The Integrative Stream

MBA Pay

MBA Pay is up. My friend John suggests that this may be a sign of the coming business apocalypse. As long as the trend holds for another few years…

Interdisciplinary MBA Approaches

Do business schools use all their available resources? According to the Financial Times, Sloan does a great job at this. Most other business schools aren’t nearly as proactive.

Among the other factors, I credit our proximity to the rest of the campus, and the lack of any clear “MBA privileges” (like at a certain school across the river which has a very nice cafeteria).

CIO Reporting Redux

Just because I’m in New Zealand doesn’t mean that ordinary issues will fall by the wayside.

A few months ago I wrote about CFOs replacing CIOs. Phil Windley of BYU has some comments on the latest survey here. It looks like the trend has shifted. There was a small increase in the number of CIOs reporting directly to the CEO, and a sharp drop in the number of CIOs reporting into CFOs. In addition, the CIOs reporting to CEOs were far more likely to be involved in strategic management than the ones reporting to the CFO.

I’m not sure if I entirely agree with Windley’s assertion that CFOs aren’t strategy focused. Some are, some aren’t. I’d agree that out of any CxO, the CFO is the least likely to focus on strategy. This may or may not tie in with the trend towards phasing out the COO position. I’ve known CFOs who were, and I’ve known CFOs who weren’t. To be fair, I haven’t known a lot of CFOs.

The new AT&T: (at&t)

Last night, while waiting to check up on Dick Clark’s health, I saw the first new commercial for “at&t”, the brand formerly known as sbc and AT&T. The tagline is “Your World, Delivered”, which is entirely forgettable (I just had to go look it up on their web site). The commercial did a good job of addressing why this matters for consumers: AT&T’s ability to invent new technologies, coupled with sbc’s ability to get them to customers, an ability that the old AT&T clearly lacked. Of course, Bell Labs was the source of AT&T’s reputation for innovation, and Bell Labs was torn off and turned into Lucent years ago, but a reputation for technological savvy has still clung to the death star logo. The new company is right to push the connection.

And yet, this morning, the New York Times arrived on my doorstep in an at&t (writing it that way is actually a little painful, given my slavish adherence to the general rules of punctuation and capitalization) promotional plastic bag, complete with the “Your World, Delivered” slogan. What does that even mean, anyway? If at&t wants to compete in the marketplace, it needs to push this idea of a technically advanced company capable of effective operations, not some fuzzy concept of personal relevance.

Intel Bunny Rabbits

“Intel Inside” is gone. “Leap Ahead” is here. “Intel Inside” was one of the more brilliant branding campaigns of our time. “Leap Ahead” will not be. That’s a safe prediction for 2006. Happy New Year!

Skype Model

I just purchased Skype calling credits for the first time. I’m doing some work with a company in New Zealand, and international calls at two cents a minute just make sense. I’m a little behind the curve on this technology, since I have a perfectly good speakerphone and a nice calling plan. As you might imagine, it’s pretty popular at MIT, particularly with the international student body.

But how do they make money (or, rather, how did they plan to before eBay bought them)? The margin on international calls, at 2 cents a minute, can’t be that high. Actually, it looks like a lot of the revenue might come from people losing interest: calling credits expire if your account has been inactive for 180 days. I wonder what the attrition rate is.

Update: I used it for an hour long conference to New Zealand yesterday. Voice quality was excellent, and the person on the other side (talking on his landline) didn’t even notice I wasn’t on a regular telephone. Total cost for the call: $1.07.

Attack of the Suits

My friend David from MIT’s Center for Media Studies made an interesting post last week on Why It’s More Than Just Courteous to Play Nice With “The Suits. David covers the games industry, so that’s where his focus is, but the point is actually much broader. I’ve seen the exact same prejudices in enterprise software shops – and that boggles the mind.

Actually, the situation is a little different. Enterprise developers aren’t quite as likely to have an independent vision, but they’re just as likely to assume they understand the customer better than the “sales droids.” Sometimes the results are pretty comical – and sometimes the developers are right.

A La Carte Cable, Take II

One other thought about a la carte cable channel pricing. As mentioned below, I don’t watch ESPN. And yet, it’s one of the most expensive cable channels out there on a per customer basis. I’d be willing to pay not to get it–that is, I’d pay the cable company whatever their margin on the ESPN channel is as long as I didn’t have to pay the $2.50 that Comcast then pays on to Disney. Of course, this means ESPN might get more expensive for the people who watch it,as Disney scrambles to cover the cost of licensing football games, but that’s fine: they watch it. No reason for me to subsidize them.

So just who are these entrepreneurs?

Jeff Cornwall provides A Definition of Entrepreneurship at The Entrepreneurial Mind and apologizes for not having gotten around to it sooner. It’s a pretty good defintion, so go read the post.

