Amazon’s Dangerous Genius

I am marveling at the Genius of Amazon and Jeff Bezos but also concerned about their future direction. 

Traditionally, they have invested for the long-haul!

For years, Amazon never made a dime, actually operating at a loss.

But all the time making long-term investments in infrastructure (warehouses, supply chain, logistics, etc.) and in customer acquisition. 

Their great selection, reasonable pricing, free shipping, and easy return policy lured hundreds of millions of people to drop the brick-and-mortar stores and even other online retailers to go Amazon all the way. 

Most people I know get virtually everything and anything on Amazon these days. 

Of course, the fear always was that Amazon would become such a dominant player and monopoly that no one else could compete. 

For a long time, they didn’t even charge sales tax!

It seems people can’t even imagine not having Amazon–where in the world would they shop and get all their stuff in 2-days or less (Prime Customers) and still be able to return all the crap they don’t even want. 

So here is the rub.

Now that Amazon is so dominant, guess what?  They are raising the Prime Rates and cutting back on returns–with customers actually being banned for returning too much. 

Ah, the lure, bait and switch. 

Amazon got us all as their slave customers–and we let them and love them for it. 

And after they snared us with all the convenience and security of being able to return stuff, they pull the rug and what can you do, but cry foul?

I love Amazon for their genius and what they have done for eCommerce, but I don’t like that they’ve built in a sense a dark empire to prey on their loyal customer base. 

Mr. Bezos, here is my message to you…

Please stay true to your ideals of customer-centricity and long-term investment in the company that has been the foundation for what you have built into such a retail juggernaut.  

Keep valuing your customers and serving them well and not trading them in for short-term profit gain.

In the end, that is a winning strategy that won’t land you in either regulatory hell and/or antitrust action to then force you to bend your knee or your ultimate breakup. 

Remember, you have one chance to make the right decision for Amazon or I fear that it’s not product returns that you’ll be for long worrying about. 😉

(Source Photo: Andy Blumenthal)

Our Forefathers Were Planners And So Are We

Thank you to Rabbi Haim Ovadia for his speech today at Magen David Synagogue on the topic of how our forefathers in the Bible were planners and so are we today. (Note: some of the thoughts below are directly from Rabbi Ovadia and others are added by me.)

In the Biblical story of Jacob, there are numerous examples teaching us the importance of planning.

1) Shepherds vs Hunters:  Jacob was a shepherd versus his brother Esau who was a hunter.  Shepherds have a long-term outlook with their animals, tending to them and caring for them over the long-term, while hunters go out for the kills to eat for that day. 

2) Working for Rachel and Leah vs. Selling the Pottage:  Jacob worked for 7 years for Rachel and another 7 for Leah–this was the long-term view and commitment to work for Lavan in order to marry his daughters. In comparison, Esau came in hungry from the field and sold his birthright for the immediate gratification of a bowl of pottage.

3) The Plan to Take Esau’s Blessing: Rebekah worked with Jacob to prepare meat for Isaac and put hair and clothes on Jacob that made him look and seem like Esau, so Jacob could get the blessing from Isaac, while Esau was still out hunting in the field. 

4) Dividing his Camp in Two: Jacob sent messengers (i.e. reconnaissance) to see and plan for what Esau was doing in coming to meet him. When the messengers returned with word that Esau was coming with 400 men, Jacob planned for the worst, dividing his camp in two, so should one peril the other could survive. Additionally, Jacob prayed and sent rounds of gifts to Esau and also presented himself to Esau before his beloved wife Rachel and son Joseph in the safety of the rear. 

Long-term planning has been fundamental to the Jewish people throughout history and to modern times:

1) “People of the Book” – The Jewish people are known as “the people off the book” for the devotion to Torah study, learning, and continually investing in education, which is a view for long-term investment and success.   

2) Good Deeds to Inherit The World To Come – Fundamental to Jewish belief is that this earthly world is just a “corridor” to the World to Come.  We do charity and good deeds, not only because it’s the right thing to do (certainly!), but also because we believe that these merits will help us long-term when we pass, and go to the spiritual next world, Heaven. 

