is primarily a company’s goal, a crappy first-generation product bounced off a wave of early adopters who will offer critique could make business sense. Because I favor brand development over fast monetization, I have never bought into the whole idea of “moving fast and breaking things.”

How did Facebook get into this fix with inexplicable amounts of customer data being exploited? Top management didn’t take the time to fully think through the implications of their product decisions. Likewise, AOL was legendary for releasing updates that crashed our computers and often made it impossible to even log onto the system. MVP is a shortcut that disrespects customers. Build excellent products tested thoroughly before deployment, and customer trust will compound rather than be wagered.

LEAVE SOME MONEY ON THE TABLE

AOL came to love hammering our screens with advertisements. We got them at sign-on, with our email, with instant messaging, with our stock listings, with our sports scores. The ad insertions were ceaseless and endless. When it was the onramp to connectivity we were already paying a monthly fee for the privilege of being an advertising target, but this additional banquet of media cash was a renewable feast of dots and spots. With so many eyeballs and so little competition they also assaulted advertisers with ever-increasing campaign rates.

Today on Facebook it isn’t quite that aggressive, but it’s getting there. What’s worse, the advertising depends on crawling through our personal profiles to target ads with astonishing performance response. The media business is certainly a game of haves and have-nots, but company leaders have to keep their eyes on the prize. Does the company think its demise is inevitable and thus seek to exploit its visitors with endless badgering? Or can it modulate the experience to show us a reasonable number of ads that are relevant but not beyond our comfort levels of intrusion?

SUSTAIN AN AUTHENTIC MISSION

Here we return to the luster or disposability of a brand, to the ability to make a promise and deliver on it consistently in the face of day-to-day business realities and financial opportunism. AOL’s stated mission was “to build a global medium as central to people’s lives as the telephone or television… and even more valuable.” AOL actually didn’t do that—the internet itself obviated its driving purpose—but rather than build on the goodwill of its access brand and attempt to enhance the customer experience through creativity, the company sought to keep customers in a “walled garden” and intervene in easy access to the open internet. Customers soon enough revolted and left in droves.

Facebook’s initial mission was “to make the world more open and connected.” That mission more recently has been revised “to give people the power to build community and bring the world closer together.” Those are both lofty ideals. The question is whether Zuckerberg had the maturity to comprehend the implications of what path his company’s technology cut through the landscape as a result. Of course it seems like a great idea to be closer to our friends and meet new people along the way, but if that compromises our privacy and personal security, is it worth it? Who gets to decide that? I can’t navigate Facebook’s privacy tree and I work in the medium. If its brand offers us a lasting promise of sharing and collaboration, does it also offer any guarantees of protection? If not, then we arrive at the cynical conclusion: “If we aren’t paying for the product, we are the product.” If a company wants to build a brand for the long-term, that’s simply not a sustainable value proposition.

I would guess if AOL founder Steve Case had it to do over again things would have been different at his once pioneering enterprise. It was a younger audience that first championed AOL, but his demographics didn’t stay young as the massive brand quickly lost its cool factor. Facebook is already seeing a similar demographic shift as its relevance with younger customers is waning, ceding that excitement to newer brands. I wonder if Zuckerberg will someday have the same regrets as Case or if he will find a way to shift gears with thundering resonance and reinvent his company to achieve a greater destiny.

The answer isn’t in testifying before Congress, any more than it is about inescapable government regulation. The answer is in balancing business success against the real human needs of customers, about making a promise and keeping it, about building a brand that stands for something more than the dollars it attracts. Innovation is both challenging and valuable. Trust is much harder and worth so much more.

You Call This a Loyalty Program?

Try this episode on for size and tell me how it makes you feel about the brand:

I recently logged into one of my hotel loyalty accounts where I had amassed several hundred thousand points. That is, I thought I did. All my points were gone. Apparently this chain has a policy that deletes all your points if you don’t stay at one of their properties for a year. Did they send me a courtesy email reminding me I needed to stay there toward the end of the twelve-month lapse? They did not.

I called customer service and they recited the policy back to me, willing to say farewell to a customer who had paid the freight to accumulate several hundred thousand points in its loyalty program, just not in the past 14 months.

Then I tweeted my complaint about the forfeited points publicly. A few hours later whoever runs the company’s Twitter account tweeted back publicly that the company was very sorry for the situation and dedicated to my satisfaction. The Twit-master asked that I send a private tweet to follow up, which I did. Then we moved the correspondence to email.

I was then told that the company had a one-time exception to the policy where points could be reinstated, but that had already been done for me approximately 13 years ago. Silly how I could have forgotten their grace. However, they said that in an attempt to reinstate my customer satisfaction, they would restore half my forfeited points now and the other half if I agreed to stay at their properties at least three times in the next six months. I wrote back that it sounded a bit ridiculous to be playing Let’s Make a Deal – Loyalty Edition with them, but I would agree because, well, why not?