The economic history of entrepreneurship is an undertreated subject. When I was an undergraduate, I did dual majors on Economics and History. It’s a fascinating area, and I was a little surprised that out of 1,200 undergraduates I was the only one my year who chose to do that. While I put my nascent career as an economic historian on the back burner, I did write a seminar paper on Adam Smith and the concept of entrepreneurship, the gist of which was that (a) Adam Smith never used the word and (b) when he alluded to entrepreneurs it wasn’t respectfully.

The word itself, as far as I can tell, goes back to Richard Cantillon in the 1730s, and the concept another century. Smith tended to use words like “projector,” which is just a breath away from “speculator.”

Nothing Left to Outsource?

It sounds like there’s nothing left to outsource. According to the New York Times, Americans are now outsourcing video game playing to China. And it’s big business.

This says something about our society, but I have no idea what.

Coke Branding and Line Extensions

The notsocommoncents blog asks Is it too late for Coke? Worth thinking about – Coke’s market share has been declining, and their core business is purely branding. As I learned a few weeks ago, brown fizzy water is brown fizzy water, regardless of whether or not it’s in a Pepsi bottle or a Coke bottle. After all, if there was a real difference restaurants would serve both. I’ve yet to find one that does. The company needs to get the buzz back.

However, the Coca Cola Company has seen a success lately, in Coca Cola Zero, which may turn out to be a textbook example of how to get a brand extension right. I haven’t actually seen the sales numbers, but by retaining the Coca Cola name they created a drink that consumers associate with the core product, rather than with Diet Coke. My highly unscientific survey, based on the contents of the soda machine on the third floor of the MIT Sloan School of Management, shows Coca Cola gaining share at the expense of Diet Coke.

Anyway you look at it, this is not a bad thing. My local Star Market does not discount Coca Cola Zero the same way they discount Diet Coke. Since I started drinking it, I’ve been spending more, so somewhere in the value chain margins have gone up. This is true for converts from Coca Cola, too. Actual new sales (from people who didn’t like Diet Coke and didn’t like the calories in regular Coca Cola, and brand-switchers) are gravy.

This is all a bit speculative since I don’t actually have any numbers, but I there are two fundamental lessons here. First, extend your brand into areas that make logical sense. Second, cannibalizing your own sales is a good thing – if you can shift the consumers to something with a higher margin.

Coke-Pepsi-Google Test

Anyone with a marketing background (or who has taken a marketing course) should be familiar with the Coke-Pepsi taste test. I’m a rabid Diet Coke drinker myself, and loudly proclaim my dislike of Pepsi. When presented with the two drinks sans packaging, I can identify them about 50% of the time. The shape of the packaging affects the perception of the product.

So then with search engines. Seth Godin points out an informal study suggesting that, in a blind test, MSN, Yahoo and Google are pretty much even.

Just as everywhere else, a lot of perception is bound up in the branding. Some of this is legacy: when Google first came out, it really was the best search engine out there. Google’s success made the space competitive again, and the other vendors have had years to catch up. In many ways, Google is still coasting on a period of technical superiority that ended at least two years ago–showing how valuable such a lead can be, and how adroit management of consumer perceptions can extend its value.

Maybe this is why Google’s hiring practices focus so much on a visible intellectual elite. A company hiring all those PhDs must be using them for something.

It’s Carnivale!

This week’s Carnival of the Capitalists is up at gongol.com. They did a nice job with it this week (fancy presentation!) and there’s a special section devoted to posts on the late Peter Drucker.

Carnival of the Capitalists: November 21, 2005 | Gongol.com

As for me, the past two weeks were insanely busy. The next two days will be too. I spent this weekend in New Haven for the Yale-Harvard game; we lost, but a good time was had by all regardless.

Customers are Good

Cory Doctorow has a nice roundup of posts and articles about Sony’s Digital Rights Management software. The phrase “anti-customer” has been bandied around a lot on this, and while the phrasing is a little harsh it’s fundamentally correct. I don’t know if I can put it any more simply: vandalizing your customer’s computers is a bad thing. Consumer oriented companies will not benefit from treating each customer like a potential criminal.

Boing Boing: Sony anti-customer technology roundup and time-line

CFOs replacing CIOs?

John Norman, one of my esteemed co-authors on Java Enterprise in a Nutshell, pointed me towards an InfoWorld article from last week: Are CIOs headed for extinction? In short, Sarbanes Oxley compliance requirements have tied corporate IS departments closer to the finance functions. Some companies are eliminating the CIO post entirely and shifting responsibility to the CFO.

There was some discussion in the business press over the last year about the trend to shift the responsibilities of COOs to CFOs as well. So when is an empowered CFO not a CFO anymore?