3) Believing and Praying for the Return to The Promised Land – For 2,000, the Jewish people never gave up hoping and praying on the deliverance of G-d’s promise to return them from exile to the Promised Land.  This was a long-term view that helped sustain the Jewish people throughout their far-flung exile and through millennium of persecution and genocide.

Ezekiel 11:17: “Thus says the Lord God: I will gather you from the peoples, and assemble you out of the countries where you have been scattered, and I will give you the land of Israel.”

4) Waiting 6,000 years for the Messiah: For 6,000 years, the Jews have maintain faith and plan for the coming of the Messiah, the rebuilding of the Temple and the ultimate redemption of the world.  

“(Ani Ma’amin) I believe in complete faith in the coming of the Messiah…Even tough he may tarry, none-the-less, I will wait for him.”

Like our forefathers, it is critical to maintain faith in the Almighty and practice long-term planning as keys to success in life. 

If we take the long-view, we can overcome so many short-term challenges, obstacles and even suffering–believing, praying planning, and doing for a better, brighter future. 😉

(Source Photo: Andy Blumenthal)

Tiptoeing Or Delivering A Knockout Punch

Russia (and many others countries) develop some really kick-a*s weapons–especially, when they are so simple, yet so devastatingly effective.

Like this TOS-1A heavy flamethrower system–it is a multi-rocket launcher mounted on a T-72 main battle tank chassis.

The TOS-1A carries 30 (newer version 24) 220-mm incendiary or thermobaric unguided rockets that it can shoot up to 3 km (newer version 6 km), and it destroys everything within 300 square meters using high-pressure and temperature.

What is cool is that the technology seems boiled down to the basics–shoot and eliminate. And when multiple TOS-1As roll unto the battlefield–they unleash what looks like a ruthless barrage of destructive fire.

Of course, precision targeting weapons have the added benefit of mitigating civilian casualties–but from the looks of things, that is not what this weapon is all about.

The question is do you go half way or finish the job–do you hit below the belt or keep it a clean fight?

In war, if you leave the enemy intact or with fighting capabilities, then you may just have to fight them another day.

While the rules of war protect people from the cruelties of all out hostilities, we need to make sure that in the end, it keeps them safe over the long-term, and does not just prolong the inevitable cat-fight.

Good, kind, and just people often don’t feel comfortable delivering a knockout punch, but sometimes (not all the time) that is just what is needed to restore the peace. 😉

The Bottle Revolution

How many of you feel sort of disgusting every time you take out the trash with bottles and containers?


According to Earth911, only 27% of plastic and 25% of glass ends up getting recycled, with the majority ending up instead in landfills. 


This is one reason that I really like the new eco.bottles made by Ecologic, a sustainable (i.e. green) packaging company.


The containers are made of two parts:


– The inner plastic pouch that holds the liquid and snaps into the second part.
– The outer shell made of 100% recycled cardboard and newspaper (and in turn is 100% recycable again). 


These containers result is a net 70% plastic reduction!


Yet, they have the same strength and functionality of plastic containers, with comparable results in drop, ship, and moisture tests.


And companies like, Seventh Generation, a leader in sustaibable cleaning, paper, and personal care products have signed on and is using eco.bottles, and they have seen sales increase 19% with it. 


In a Bloomberg BusinessWeek (25 October 2012) article, the chief operating officer of The Winning Combination states: “The minute you look at it, you get it. This is a bottle that’s good for the planet.”


Like these eco.bottles, we need more of our decisions to be driven by what is good for us long-term, so this is not just a revolutionary green bottle, but perhaps a true sustainable evolution in our thinking and behaving all around. 

Leadership Now!

There is a very good interview in the Wall Street Journal today (14-15 July 2012) with George Shultz, former Secretary of State, Treasury, and Labor.

Shultz talks primarily about our countries devastating financial situation today.

On the economy, he states bluntly: “We have some big problems in this country.”

But according to the interview “the policies for revival are obvious with the right leadership.”

Shultz gives an example of former President Reagan (who I blogged about previously (24 June 2012) in It’s The Right Thing To Do] as someone who had what it took to lead us out of difficult times.

