June 2012

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is one of the world’s truly great guys. Besides being smart, funny, caring, hard-working, a good husband and father — and pretty much all the other positive stuff you could pack into a bio, Michael was one of the first people to not only dig  , but to grok it thoroughly at every level, including the multiple ironies at all of them. And to continue doing so through all the years since.

Like three of Cluetrain’s authors, Michael was a marketing guy who was never fully comfortable with the label or the role, and broke every mold that failed to contain him. Unlike those three, however, he continued to labor inside the business, which still needs many more like him. Because, from the start, Michael has always stood up for the the user, the customer, the individual whose reach should rightly exceed others’ grasp.

His labors are suspended, however, while he takes on a personal battle with .

Friends of Michael’s have put up SupportMichaelOCC.ca, so all of us who care about him and his family can easily lend support. He’s a sole breadwinner with four kids, so this is a tall order. Whether you know Michael or not, please do what you can.

Bonus links:

dome
When I visited the Upheaval Dome in 1987, I was sure it was an impact crater. But roadside displays and printed literature from Canyonlands National Park said otherwise. Clearly, they reported, this was collapsed salt dome. Since then German researchers have found evidence, through shocked quartz, of an impact. That now appears to be the prevailing theory. The crater is approximately 5 km in diameter and must be Jurassic in age or younger, given the ages of the rock it hammered. From bottom to top, those rocks are:

Navajo Sandstone also stars in Zion and Capitol Reef National Parks, in Comb Ridge, San Rafael Reef and the Red Rock country overlooking Las Vegas from the west (where it is called Aztec Sandstone). Its cross-bedding strata suggests windblown sand, which is exactly what comprises the rock. The whole formation is the fossilized remains of a Sahara that once covered much of  The West. Think of it as a fossil desert within a desert.

So I was flying over the area last week, and got some good shots of the thing, including the one above. There are many more in that series, which stretches from Boston to San Francisco, by way of Newark. I’ll put up other segments soon, I hope.

 

My sister and I received a durable lesson in generosity in the summer of 1963, in the heart of Iowa. That was where our family’s 1957 Ford Country Sedan station wagon, towing our Nimrod pop-up camper trailer, broke down.

It was on a Sunday morning in late June, heading south from Des Moines on I-35 when the engine made a loud bang, and there was smoke and steam everywhere. We pulled over to shoulder and sat there for a long time while the engine cooled off and the day heated up. Then we topped off the radiator with some of the water from our cache, started the car back up and knew right away that the engine was in very bad shape. Pop figured that fewer than car’s straight-six engine’s cylinders were working, and that water was leaking through the head gasket  (since steam as well as smoke and unburned gas fumes were coming out the exhaust). There was no traffic to flag down on the highway, which was still new.  So all we could do was limp on, while limping was all the car could do.

At the top of the first exit was a sign that pointed west to St. Charles, and east to St. Mary’s. The former was closer, it said, so we turned right. We pulled up in front of a general store with some old guys on the porch out front, and asked if there was a service station nearby.

“Deane fixes cars,” one of them said, and told us which house was Deane’s. It was down the road on the left.

Turns out this was Deane Hoskins, a master mechanic with a complete garage in his garage. His day job was working for GM’s diesel division in Des Moines. His wife was Arlouine, a teacher like Mom. They also had a bunch of kids: Carolyn, Linda, Janet, Karen and Robert. All were friendly and eager to help. Deane told us to pull in. So Pop and I disconnected the camper, left it in the street, and went up the driveway to help Deane as best we could while he tore down the broken engine.

At the peak of the Hoskins garage’s roof, facing down the driveway, was a thermometer in the shape of a big clock. It said 112°. Sweat poured off Deane’s nose and chin. I remember that his eyes were blue, though one was a mix of blue and brown. The whole time he talked to us about engine design, how they worked, and what they were built do do. This Ford, he explained, was built to fail.