To their credit, they did return half my points upon receipt of our “written agreement” in that email thread, and I have booked one stay with them. I just wonder, is this what they really set out to accomplish in developing their loyalty program? Is it a loyalty program at all, or just a rewards program that effectively gives me a rebate on what I spend provided I do it on their timetable?

If you give me a reward for my business, then take it away because I didn’t precisely follow your rules, then give it back conditionally with an expectation that somehow I have become pleased by our interaction, how has this helped me as a customer or you as a business? It’s a quid pro quo. I don’t think a quid pro quo has anything to do with loyalty.

When I think about loyalty, I think about preference. When I think about preference, I think about what brand comes first to mind when I need a particular item or service. I choose that brand for a host of reasons, for the totality of my experience with the brand.

I prefer to fly Alaska Airlines because they tend to treat me better as a human being, so I am loyal to them. I am also a member of their loyalty program, but that has very little to do with my loyalty. The way we interact all the time has to do with my loyalty. There is a consistency in my interaction with their airline personnel whether I am flying in coach or upgraded to first class, whether I bought a discount or full-fare ticket. That consistency is what creates loyalty.

I prefer to shop at REI for sporting gear because they are patient with me when I come to their stores not knowing nearly as much about hiking or biking shoes as they do, and when I leave it is with the right pair of shoes. I am also a member of their co-op because that is required to shop in the store, and I get a member rebate every year, but that is not why I am loyal. I am loyal because when I am on a trail or in spin class and my shoes are comfortable, I remember how great they were about helping me get the exact fit and charging me nothing more for their time.

I don’t prefer the hotel chain that gave me back half my points now with a contingent promise for half my points later. We have a transactional relationship based on price and location. I wouldn’t seek them out. I could, but they have given me no reason. Now when I think of them I think of my Let’s Make a Deal experience rather than any experience staying under their roof. That’s sad.

Maybe the problem is terminology. Maybe there is no such thing as a loyalty program. Maybe they are all just rewards programs masquerading as loyalty programs. That’s kind of a punt when you think about it. We could design a loyalty program that involved every point of customer interaction to ensure your satisfaction, but heck, that would be hard, why don’t you just take these points instead and we’ll play like we’re loyal to each other even when we know, wink-wink, we couldn’t care less about each other. It’s a bed and bathroom and points if you follow our rules, so come here at least every twelve months and someday maybe you can cash in those points for a standard room on the house. Maybe, if we have availability, certain restrictions apply.

I recently attended an e-commerce industry conference where at more than one session I heard the phrase, “There is no customer loyalty, consumers only care about price.” If this cynical statement is true, then I wonder why we have marketing departments at all. Don’t believe it. All customers are not automatons who solely focus on what’s cheapest.

Brands are not dead. A brand is a promise. Brands compete on price, quality, and service. If a company wants my loyalty it is there to be won, like Alaska Air and REI. If a company wants to make it about points and rules, that’s something else, and yes, in that scenario why should there be customer loyalty?

You get what you give. Since you’re selling and I’m buying you get to go first. You want my loyalty, show me yours. You want my loyalty, enter into a brand-customer relationship with me. You want to make it about points, if you piss me off I’ll dump you at the next possible off-ramp.

Loyalty is hard to win. It should be, because it’s valuable. That’s why the great brands think in terms of lifetime value rather than rules. If I have to publicly embarrass you with a tweet to get your attention, you don’t care about me a hoot, especially when you just had me on the phone. Think about that the next time a company penalizes you for breaking its loyalty rules. Those are stupid rules. You don’t need the points that badly, and if you don’t prefer the brand, you sure don’t need its crappy rewards program.

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Image: Stefan Hatos – Monty Hall Productions

It’s All Getting Personal

It’s a bit weird, this Author thing. Let me try to explain.

For as long as I can remember, putting words on paper has been an integral part of my life. It started when I was a kid, with little plays and poems. Then in high school it became short stories and full-length plays. Then in college some more plays, some student films, and the occasional joke for a journeyman standup comic. When I was done with school, I wrote about a dozen screenplays, and then when the Writers Guild strike hit, I wrote an epic story for one of the very first movie-like computer games.

Shortly after that I moved to the business side of the computer software publishing model, only occasionally penning a bit of dialogue here and there for a certain Carmen Sandiego. My life became focused on technology, marketing, sales, finance, and team leadership. As I’ve said before, I really didn’t write much for a couple of decades, other than business plans and PowerPoint decks, which I was later told might have had saleable option rights for media exploitation given my need to always tell a story (if only I then had an agent!).