“It took long-term thinking…[Reagan] knew and we advised him you can’t have a decent economy with the kind of inflation we’ve got…The political people would come in and say ‘You’ve fot to be careful Mr. President…You’re gonna lose seats in the mid-term election.”

And as Shultz reminds us, what was Reagan’s response?

“And he basically said, ‘If not us who? If not now when?”

The article goes on that “it took a politician with an ability to take a short-term hit in order to get the long-term results that we needed.”

Reagans words and deeds remind me of the Jewish teaching from the Book of Avot (“Ethics of Our Fathers”) from more than 2,000 years ago which reads in 1:14–

“If I am not for myself, who will be for me?
And if I am [only] for myself, what am I?
And if not now, when?”

Reagan was in tune with this ancient wisdom of our forefathers, that we have an obligation to take the appropriate actions to care for ourselves and others and not to put off these actions unto others or for later.

This is one of those true leadership qualities that made Reagan one of the most popular and favorite leaders on the 20th century.

Reagan acted based on principle and not based on votes–the long-term health and outcomes for the country was more important than the minute-by-minute polling.

Of course a leader needs to represent the will and wishes of the people, but he must do so with the bigger-picture and long-term view in mind for the nation to survive and thrive.

Similarly Peggy Noonan writes today about how we need a “political genius” to get us out of the mess we are in as a nation.

She too uses Reagan as an example and explains how he used to state about congress that: “when they feel the heat [from voters], they see the light,” and it is the President’s job to help the people understand and “galvanize them.”

As Ms. Noonan states about a real leader: “he’s direct and doesn’t hide his meaning in obfuscation, abstraction, cliches and dead words.”

A leader who knows and believes as in the wisdom of fathers, and like Ronald Reagan, “If not us who? If not now when?”

(Source photo: here with attribution to Tom Magliery)

Governing the Internet Commons

Recently, I’ve been watching a terrific series called America: The Story of Us(12 episodes)–from the History Channel.

It is a beautiful portrayal of the the founding and history of America.

One theme though that repeats again and again is that as a nation, we use the common resources and deplete them until near exhaustion.

The show portrays an America of lush forests with billions of trees that are chopped down for timber, herds of 30 million buffalo slaughtered for their hides, rollings plains of cotton for a thriving clothing industry that is over-planted, a huge whaling industry used for oil that is over-fished.

Unfortunately, as we know, the story is not just historical, but goes on to modern-day times, with fisheries depleted, whole species of animals hunted to extinction, energy resources furiously pumped and mined to a foreseen depletion, city streets turned into slushy slums, and national forests carelessly burned down, and more.

The point is what is called the “Tragedy of the Commons”–where items held in trust for everyone is misused, overused, and ultimately destroyed. With private property, people are caretakers with the incentive to maintain or raise the value to profit later. However, with common property, people grab whatever they can now, in order to profit from it before someone else gets it first.

This phenomenon was first laid out in the Torah (Bible) with a law for a “Shabbath Year” called Shmita mandating that people let fields (i.e agriculture) lie fallow for a full year every 7 years and similarly, the law of Jubilee (i.e. Yovel), that slaves be freed and loans forgiven every 50 years. I think that the idea is to regulate our personal consumption habits and return what the historical “commons” back to its normal state of freedom from exploitation.

This notion was echoed by ecologist Garrett Harden in the journal Science in 1968, where he described European herders overgrazing common land with their cows to maximize their short-term individual profits at the expense of longer-term term societal benefits. Harden suggested that regulation or privatization can help to solve the “Tragedy of the Commons.”

In the 21st century, we see the modern equivalent of the commons with the Internet, which is an open, shared networking resource for our computing and telecommunications.Without protection, we have the Wild West equivalent with things like spam, malware, and attacks proliferating–clogging up the network and causing disruptions and destruction, and where some people use more than their fair share

Here are some examples of the Tragedy of the Internet:

– Symantecreports that even with spam decreasing with the shutdown of spam-hosting sites, in 2011, it is still 70% of all emails.

– McAfeereports that malware peaked as of the first half of 2010, with 10 million new pieces.