The policy was called “planned obsolescence,” and you could see it in the cooling tubes in the engine block, flanking the cylinders. Water cooled by the radiator flows through these tubes, keeping an engine from overheating. The pistons in the first and sixth cylinders looked fine. The ones in the second and fifth were pitted on the top. The pistons in the third and fourth cylinders had holes blown through their tops. That was because the cooling tubes flanking the third and fourth cylinders had metal plugs in them, causing the pistons to overheat and eventually fail. The plugs were the opposite of necessary, unless the necessity was a blown engine, eventually. In our case the eventuality was sixty thousand miles.

This was a huge blow to Pop, a committed Ford Man. This wagon was the first new car he had ever bought, and it had been nothing but trouble from Day One. Even before this last failure he figured the car cost $60 per month on average to fix, and this was in 1950s dollars. It was also clear and present evidence of customer-hating corporate venality. To this day it amazes me to see nothing written about Ford’s (or anybody’s) practice of plugging an engine block’s cooling tubes. Were all of Ford’s inline-6 blocks crippled like this? Or was this an experiment by Ford with just a few engines to see what happened? How could a worker in good conscience have put the plugs in there, when the result would obviously be a short life span for the engine?

Deane drilled out the plugged tubes, removed the bad pistons, honed out the two center cylinders, called up a friendly Ford dealer, and drove us over to pick up some new pistons and a fresh head gasket. The dealer was closed on Sunday, but opened up just for us. On the way over we went through a covered bridge, one of those later made famous by The Bridges of Madison County.

By evening Deane had the engine back together, and the car running fine. We spent the night as the Hoskins’ house guests, and in the morning went on our way. For years Mom kept up with the Hoskins family through Arlouine. It was what moms did in those days. Mom was from a small town two states away: Napoleon, North Dakota. St. Charles and its friendly ethic was familiar to her.

Pop’s partisan loyalties were simple and clear. Three of the biggest were to the Brooklyn Dodgers, the Ford Motor Company and the Republican Party. So this was the second time he felt betrayed. The first was when the Dodgers moved to Los Angeles. The third was Watergate.

Leaving St. Charles on Monday morning, we drove west. In Griswold, barely bigger than St. Charles, we found a Chevy dealer. It wasn’t that Pop was suddenly a believer in Chevy, but that he had become a disbeliever in Ford. He also took Deane’s word that GM didn’t play the planned obsolescence game. There were just two new cars in the showroom: a minimal white Biscayne and a  blue Bel-Air. Pop and Mom wanted to get the Biscayne, but my sister and I talked them into getting the Bel-Air, which had a 283 v-8 rather than the Biscayne’s straight six. Better for pulling the trailer, we argued, successfully. Pop’s compromise was to make sure the car had no radio and no air conditioning. That car was almost trouble-free until the transmission went, at 125,000 miles — a lot in those days. That’s when we sold it, in 1969.

And that’s Griswold, above. I spotted it last week while looking out the window of the plane from Newark to Los Angeles. It doesn’t look much different from above than it did on the ground forty-nine years ago. The dealer was small, with just two cars in the showroom: our Bel-Air and the Biscayne. No Impalas. I don’t remember the name, but there are no Chevy dealers in Griswold today.

I see that Deane died in 1991 and Arlouine in 2005. And, at the second link, that Linda is also gone. But our encounter with the Hoskins family isn’t forgotten, half a century later. To me the “flyover” states are places where good people live and lucky people drive through. Turns out our bad luck in St. Charles with a bum Ford was the best thing that could have happened.

 

 

… I’ll be speaking about The Intention Economy at the Hyatt Regency Santa Clara, in the Winchester Ballroom, courtesy of the good people at Weber Shandwick Here’s a link to the invite. (It’s open and free, but ya gotta RSVP.)

The book covers a lot of topics, and the one I’m going to focus on tonight is marketing. Right now the big bux in marketing are going toward Big Data, with a lesser emphasis on Big Engagement. This needs to be reversed.

What marketing needs to do now is get personal, and not just social. Marketing needs to start truly listening and interacting with customers on a personal level. Crunching numbers to improve guesswork. won’t cut it any more.