All through these periods of business creativity and innovation, I never had much trouble calling myself a writer, because I felt pretty good about my ability to form pithy sentences and get other people to take an interest in them. Even when I wasn’t writing per se, people would call me a writer, and I would show up at writerly events and schmooze with writers because I could keep up with the banter and liked most of it. I felt fine about this. It never felt stuffy, arrogant, pretentious, or the least bit weird.

Then I hung up the spreadsheet programs for a while and wrote my first novel, This Is Rage. Suddenly I was an Author—at least that’s what my publisher called me. I fell into silence at that descriptor. That was weird. In that same window, one of my most valued mentors introduced me at lunch as a Novelist. I looked at him in fear and more silence. “No, it’s just me, Ken, the writer.” It was and it wasn’t. That’s when things started to change.

You can go online and look up all the different uses of Writer vs Author vs Novelist vs. Schmuck Who Types and Prays for Good Reviews and Modest Royalties (that last one is harder to find in search, so I think I’ll tag it). Here’s the really hard part, especially for me: Once you decide you want to sell books and do public readings and speak at lunches and conventions, you have made the implicit decision to transform yourself from Writer to Author. What’s hard about that? You now find yourself being public about things you never thought were your job to expose. Take, for example, this blog post. It’s a little different from most of my others, huh? It’s getting personal.

PlatformIn the publishing world, they call this “building your platform.” It’s not a platform you stand on in Hyde Park and it’s not a platform you adopt as a political candidate. It’s the sum total of all your networking outreach, private and public. You gotta go light up Twitter (@CorporateIntel) with clever BRIEF memes your soon to be amassed Followers can follow. You gotta have an Author Page on Facebook that gently steers people toward buying your new book without being too crass about it. You gotta pump up your LinkedIn Profile so your business associates know what you’re doing but don’t think you’ve gone completely rogue. You gotta get busy on Google+ which means you have to figure out how Google+ works and learn to repost everything there to get it scraped into the index.

Why in tarnation do you need to do all this? Can’t you just write the dang book (that’s hard enough!) and toss it over the wall to your publishing team? Well, I suppose you can if your name is Stephen King, J.K. Rowling, or Malcolm Gladwell. The rest of us quickly learn our real name is more like P.T. Barnum. When you are deemed an Author, you are also deemed Promoter-in-Chief, because if you won’t get out there and rally people behind your work, why on earth would anyone else? The introverted tendencies of writing reverse themselves into Living Out Loud! If you don’t think you can do it, you can always go back to being a Writer. In this day and age, writing for an audience is putting yourself out there, and no matter how uncomfortable it is to type the word Author after your name as some bizarre form of professional title from The Bloomsbury Group, you really have no choice other than to accept obscurity without a fight.

Okay, two more points and then I’ll wind down. First, if you know me, you know I’m a lousy introvert, and second, if you know me, you know I ain’t going down without a fight. Publisher says build the platform, I’m building the platform. Please don’t leave me out here on the ledge in the clown suit alone. Like me or something.

Here’s how I am reconciling this weirdness, this discomfort, this near unholy demand to say please pay attention to me. I’m going back to my business roots. It’s all about mission statement. It’s all about brand promise. Writer, Author, or Schmuck, that’s my job.

Sometimes the simplest ideas are the easiest to forget, and the ones most worth remembering. Two years ago I wrote a post on the importance of a mission statement in a business. What I emphasized was that it only mattered if it was more than words. At the top of this blog you see the words:

Ideas. Business. Stories.

That has been my brand promise to you, the underlying essence of this whole Author mishigos. You buy that, you buy me. I’m pretty sure the rest is arts and crafts.

Rolling deeper into my non-Author roots, as I was driving to a meeting last week, I heard a snippet of a radio interview with Dane Ban, the CEO of much-beloved Trader Joe’s. He was asked what advice he most often gives emerging entrepreneurs. He replied that a business has to be about a mission. Rather than leave it at that, which already resonated with me, he went on to quote the esteemed Peter Drucker in The Practice of Management:

“There is only one valid definition of business purpose: to create a customer.”

Simple. Relevant. Profound. Try to challenge it.  Very, very hard.

So as weird as it feels to me, as uncomfortable as it is being made for me, I am building that platform in advance of the launch of Endless Encores. Its subtitle is not coincidental: “People, Products, Profits—In That Order.” That also appears near the top of this blog in my mission statement. It all comes around. Like I said, it’s all getting personal.

Come along for the ride, will you, please? Don’t force me to come to my senses and claw my way back in. That might make me a writer again. How scary would that be?

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This article originally appeared on The Good Men Project.