New Power

*Gah!* It has been 15 years since [_The Clue Train Manifesto_][] went live (April 1999 for those wanting precision), and it would appear that a good chunk of the corporate world still needs it explained to them. Witness the _Harvard Business Review_’s [“Understanding “New Power””][], which somehow manages to fuse, really confuse, in their own words “increasing political protest, a crisis in representation and governance, and upstart businesses upending traditional industries.” Okay, so one should be generous with HBR: it doesn’t really serve them to think about things like income inequality. (More seriously, HBR can often be a lot smarter than its home in the Harvard Business School, which begot the world the MBA, and thus probably deserves a special place in the annals of *Ideas That Destroyed Civilization As We Know It (And Just When Things Were Looking Up)*.)

HBR’s definitions of old and new power are reasonable, however:

> Power, as British philosopher Bertrand Russell defined it, is simply “the ability to produce intended effects.” Old power and new power produce these effects differently. New power models are enabled by peer coordination and the agency of the crowd—without participation, they are just empty vessels. Old power is enabled by what people or organizations own, know, or control that nobody else does—once old power models lose that, they lose their advantage.

And we can only hope that someone, somewhere is making notes on where there is excitement and innovation in the world and where there is not.

[_The Clue Train Manifesto_]: http://www.cluetrain.com
[“Understanding “New Power””]: https://hbr.org/2014/12/understanding-new-power

CNBC State Ranking

CNBC ranks the states in terms of their being [best for business][b]. There are a number of dimensions involved, each represented by a column, each of which can be selected and the list itself sorted by that dimension. One of them, thankfully, is *education*. (Louisiana doesn’t, in general, do well in any of the dimensions.)

[b]: http://www.cnbc.com/id/100824779

People, People, People

> The world’s most successful organizations value great people. Some call them “A Players.” Others call them “stunning colleagues.” In all cases, high talent density is everything. What’s in flux today is what makes someone great. Legacy HR models tend to value “managers” – people with graduate degrees from prestigious business schools with years of experience leading initiatives in their chosen field. As a result, a typical day in corporate America is peppered with meetings and PowerPoint presentations. Planning has become the work. Intuitively, we know that’s not right. To win in the marketplace, someone has to create and deliver exceptional products, services, and experiences, and planning won’t get us there. In a Digital OS, the emphasis on People is all about making. “Makers” are people who have skills (as opposed to credentials). They think by doing: experimenting, testing, and learning. Within these high performance cultures management has evolved into something more akin to mentorship. The thinking goes, if workers are capable of making decisions about their priorities and workflow, what’s left for the manager is skills development, knowledge sharing, and helping with roadblocks – the Montessori method gone corporate.

From “[The Operating Model That Is Eating The World](https://medium.com/on-management/d9a3b82a5885)” by Aaron Dignan.

Why Apple Is Special and Amazon Is Not So Special in One Paragraph

You have to admire the grandness of claims sometimes made by pundits. [Derek Thompson’s assessment][] comes down to this:

> Apple’s core business is something that practically everybody wants to do (and can do): making phones and tablets. Amazon’s core business is something that practically nobody wants to do (or can do): build a massive online database and offline infrastructure to transport boxes from warehouses to hundreds of millions of doorsteps.

A later update comes in the form of a telephone call from Peter Misek, managing director at Jefferies & Company, who responded:

> Apple is an ecosystem. I’m an iPhone user. The chances I leave are minimal because I have all my music and photos and such on the phone. The inertia or friction of moving is fairly high.

Clearly, Amazon knows that my loyalty as a consumer is price-dependent. Unless they can move into a similar market space as Apple occupies, which is less so, they are going to have to watch always for competitors looking to play the one-downsmanship game that is so often retail. This is not impossible, but it is difficult, as department stores across America can attest. This is clearly why they are pushing so hard to develop their own ecosystem.

As always, the world is more complex than pundits make it out to be.

[Derek Thompson’s assessment]: http://www.theatlantic.com/business/archive/2013/02/why-amazon-is-special-and-apple-is-not-in-1-paragraph/272791/

Intel Inside

Back in 2007 a member of the press asked Steve Jobs about Apple’s participation, or lack thereof, in the Intel Inside program. Both Jobs and Phil Schiller make it clear that they want the customer’s experience to be focused on what the product delivers, not who the makers of its components are.

That’s important for a couple of reasons. First of all, it keeps producers focused on their audience’s experience and not on satisfying supplier or partner compliance requirements in order to save money. So, deliver a great product to your real audience and make money in the old-fashioned way. Second, it makes your product yours and not someone else’s. If you change suppliers, you don’t need to change anything else. Third, and most importantly, it forces you as a producer to take responsibility for your product. Its strengths, and its weaknesses, are yours and yours alone to account for.

[Listen for yourself.](http://media.macworld.com/media/legacy/2007/08/downloads/stickerquestion.mp3)

Saving the Independent Bookstore

The Washington Post has a three-part series chronicling a recent workshop in Menlo Park, California focused on finding ways to save independent bookstores. [Day 3 is here][wp], with links to the previous two days. The threat? Amazon.

Oh, Amazon, I don’t know how to feel about you anymore. Life on the South Coast would be, first, intellectually poorer, and, second, more expensive with you.

That is, we have no local bookstores except for Barnes and Noble and Books-a-Million — okay, I’m not counting our one goofy used bookstore and the handful of Christian bookstores. Our local public library is strictly a browsing library and our university library hasn’t bought much in the way of new books since 2005. Amazon has been our one conduit for maintaining any kind of relationship with intellectual currency.