I’ve got more to say about that, but I’m saving it for tonight. Look forward to seeing you there.

Looks like IBM and I Bookare in agreement. Last week the first image you saw at IBM’s site (at least here in the U.S.) was a larger version of the one on the left, with the headline “Meet the new Chief Executive Customer. That’s who’s driving the new science of marketing.”

At the “learn more” link, the headline reads, “The new CMO and the science of giving people what they want.” In the copy there’s this:

In this highly connected world of commerce and communication, you can no longer market broadly to a demographic. A consumer doesn’t want to be a “segment.” She’s an individual. To capture and keep her business, she must be treated as one.

The onus of this evolution has landed on the doorstep of the Chief Marketing Officer. And that means that the mind-set, as well as the skill set, of a CMO has to evolve right along with it. IBM has identified the three mandates for the new CMO.

The first of those is “Harness data to paint a predictive picture of each customer as an individual—on a massive scale.” The second is “Create ‘systems of engagement’ so you do more than shape desire—you predict it. The third is “Design your culture and brand so they are authentically one.”

Above that last one it says this:

Your brand is tested in every interaction. Today, the same transparency that allows you to understand each customer as an individual; conversely allows each customer to understand everything about your company. And gaps between what the brand promises and what it delivers are known―not just by those who experience them, but by others in their social network. Thus how authentically a culture lives its brand becomes the measure of success. This is the heart of becoming a social business. Marketing’s role is to close the gaps by building a system so that in every interaction brand and culture are one.

Two problems with that. Also two opportunities:

  1. Transparency isn’t what allows a company to understand each customer as an individual. Direct interaction is. Better yet, direct interaction that the customer drives, in her own way.
  2. “Becoming a social business” is very 2011. Business was personal in the first place, and it will be personal again. What the hell is a Chief Executive Customer if she doesn’t have direct personal influence with the company?

IBM is familiar with CRM: Customer Relationship Management. Now it needs to get familiar with VRM: Vendor Relationship Management. Because it’s with VRM tools and services that customers will have the means to tell companies exactly what IBM’s headline welcomes: what they want.

Meanwhile, here’s the bad news for Big Data: what customers don’t want, most of the time, is to be told constantly what they want. Or to be told that their Chief Executive status with a company derives from a “predictive picture” derived from “harnessed data” about one’s individual self — least of all “on a massive scale” in which desire is not only “shaped” but “predicted.” IBM continues,

Today’s abundance of data helps companies understand each customer in multiple dimensions. This leads to insights which, when combined, help build a clearer understanding of each customer as an individual. With that, marketers can make better decisions about the mix that will serve customers more completely—based on needs, desire, likely next action, opinions. Today’s marketing practice requires building this capability of understanding customers as individuals across millions of interactions.

There is no clearer sign that a relationship has gone bad than this statement: “We don’t need to talk. I already know what you’re going to say.” Or worse, “I can also shape your desire.” Hell, that’s a relationship headed for divorce, and it’s hardly begun.

But that’s what Big Data marketing is about — so far — and why it will fail if the customer is not truly involved as an independent and autonomous human being, and not just as a “million points of data:+” (IBM’s term), and then as a target for messages and offers, based on the crunching of that data.

On that same page IBM posts this short pile of Big Data stats:

Earth to IBM and CMOs: The next era isn’t social. It’s personal. No amount of marketing analytics will out-perform knowing exactly what the customer wants, intends, or wishes to contribute to the company’s intelligence about the marketplace —in her own ways, and on her own terms.

If a brand wants to be fully understood and respected — and if it deserves both — it needs to be ready for customers to truly engage, and not just be told what they’re like, and then guessed at.

The means for that will be provided by both sides, not just by one. Until IBM and CMOs welcome independent customers, operating at full agency, outside any company’s silo or walled garden, all this mandating will be the sound of one hand shaking.

 

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Through my work over the years I have often been directed to the worlds of Elinor OstromElinor Ostrom, and toward speaking to her in person. Alas, the latter choice is now off the table. She died yesterday, at 78, of pancreatic cancer.