Helpful Interview Hints

Stupid Interviewing Mistakes. Obvious things, which people nevertheless manage to forget.

I’ve certainly interviewed more than one person whose resume turned out, under slight probing, to be little more than an exceedingly thin tissue of lies. I could generally tell from the phone screen, if the resume itself wasn’t a giveaway. I bounced at least one person who was probably qualified for the job at hand, but managed to blow his credibility by trying to make himself look qualified for every other job at hand, too.

The moral, at least for technology job applicants, is to not list experience on your resume if you don’t have it. Sure, an extra buzzword or two might get you an interview, but they won’t get you the job if the person doing the hiring is even half-way competent.

Tech or Transcendence?

Nicholas Carr has begun to make a nice career for himself callings spades spades and asking good questions about whether accepted orthodoxy in business and technology should be accepted quite so readily. He made a splash with a Harvard Business Review article a few years ago arguing that information technology doesn’t matter–isn’t a competitive advantage–for modern corporations since they all have access to the same resources. Lots of knee-jerk reaction to that. I don’t happen to agree with him, but mostly because I don’t think strategic thinking has evolved to the point where we can treat IT strategy the same way we think about, say, pricing strategy.

But I digress. His recent blog post,
The amorality of Web 2.0, takes a look at the filters through which we see the web., and asks why so many of people in the technology world don’t talk about the Internet in terms of an information utility, but in terms of spiritual self discovery. On a more earthly level, he also draws some attention to the fact that the “cult of the amateur” represented by WikiPedia, the Blogosphere, and carped on by various commentators might not be such a great thing after all.

Worth the read.

FedEx and Micro Recessions

Yesterday’s New York Times — which I only got around to reading today — had an interesting article about the role FedEx plays in the economy. A few things in particular stood out. One is that FedEx is a major source of information for the Federal Reserve, which actually makes a lot of sense. No other company, except maybe UPS, has day-to-day information about the communication and shipping activities of most of the companies in the economy.

The really interesting speculation, though, is that FedEx is both an enabler and a manifestation of a new level of flexibility in the economy as a whole. One of the first things you learn about in business school is the whipcord effect of poor communications down a supply chain (relatively recent Sloan graduates will know exactly what I’m talking about). Traditionally, changes in retail sales might not be visible to manufacturers for weeks or months. So everybody spent a lot of time being surprised, and a lot of resources responding to facts on the ground that were generally already out of date. Excessive inventory buildup isn’t the only cause of recessions, but it magnifies them, since companies have to scale back massively.

The Times article argues that the ability of firms in a modern economy, enabled by companies like FedEx, to respond quickly to changes in circumstances could blunt future recessions. I think we’re already seeing evidence of this in the economic response to Katrina. Unemployment rates are up, but by less than most predicted. Energy prices are still going to spike, but just maybe we won’t see a repeat of the 1970s.

Have Recessions Absolutely, Positively Become Less Painful? – New York Times

Slowing down? Can’t be.

MIT definitely keeps you busy. After spending all day Saturday at a Biomedical Enterprise Program retreat, Sunday and Monday (which was supposedly a “day off”) went to academics. Yesterday was twelve solid hours from door to door, including an evening career development office dinner (another of those this evening, one more tomorrow), followed by a few hours polishing up the various things I needed to hand in today. As of right now I’m all caught up, and if I don’t slack off I can build up a comfortable margin by the weekend.

The problems people have depend on where they come from. The pure engineers aren’t all that happy with accounting, a domain where numbers do not necessarily obey the various laws of thermodynamics. I had a strange problem on some relatively simple probability questions in a data analysis class, since years of programming in C-descended programming languages have trained me to read the | symbol as “or.” I even use it in handwritten notes. In probability, it means “given.” You can waste a lot of time by reading “A given B” as “A or B”. Little stuff, but it shows.

All the MBA work has left me little time to read, think, or otherwise produce new material for this web site. Things are starting to shake out a little bit, so that should change.

First Full Week

One thing I’ve learned this morning is that an accounting textbook, placed between one’s lap and one’s laptop, provides excellent insulation and raises the laptop keyboard to an appropriate typing height. It also contains much valuable information on the subject of financial accounting, but that’s just a nice side benefit.

Last week was the first full week of MBA classes at Sloan, and it has given me the chance to fully reacquaint myself with the word “deliverable.” I’ve also grown to love my Palm Pilot again. That particular device spent most of the summer sitting on the side of my desk, since I seldom had more than one or scheduled events a day. Such simplicity is in the past. Since I’m carrying two devices around again, I’m giving serious thought to chucking my Nokia and switching to either a Treo or one of the latest Windows SmartPhone devices when my TMobile contract comes up next month. Treos and Blackberries are fairly common around Sloan, even though most students don’t strictly need that kind of functionality–now. But they did before, and they will again.