But Amazon’s business practices — their pricing practices, their treatment of employees (especially those in their distribution centers) — seem only to reveal a cut-throat approach to the world.

[wp]: http://www.washingtonpost.com/blogs/arts-post/post/how-to-save-an-indie-bookstore-day-3/2012/07/29/gJQAr29NIX_blog.html

Netflix’s Lost Year

[CNet has a fantastic history of “Netflix’s lost year”][cnet] in which they pair all the external happenings that all of us could observe with internal events. If the article seems too long to read: the conclusion is Netflix over-reached in its transition. Streaming video is the future, but there was no reason to cannibalize the company by spinning off the DVDs when that end of the business could simply have slowly been sunsetted. Why did Netflix over-reach? CEO Reed Hastings let success go to his head.

It never ceases to amaze me how executives and managers of successful companies begin to believe their own hype. The fact is few organizations, if any, succeed because of one individual alone. One person may give the driving vision, but there’s a whole lot more to be done on the execution end of things.

And then there’s luck. Few successful people realize how much luck, just the raw randomness of the universe, made their success possible. A large percentage see their own hard work, and no doubt hard work is important, but they don’t see all the other folks working equally hard, perhaps even harder, who did not succeed.

The result of this weird blindness, perhaps a function of our own American tendency to tell “rags to riches” stories that tend to focus on the individual and not the organization, is that smart folks too often think they are the only ones who know better.

[cnet]: http://news.cnet.com/8301-1023_3-57468798-93/netflixs-lost-year-the-inside-story-of-the-price-hike-train-wreck/

Bootstrapped, Profitable, and Proud

_Signal vs. Noise_ has an ongoing series entitled “Bootstrapped, Profitable, and Proud.” Last spring they [profiled Braintree and its founder Bryan Johnson][svn]. It’s a great story about a guy who, while not particularly interested in payment processing, is interested in setting up and running a good company. Johnson’s particular moment arrived when he realized he was trapped within a bureaucratic, and socio-cultural, web which wasn’t feeding him:

> By 2007, Johnson was sick of working for a big corporation. He says, “I concluded that I’d rather live poor and hungry than work in a large, bureaucratic and political environment where I personally couldn’t see how my efforts created value.”

He left the company and eventually started his own company, Braintree, where he attributes some of the joy of working there simply to the people, and they appear to cultivate that environment quite consciously:

> Braintree has an eclectic office in Chicago that consists of two large, open rooms, and pixelated old-school Mario decals on the walls. There are no offices, no managers, and no dividers. “It does occasionally get chaotic, but it’s a trade-off we make for collaboration and enjoyment,” says Johnson. “We all make an effort to spend time together outside of work. We eat lunches together, have events at each other’s houses, and organize outings for everything from cooking classes to concerts. We also organize and pay for after-work activities, such as Whirley Ball and Bulls’ games. We try to do one per month.

It’s an enviable, and duplicatable, idea.

[svn]: http://37signals.com/svn/posts/2800-bootstrapped-profitable-proud-braintree

Business Narrative

[The _Forbes_ reviewer mentioned previously](http://johnlaudun.org/20111230-forbes-asks/) is Steve Denning, who is “the author of six business books and consultant to organizations around the world on leadership, innovation, management and business narrative.” *Business narrative*?

M-Edge Accuses Amazon of Bullying

It’s not that I am particularly interested in tracking Amazon’s bad behavior, but as a consumer who has become somewhat invested in their infrastructure, I do like to know all I can about the folks with whom I do business. Ethics matter. In this particular case, according to the lawsuit, Amazon raised its percentage of its take on Kindle accessories, from 8% to 25%, and then tried to bully a supplier, M-Edge, into paying more money for a period of time leading up to the change. When the supplier balked, Amazon threatened to de-list their products.

[Amazon is in the news again](http://www.nytimes.com/2011/12/13/opinion/amazons-jungle-logic.html), and again for all the wrong reasons. Is it really so hard for a corporation to imagine that people will subscribe to your business model if it offers reasonable prices while you engage in reasonable practices? That’s why I shop at Amazon. I don’t need the cheapest prices because the practices behind them are so aggressive as to be “mean.” I guess the important thing here is that Amazon.com is ripe for another enterprise to come into the market place and steal customers like me.

Amazon’s Low Prices Sometimes Come with a High Cost

Regular readers know that I am not only a fan of Amazon.com, but also a subscriber to its Prime feature. I think the company has made most of the right moves, except its digital content offerings, especially video, seem stuck in some older, uglier version of the web where a lot of the functionality you expect isn’t there and what functionality you expect requires a click that takes you to yet another page. Worse, those pages often don’t know from whence you came.

All that noted, there is always a potential dark side to human endeavors, especially in the business world where costs, by and large, don’t magically disappear, but instead get shifted somewhere. The question is always there. Americans have largely had our stagnant wages propped up through the low cost of items manufactured in other countries where wages are low and the cost of regulation, such as environmental protections, are far less.

If you are in the distribution business like Amazon, however, you have little choice but to have facilities throughout the U.S. But there is always a way to squeeze out costs. The way Amazon does it, in at least one location in Pennsylvania but one has to assume the others operate similarly, is to operate a warehouse that is not air conditioned, use temporary workers, and design a system that literally uses people up, guaranteeing they won’t stick around for a permanent position.

A local Pennsylvania paper has the complete story.

[Build Your Own Platform](http://michaelhyatt.com/3-benefits-of-building-your-own-platform.html) (Really “brand” describes what Hyatt is after perhaps better than platform, but his article is focused on the IT infrastructure that one uses to build a “brand” — or franchise or whatever.)