On Monday evening, in the Q&A during my talk, I was asked about the relevance of Ostrom’s work to mine around VRM and The Intention Economy. I answered, with regret, that my sourcing of Ostrom was limited to a bibliography entry, after I had to reduce the curb weight of the book from 120,000 words to 80,000. So here’s one section, recovered from the cutting room floor:

In Governing the Commons (1990), Elinor Ostrom says Hardin’s argument is not new:

Aristotle long ago observed that “what is common to the greatest number has the least care bestowed upon it. Everyone thinks chiefly of his own, hardly at all of the common interest” (Politics Book II, ch. 3). Hobbes’s parable of man in a state of nature is a prototype of the tragedy of the commons: Men see their own good and end up fighting one another…[1]

She goes on to cite a long list of other sources, the growing sum of which have long since snowballed into a single widely held conclusion: “Much of the world is dependent on resources that are subject to the possibility of a tragedy of the commons.”[2]

Yet Hardin’s model, she explains, is an argument of one very narrow kind: a prisoner’s dilemma, “conceptualized as a noncooperative game in which all players possess complete information … When both players choose their dominant strategy… they produce an equlibrium that is the third-best result for both.” The game is fascinating for scholars because “The paradox that individually rational strategies lead to collectively irrational outcomes seems to challenge the fundamental faith that rational beings can achieve rational results.” She adds, “The deep attraction of the dilemma is further illustrated by the number of articles written about it. At one count, 15 years ago, more than 2,000 papers had been devoted to the prisoner’s dilemma game (Grofman and Pool 1975).”[3]

Ostrom, however, doesn’t challenge Hardin’s assumption that common pool resources and a commons are the same thing.[1] Lewis Hyde does. In Common as Air (2010), he makes a thoroughly argued case against both Hardin’s tragedy-prone commons and idealized models, such as what he calls John Locke’s “aboriginal first condition” and Lawrence Lessig’s “dreams of pentitude.” What Hyde argues for is something much more complex, subtle and—I believe—important to understand if we are to make the most of the Internet.

“I take a commons to be a kind of property,” Hyde writes, “and I take ‘property’ to be, by one old dictionary definition, a right of action,” noting “that ownership rarely consists of the entire set of possible actions.”


[1] Elinor Ostrom, Governing the Commons: The evolution of institutions for collective action. (New York, Cambridge University Press, 1990) 2-3. [2] Ibid., 3. [3] Ibid, 4-5.

[4] In fairness, Hyde notes, “Garret Hardin has indicated that his original essay should have been titled ‘The Tragedy of the Unmanaged commons,’ though better still might be ‘The Tragedy of Unmanaged, Laissez-Faire, Common-Pool Resources with Easy Access for Noncommunicating, Self-Interested Individuals.” (Common as Air, 44.) [Links added.]

The final version focuses entirely on Lewis Hyde’s work, which I believe encompasses Elinor Ostrom’s, at least for my purposes in the book. Still, leaving her out seems especially regrettable now.

And I encourage study of her work. Our common pool resources, which are many and of transcendant importance, are well served by her original thinking about them.

Bonus linkage:

Apple TV (whatever it ends up being called) will kill cable. It will also give TV new life in a new form.

manhole coverIt won’t kill the cable companies, which will still carry data to your house, and which will still get a cut of the content action, somehow. But the division between cable content and other forms you pay for will be exposed for the arbitrary thing it is, in an interactive world defined by the protocols of the Internet, rather than by the protocols of television. It will also contain whatever deals Apple does for content distribution.

These deals will be motivated by a shared sense that Something Must Be Done, and by knowing that Apple will make TV look and work better than anybody else ever could. The carriers have seen this movie before, and they’d rather have a part in it than outside of it. For a view of the latter, witness the fallen giants called Sony and Nokia. (A friend who worked with the latter called them “a tree laying on the ground,” adding “They put out leaves every year. But that doesn’t mean they’re standing up.”)