– Kasperskyreports that web-based attacks were up to 580 million in 2010–8 times the amount of the previous year.

– Verizon Wirelessreports 3% of their users use 40% of their bandwidth.

If we value the Internet and want to continue using and enjoying it, then like with our other vital resources, we need to take care of it through effective governance and prudent resource management.

This means that we do the following:

1) Regulation–manage the appropriate use of the Internet through incentives and disincentives for people to behave civilly online. For example, if someone is abusing the system sending out millions or billions of spam messages, charge them for it!

2) Privatization–create ownership over the Internet. For example, do an Internet IPO and sell shares in it–so everyone can proverbially, own a piece of it and share financially in it’s success (or failures).

3) Security Administration–enhance security of the Internet through public and private partnership with new tools, methods, and advanced skills sets. This is the equivalent of sending out the constable or sheriff to patrol the commons and ensure people are doing the right thing, and if not then depending on who the violating actor(s) are take appropriate law enforcement or military action.

Only by managing the Internet Commons, can we protect this vital resource for all to use, enjoy, and even profit by.

(Source Photo: here)

Are You A Moses or A Seagull?

I have a new article called “Leadership for Lasting Change.””Usually organizational turnaround don’t happen by themselves. They are steered by change agents, people unafraid to take the reins and move forward. Like Moses liberating the Jewish people from slavery, a strong leader shows his [/her] people the way.”Read the article at Public CIO Magazine, Winter 2012.Hope you enjoy it.

Andy

(Source Photo: here)

Growing America’s Jobs

ABC News reported tonight of a home builder in Montana making a house entirely from American made products–as difficult as they are to find.

The home uses more than 120 products from 33 states and costs only 1 to 2% more than a foreign-sourced one.

The builder who is also an economist says that if builders around the country would just increase their use of made in the USA products by 5%, we could increase jobs by over 220,000 right now.

Multiple it by ten, if we actually produced these homes 50% or more here in the USA–that’s 2+ million jobs.

It makes you wonder if all the outsourcing is just another addiction where we feel good now–by saving a little today at the checkout line–but we pay the piper down the road, through the gutting of our own labor force and the future capacity for us to produce.

While, I don’t believe in circle-the-wagon protectionism out of fear of competing in the global marketplace, I do think we need to assess the deals we make to ensure that we are getting the best for our people and our future–and not just for the next quarter or two, but for the long-term!

Having started my career in business, I am well aware that this is “one big balance sheet” and things have to add up or else short-term profits today are made at the expense of long-term capabilities tomorrow.

If the strategy was that we would somehow give the blue collar work to others and keep the white collar work for ourselves, it seems like we have deluded ourselves into thinking that a one-size fits all economy will keep America running. 

We need broad based opportunities for our diverse workforce in all areas of work, and we need to remain strategically self-sufficient, so that we do not outsource ourselves to economic death, where we lose the know-how or capability to help ourselves.

Buy, build, and work America into an economic powerhouse that the world relies on, rather than one that is fed by others with economic loans and cheap goods made in wherever-land.

In my opinion, there is no real alternative to balancing the national budget as well our current account deficit–if we consistently spend more than we earn, and the ships keep unloading more stuff here and then going back overseas half empty, eventually the system has got to go kaput!

As the world’s superpower, our coffers can once again be full and our ships can brim proud with made in America wares–but this can happen only if we focus on products that outlast, outlook, and outperform.

Competition has never been more fierce and the stakes never higher for us individually and as a nation–we will need technology to keep us steadily improving and releasing the pressure from this enormous economic cooker.

(Source Photo: here)

They’re Not Playing Ketchup

I wouldn’t necessarily think of Heinz as a poster child for a company that is strategic and growing, and was therefore, somewhat surprised to read an impressive article in Harvard Business Review (October 2011) called “The CEO of Heinz on Powering Growth in Emerging Markets.”

Heinz, headquartered out of Pittsburgh PA, is ranked 232 in the Fortune 500 with $10.7B in sales, $864M in profits, and 35,000 employees. They have increased their revenue from emerging markets from 5% a few years ago to more than 20% today.

