Dodging The Greatest Hits Graveyard

I’ve kept a frequent presence at rock concerts ever since I was a kid. Back in the day, live rock and roll shows were reasonably affordable—even if you did have to sleep on the street to get tickets—because bands toured in support of the latest record they had produced. Live shows were a catalyst for selling singles and albums, pushed local radio play, sold t-shirts and memorabilia, and paid for the road antics of the bands who could live and party on “permanent vacation.”

The concert world today is obviously different because the ecosystem is so drastically different. There are still monster arena tours like U2, Springsteen, or the Rolling Stones 50th (gasp!) corporate sponsored anniversary. There are small gatherings of devoted fans at venues around 5000 seats for tireless road warriors like Cheap Trick or Chicago. There are nostalgia plays in casino showrooms or destination bars with one or two surviving members of one-hit wonder acts. And there are tremendous new stars like Adele who play the old game a new way and can still fill amphitheaters at top prices, sell plenty of music downloads, and inspire faith that the CD has a tiny bit of life left for the bygone tribe.

What I have noticed over the course of this music evolution is the underlying key to longevity and not moving down the food chain hasn’t much changed—the survivors tend to deliver a healthy balance of old and new material. This is no small problem, as the fans who come out to concerts are no doubt screaming for an artist to play their big hits. It’s natural. It’s satisfying. It’s a trap.

TSO2005A few weeks ago my wife and I went to see one of our favorite groups, the still somewhat niche band Trans-Siberian Orchestra, best known for their annual Christmas shows and the ever-present holiday single, Christmas in Sarajevo. TSO blends heavy metal power chords with classical music and electric violins, usually with an interspersed layer of spoken storytelling. Several years ago they started branching out from Christmas themes, recording and touring a fantasy tale called Beethoven’s Last Night. This was the first time we had seen the show performed live, and while it was familiar to us, it was not well-known to much of the devoted audience. That was pretty brave, I thought, to tour a concept album that was not necessarily top of mind with their audience, but then they did something I found even more courageous. Toward the end of the show, when they had finished playing Beethoven and the audience expected they would play some oldies, they instead played several entirely new songs that had not even been released online. No one had heard these songs except those who had seen the tour, and the applause following was as you might suspect a bit tentative. The nervous quiet during these songs was not because they were bad, it was because they were new. If you are a regular on the live music scene, you know that awkwardness—but without it, there are no new hits.

New music has to be debuted at some point, that’s why it’s called a debut. Audiences can be very tough on new songs, they pay good money to hear hits and the survival of any act is contingent on meeting the expectations of fans. Yet long-term success is equally contingent on innovating, and facing an audience with the unknown or unfamiliar is always a daunting prospect. Who would willingly trade thunderous applause for quiet, polite clapping? The greatest acts know they have no choice.

Most of the hot Top 40 bands in the 1970s and 1980s would periodically release Greatest Hits albums, mechanical collections of their charting singles, usually pushed by their record labels for bankable cash acceleration. Some of these became all time bestsellers, notably The Eagles and Elton John. The question I always used to wonder when I handed over my cash for a dozen song vinyl collection was whether this was the end of the band or the beginning of a new chapter. For too many, we know how that played out, and we know where those bands are playing today, if at all. A Greatest Hits or “Best of…” album was easy money, the equivalent of predictable thunderous applause. Pushing out new work would remain the heart of risk, and the genesis of going to the next level.

Nothing about this cycle is unique to music. Business is the same, especially technology wrapped as consumer products. You need to play to your familiar success, the current incarnation of your brand, but the moment that catalogue is fixed, you’re doing dinner theater rather than headlining at Carnegie Hall. Think RIM with the standing ovation worthy Blackberry, Kodak and Polaroid with endless scrapbooks of silver snapshots, perhaps now Best Buy longing for a different curtain call than their former contender Circuit City. They all climbed the charts, but staying there remains a different story.

Steve Jobs liked to say that he never believed in focus groups, because it was not the job of customers to tell you what they wanted—how could they know what they wanted when it hadn’t yet been invented? No civilian could concretely describe iTunes, the iPod, the iPhone, or the iPad prior to their release. You can only imagine how many pundits prior to the success of these inventions could tell you of their impending doom solely on the basis of unfamiliarity. Of course Apple never stopped marketing its core line of computers during this unbelievable expansion of reach, they were still playing hits while composing new material and seeding it to the faithful, those with whom they had established profound affinity and could ask to trust them further with the unknown.

I also don’t think it is a coincidence that Steve Jobs was a huge fan of The Beatles, who in an active career that spanned all of about eight years never stopped putting out new material, took themselves off the road to focus on composition and the creative process, then reinvented their sound with almost every album, including a few radical pivots like Sgt. Pepper. Is it counter intuitive that the actual career of The Beatles was so short despite all that new material and no Greatest Hits collection until after their break-up? Possibly, but if impact is the name of the game, it is hard to dispute that The Beatles succeeded most of all at avoiding that most dreaded of dead-ends, The Greatest Hits Graveyard. Their incomparable legacy remains vibrant because they pushed themselves so hard to be innovating all the time while crowd pleasing.