I don’t know anything about Apple’s plans. But I know a lot about Apple, as do most of us. Here are the operative facts as they now stand (or at least as I see them):

  1. Apple likes to blow up categories that are stuck. They did it with PCs, laptops, printers, mp3 players, smartphones, music distribution and retailing. To name a few.
  2. TV display today is stuck in 1993. That’s when the ATSC (which defined HDTV standards) settled on the 16:9 format, with 1080 pixels (then called “lines”) of vertical resolution, and with picture clarity and sound quality contained within the data carrying capacity of a TV channel 6MHz wide. This is why all “Full HD” screens remain stuck at 1080 pixels high, no matter how physically large those screens might be. It’s also why more and more stand-alone computer screens are now 1920 x 1080. They’re made for TV. Would Steve Jobs settle for that? No way.
  3. Want a window into the future where Apple makes a TV screen that’s prettier than all others sold? Look no farther than what Apple says about the new iPad‘s resolution:
  4. Cable, satellite and over-the-air channels are still stuck at 6MHz of bandwidth (in the original spectrum-based meaning of that word). They’re also stuck with a need to maximize the number of channels within a finite overall bandwidth. This has resulted in lowered image quality on most channels, even though the images are still, technically, “HD”. That’s another limitation that surely vexed Steve.
  5. The TV set makers (Sony, Visio, Samsung, Panasonic, all of them) have made operating a simple thing woefully complicated, with controls (especially remotes) that defy comprehension. The set-top-box makers have all been nearly as bad for the duration. Same goes for the makers of VCR, DVD, PVR and other media players. Home audio-video system makers too. It’s a freaking mess, and has been since the ’80s.
  6. Steve at AllThingsD on 2 June 2010: “The only way that’s ever going to change is if you can really go back to square one and tear up the set-top-box and redesign it from scratch with a consistent UI, withall these different functions, and get it to the consumer in a way they are willing to pay for. We decided, what product do you want most? A better tv or a better phone? A better TV or a tablet? … The TV will lose until there is a viable go-to-market strategy. That’s the fundamental problem.” He also called Apple TV (as it then stood) a “hobby”, for that reason. But Apple is bigger now, and has far more market reach and clout. In some categories it’s nearly a monopoly already, with at least as much leverage as Microsoft ever had. And you know that Apple hasn’t been idle here.
  7. Steve Jobs was the largest stockholder in Disney. He’s gone, but the leverage isn’t. Disney owns ABC and ESPN.
  8. The main thing that keeps cable in charge of TV content is not the carriers, but ESPN, which represents up to 40% of your cable bill, whether you like sports or not. ESPN isn’t going to bypass cable — they’ve got that distribution system locked in, and vice versa. The whole pro sports system, right down to those overpaid athletes in baseball and the NBA, depend on TV revenues, which in turn rest on advertising to eyeballs over a system made to hold those eyeballs still in real time. “There are a lot of entrenched interests,” says Peter Kafka in this On the Media segment. The only thing that will de-entrench them is serious leverage from somebody who can make go-to-market, UI, quality, and money-flow work. Can Apple do that without Steve? Maybe not. But it’s still the way to bet.

Cable folks have a term for video distribution on the net Net. They call it “over the top“. Of them, that is, and their old piped content system.

That’s actually what many — perhaps most — viewers would prefer: an à la carte choice of “content” (as we have now all come to say). Clearly the end state is one in which you’ll pay for some stuff while other stuff is free. Some of it will be live, and some of it recorded. That much won’t be different. The cable companies will also still make money for keeping you plugged in. That is, you’ll pay for data in any case. You’ll just pay more for some content. Much of that content will be what we now pay for on cable: HBO, ESPN and the rest. We’ll just do away with the whole bottom/top thing because there will be no need for a bottom other than a pipe to carry the content. We might still call some  sources “channels”; and surfing through those might still have a TV-like UI. But only if Apple decides to stick with the convention. Which they won’t, if they come up with a better way to organize things, and make selections easy to make and pay for.