Bill Johnson, the CEO of Heinz, explains his 4 As for success–which I really like:

1) Applicability–Your products need to suit local culture.  For example, while Ketchup sells in China, soy sauce is the primary condiment there, so in 2010, Heinz acquired Foodstar in China, a leading brand in soy sauce.

2) Availability–You need to sell in channels that are relevant to the local populace. For example, while in the U.S., we food shop predominantly in grocery stores, in other places like Indonesia, China, India, and Russia, much food shopping is done in open-air markets or corner groceries.

3) Affordability–You have to price yourself in the market.  For example, in Indonesia, Heinz sells more affordable small packets of soy sauce for 3 cents a piece rather than large bottles, which would be mostly unaffordable and where people don’t necessarily have refrigerators to hold them.

4) Affinity–You want local customers and employees to feel close with your brand. For example, Heinz relies mainly on local managers and mores for doing business, rather than trying to impose a western way on them.

Heinz has a solid strategy for doing business overseas, which includes “buy and build“–so that they acquire “solid brands with good local management that will get us into the right channels…then we can start selling other brands.”

Heinz manages by being risk aware and not risk averse, diversifying across multiple markets, focusing on the long-term, and working hard to build relationships with the local officials and managers where they want to build businesses.

“Heinz is a 142-year old company that’s had only five chairmen“–that’s less than the number of CEO’s that H-P has had in the last 6 years alone.

I can’t help but wonder on the impact of Heinz’s stability and laser-focus to their being able to develop a solid strategy, something that a mega-technology company like H-P has been struggling with for some time now.

If H-P were to adopt a type of Heinz strategy, then perhaps, they would come off a little more strategic and less flighty in their decisions to acquire and spin off business after business (i.e. PCs, TouchPads, WebOS, etc.), and change leadership as often as they do with seemingly little due diligence.

What is fascinating about H-P today is how far they have strayed front their roots of their founders Bill and Dave who had built an incredibly strong organizational culture that bred success for many years.

So at least in this case, is it consumer products or technology playing catch-up (Ketchup) now?

P.S. I sure hope H-P can get their tomatoes together. 😉

(Source Photos: Heinz here and H-P here)

>Reading is Love

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http://cnettv.cnet.com/av/video/cbsnews/atlantis2/cbsnews_player_embed.swf

What an inspiring story this week about Jim Brozina and his daughter Alice Ozma.

Jim’s wife left him when Alice was ten years old.

And when Alice started 4th grade, Jim (a retired librarian) made a challenge to his daughter to see how many nights they could read together in row–it was a way for them to spend time together and bond.

Well their “Streak” went on and on–for over 3000 nights–almost 9 years–until Alice’s first night at Rutger’s University.

Alice majored–of course–in English Literature.

And she wrote a book called “The Reading Promise” about her dad’s selfless devotion and love to her, reading every night.

I remember as a kid, the commercials encouraging reading–“Reading is Fundamental“.

Now I know that reading is not just fundamental (to learning and growth), but is also a way to love someone.

In the hustle and bustle of the 21st century, how many of us spend the time with our kids–consistently and with the utter devotion that this father did–one chapter a night, every night?

Aside from the lesson of selflessness in this story, I also see in this the message of incremental change and growth–by starting off with just 15 minutes a day and building on this incrementally, Jim and Alice were able to accomplish so much together over the years–in terms of learning and their relationship.

So while, the big blowout moments in life are significant memories for us and very often get a lot of emphasis (i.e. as in “let’s make a memory”), the day-to-day consistent building of relationships and learning, can have a truly larger than life impact over the long-term.

On a more personal note, I remember when I was debating going back to school for my MBA (while working full-time during the day), and my dad encouraged me and told me that the years would come and go regardless, but that if I made the commitment, at the end, I would have something valuable to show for it.

I listened to his advice and went to school at night for what seemed like ages for an MBA and then numerous certifications and other learning opportunities, and I am always glad that I did. Dad was right…the years pass regardless, but your hard work pays off. I will always be grateful to him for that advice and support–love comes in many shapes and sizes.