Celebrated descriptors like “Built to Last” and “Good to Great” are hard-won praise tied to nimble companies for navigating the same difficult balance for so many years of reinvention. It’s a lesson in courage and vision that is as difficult to learn as it is to replicate, but it is that very bravery that can guide any individual career from ordinary to enviable. Facing the anxious reception of the untried might not be pleasant when a clear alternative is available, but it’s the only trail that bypasses the one-hit wonders.

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The Real Lesson of Kodak

KodakIt is hard not to feel at least somewhat sentimental watching Kodak exit the world’s business stage in such a sad state after such a storied run. You have to feel sorry for the employees, especially those likely to lose retirement benefits after long careers of loyal service. It is also hard to feel sorry for the company, particularly its management. Kodak had the solution to its own ills and chose to submarine it. The lesson: if you don’t cannibalize your own business, count on a competitor to do it for you.

A timeline of “Kodak’s Key Moments” recently appeared in the Wall Street Journal, and what is too easily forgotten is that Kodak developed the first digital camera as early as 1975, but chose not to bring it to market for fear of cannibalizing its hugely popular film business. That’s an easy enough Monday morning quarterback call, but how many companies right now know they are on a path to their own obsolescence, have a pretty good idea what the long-term answer to their ills may be, but are ceding alternative paths to their competitors for fear of short-term pain or possibly looking stupid? The answer: more than you think.

In a subsequent article entitled Avoiding Innovation’s Terrible Toll, the Journal further noted that in a study of more than six million firms, only a tiny fraction made it to the ripe old age of 40. The authors of that report, Charles I. Stubbart and Michael B. Knight, reflect that “…despite their size, their vast financial and human resources, average large firms do not ‘live’ as long as ordinary Americans.” We have just seen this of late with the beloved Borders Books, and now we are watching Barnes and Noble try to pull off a comeback around its initiatives with Nook. Other companies like Apple, Johnson & Johnson, IBM, and General Electric have steered their ships across longer journeys. It is possible to go the distance, but it requires an openness to change that is so uncommon in business, you almost have to shake people physically to get them to see how to save themselves. Generally speaking, corporate people don’t like to be shaken, even if it’s good for them.

Creative destruction as most commonly defined by Joseph Schumpeter is real and unavoidable. It is also reasonably easy to argue that despite the pain it causes in transition, it is a positive force of social evolution that drives us forward and replaces inefficient procedures with new technology, updated methodology, and even new financial opportunities for investment and return. My dear friend Kermet Apio, a wonderfully successful standup comedian, captures the essence of Creative Destruction in a 90 second bit where he compares the joy and simplicity today of clicking on a song you might want to hear versus trying to find it on a cassette tape, which might take you so long you’d almost certainly abandon the task unfinished, or worse, try using your pinkie on the internal reels to queue up the precise starting spot. There’s a touch of nostalgia here, and we do find ourselves laughing very hard at what was our norm not so long ago. Click on the link above to see how Kermet tells the tale, the chuckle makes the point.

But no one is laughing at Kodak’s headquarters in Rochester, and no one should be. Kodak had the first digital camera in 1975, and while admittedly neither they nor anyone else knew what to make of this at the time, they had a much more important mandate on their mind: Protect Film. Kodachrome was not only iconic, it was hugely profitable. So was motion picture film processing. So were all their other traditional film developing technologies, not to mention the sale of retail supplies, equipment repairs, and patent licensing. Kodak was a beloved company and a global brand that made the same wrong decision so many other short-life companies make—they worried too much about cannibalism, and not enough about what happens if they don’t cannibalize their own markets.

It doesn’t get any easier to understand than this—if you don’t cannibalize your own markets, someone will do it for you. The choice is that simple: do it to yourself for your own good, or be the victim of outside attack. No form of technology is forever, and any trend you’re surfing is going to break flat on the beach. In Kermet’s bit, he talks about the Sony Walkman. Everyone had one. It was great. Then came the CD, Sony had a piece of that technology, so far so good. Then came Apple with the iPod, not the inventor of portable digital music playback, but the “perfector.” By the time Sony responded, they were on defense instead of offense. Too late. The cannibal is here, it came from elsewhere and did what you feared it would. You knew it would happen, you couldn’t stop it, but you could have been it. That’s the choice. Not will it come, but from where will it come.

That is the real lesson of Kodak: no one can stop the march of innovation because it is inconvenient or upsetting. No company can duck cannibalism by refusing to acknowledge that current markets have to be sacrificed for new markets to be built. If you’re young and just getting into business, get used to this, and get used to your bosses telling you all the reasons why they have to protect what you have today, that the hit to earnings to attack your own hugely successful lines of business with nascent replacement ventures is just too painful. If you’ve been doing this a few decades, remember back on all those long and awful bureaucratic meetings where you wished someone would have pounded the table and screamed, “To Hell with cannibalism, we’re doing this—keep the cannibal in the family!” There were meetings where that happened. Those are the companies with the 100 year brands.

If you are at CES this week wandering the endless aisles of new stuff and you see something that could eat your lunch, ask yourself, why didn’t we think of that? And if we did, would we have had the courage to launch it? Let’s hope this lesson gets easier to recite so we don’t see loyal employees lose their benefits because political correctness forced a gag order or management failed to act when time was on their side. Manage the product life cycle, but don’t be afraid to leave a little money on the table. Get the new products out there before someone does it for you. The real money is in longevity, which means innovation, which means playing offense against yourself.