This is why the non-persuasiveness of Take My Money, HBO doesn’t matter. Not in the long run. The ghost of Steve is out there, waiting. You’ll be watching TV his way. Count on it.

We’ll still call it TV, because we’ll still have big screens by that name in our living rooms. But what we watch and listen to won’t be contained by standards set in 1993, or by carriers and other “stakeholders” who never could think outside the box.

Of course, I could be wrong. But no more wrong than the system we have now.

Bonus link.

Another.

I was interviewed for a story recently. (It’s still in the mill.) In the correspondence that followed, the reporter asked me to clarify a statement: “that the idea of selling your data is nuts.” I didn’t remember exactly what I said, so I responded,

I think what I meant was this:

1) The use value of personal data so far exceeds its sale value that it’s insane to compare the two.

Especially because …

2) There never has been a market for selling personal data, and to create one now, just because marketers are sneakily getting that data for free, doesn’t mean there should be one.

Especially because …

3) The sums paid by marketers for personal data are actually tiny on a per-person basis.

4) Selling one’s personal data amounts to marketing exposure of one’s self. It’s like stripping, only less sexy. And for a lot less money.

And added a pointer to For personal data, use value beats sale value.

In When bubbles burst…, Dave writes,

When any hamster-based startup can raise $50 million on a $1 billion market cap, there’s not much market for new ideas. Why bother, when the same-old-stuff can make you rich. But when the bubble fades, it’s time to get creative. Because techwill reboot. The question is, what’s the next wave.

I followed the link to FACEBOOK FALLOUT: Y Combinator’s Paul Graham Just Emailed Portfolio Companies Warning Of ‘Bad Times’ In Silicon Valley, in which Nicholas Carlson begins,

Facebook has flopped on the public markets, and now we have vivid evidence of how badly Silicon Valley is reeling in the fallout.
Paul Graham, cofounder of Silicon Valley’s most important startup incubator, Y Combinator, has sent an email to portfolio companies warning them “bad times” may be ahead.

He warns: “The bad performance of the Facebook IPO will hurt the funding market for earlier stage startups.

“No one knows yet how much. Possibly only a little. Possibly a lot, if it becomes a vicious circle.”

Among the comments is this one:

Adam Lavine:

One dinner with a dour VC does not a Silicon Valley liquidity crisis make.

With that said: would be nice for all of these startups to find CUSTOMERS willing to PAY for their services. The fact that startups that have “easy money built into their models” is an obvious bubble sign in itself.

To which I replied,

@Adam Lavine:

Exactly.The tightening of VC sphincters is an issue, but it’s a lesser one than the paucity of VC-funded business models that make companies accountable to users as customers.

Facebook, Google and Twitter have consumers and customers that are different populations. Users are the consumers, and advertisers are the customers. This does work as a business: for commercial broadcasting it has worked for the duration. But it works at the cost of having minimized accountability to the millions of individuals who use the service but pay nothing for it. Ever tried to get personal service from Google or Facebook? Good luck with that.

Our dependency on Google alone today verges on the absolute. Facebook envies operating Google-grade user containment systems (e.g. Gmail, Google docs, etc.) on the same scale. But neither company is financially accountable to their users (only to their advertisers and stockholders), and neither have worthy competitors, and that’s not good for the markets they contain either.

The whole ad-supported commercial Web we have today is a collection of monocultural silos, each of which is a bubble in itself. (Think of every giant silo as a single point of failure and therefore a giant bubble.)

Another angle: every company deals with two markets — one for its goods and services, and one for itself. In Silicon Valley the latter has overrun the former, time and again. Now is no exception.

Bonus link: http://www.linuxjournal.com/magazine/eof-google-exposure

Just wanted to share that here, and not just there.

The hard drive is crapping out on my main laptop. I’m backed up, so that much is cool. Installing a Seagate Momentus XT 750 GB drive later today. We’ll see how it goes.

[Later...] Lot of dependencies and such to clean up, but performance-wise, it’s like a new computer.

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