Selling CRAP

I just thought this was an interesting acronym that Amazon uses for selling unprofitable knick knacks.

They call it:

CRAP

It stands for:

Can’t Realize A Profit. 

Sometimes, you see people buying stuff, lots of stuff, and it’s not important–often, it’s all a lot of junk. 

But they like to shop–bordering on shopsholics’ compulsion. 

Maybe they don’t even have a lot of money for this stuff.

However, just the act of buying it–of having some control in their lives and some freedom of the purse–makes them feel good and buy and hoard more and more things. 

Likely it ends up in Goodwill, recyclables, the attic, or the trash. 

Is it crap?

Well you can’t make realize a profit on it. 😉

(Source Photo: Andy Blumenthal)

Not Just Business

This was a funny sign on the parking meter.

“All May Park. All Must Pay.”

Another way of saying this is like at the dry cleaners, “No tickee, no shirtee!”

This reminded me of a conversation that I was having with some colleagues about whether individuals or organizations can be evil?

(Note: True story, but I’ve embellished for the sake of demonstration.)

One colleague said, “Individuals are not bad, but people in groups definitely [often] turn bad!”

Another said, “No individuals can be bad, really bad–think of Hitler and so many others who have murdered, tortured, raped, enslaved, and impoverished–it’s the individuals that can and do turn an organizational culture bad.”

A third person replied that, “Indeed, it can be the other way around as well, where bad organizations make or encourage it’s people to do the wrong things–whether for profits, power, or punishment.”

Then someone blurted out, “Well, business is business, right?” In other words, it’s okay to do something wrong because everyone does it in business–that’s the name of the game and what you have to do to compete and survive!

Then I said sort of annoyed at what the last person said, “Business is not business–that is our test to be G-dly, moral, and ethical in all our dealings [in our personal and professional lives]”

Of course, we don’t always succeed–no one does/we are not angels–but we have to try every time, learn and grow and become better people. 

If you do wrong, you will pay–whether in this world or the next. 😉

Google Hypocrisy?

Google, which touts itself as the one that “organize[s] the world’s information and make[s] it universally accessible and usable,” ended its Reader product on Monday, July 1.

The RSS reader was a terrific tool for aggregating content feeds on the Internet (and Google is a terrific company that benefits the whole world’s thirst for knowledge).

With Google Reader you could subscribe to tens or hundreds of news services, blogs, and other information feeds and read it on your desktop or mobile device.

Reader represented the Google mission itself by pulling together all this information and making it available in one reading place, simply and easily for anyone.

While the Goolge line is that they killed Reader, because of a declining user base, I find this less then credible, since anecdotally it seems like a very popular that is helpful to people. Moreover, Google could’ve chosen to competitively enhance this product rather than shut it down.

So why did they end a great product that literally fits their mission perfectly?

We can only surmise that the ad clicks weren’t there (and thus neither was the profit) or perhaps Google felt this product was cannibalizing attention from their other products like Google News (a limited aggregator) or from some of their paying ad sponsors or partners feeding other products like Google Glass.

We may never know the answer, but what we do know is that, in this case, Google sold out on it’s core mission of organizing and providing information and abandoned their adoring userbase for Reader.

Feedly and other more clunky readers are out there, but Google Reader is a loss for the information needy and desirous and a misstep by Google.

RIP Reader, I think we will yet see you, in some form or fashion, yet again. 😉

(Source Photo: here with attribution to Laurie Pink)

Factory Floor Servitude

As a kid, I was all too familiar with factory settings–my dad worked in one.

Dad is an incredibly persistent hard worker who went to the factory every day–tuna sandwich in tow–worked hard and was the voice of reason in advancing the business–and worked his way up to manage the place. My dad is a modern-day success story!

He worked in everything figuring out how to design products, make them, sell them, and ensure the business stayed afloat. A lot of people depended on him in the factory to keep production humming, put bread on their tables, and most importantly to be treated fairly and like human beings.

My dad never became arrogant as he advanced himself, he always believed that we only have what the Almighty above grants to us.

What a contrast between the way my dad managed a factory and the decrepit working conditions that led to the factory collapse two weeks ago in Bangladesh that has now left at least 1,038 dead.

The collapse has raised ethical questions again about the horrific working conditions in factories overseas–where low wages and hazardous conditions is the rule–low wages lead to growing outsourcing and hence, a $18 billion garment industry in Bangladesh that has tripled in size between 2005 and 2010 and is expected to triple again by 2020.

The average monthly pay in 2009–$47!

By 2010, Bangladesh had 5,000 garment factories–2nd only to China.

Now most of the factories are gone from the U.S. moving overseas to the cheapest providers, with jobs in manufacturing decreasing almost in half from nearly 20 million in the U.S. in 1979 to less than 12 million in 2010.

Bloomberg BusinessWeek (9 May 2010) chronicles the ten years of stagnant wages and horrible working conditions there–verbal abuse, sexual abuse, physical punishment and humiliations for not meeting quotas (like having to forcibly stand on tables for hours and undress in front of workers), rare bathroom breaks to filthy and overflowing toilets, and much more.

When the Savar building developed cracks on April 23, one man begged his wife not to go to work the next day, but when she called in and asked for the day off, she was told she would be docked a whole months salary if she didn’t show up–she went to work and the building collapsed on April 24–leaving her buried under the rubble. Eventually, when the rescuers could not free her, they chopped off her legs!

Cheap labor means cheap goods–that’s a draw for us getting more branded goods for less. In a large sense, our insatiable demand fuels the cruel, servile conditions overseas.

This is also a broken market, where people sell their labor just to provide subsistence living for their families, while big corporations increase profits, investors smile all the way to the bank, and we get our boatloads of stuff cheap, cheap, cheap.

There is nothing wrong with making money or saving money–it’s an incentive-based system, but the only measure of success is not money.

We need global standards of ethical conduct in the labor market, and this should be part of every organization’s financial reporting, disclosure, and audit requirements.

People and organizations should not just be penalized for cooking the books or insider-trading, but for how they treat their people.

Those organizations and leaders that balance making money with treating people decently have a leg up on those that don’t–not that they will necessarily do better in the marketplace (maybe they won’t), but that they make their money with their integrity intact and that’s something money cannot buy. 😉

(Source Photo: here with attribution to Ronn “Blue” Aldaman)

Innovation Made Easy

Innovation is not something that can be mandated to succeed like a quota system, but rather it needs to be nourished with collaboration, motivation, and giving people the organizational freedom to try new things.

While many organizations have played with the idea of giving employees “tinkering time”–from a few hours a week to 20% of their time–to explore their creativity and work on new ideas, according to the Wall Street Journal (18 January 2013), “it rarely works” or pays off.

The reason–most employees have “enough to do already” and most tinkerers are free thinkers and amateur experimenters–and “they aren’t the kinds of employees most big companies like adding to the payroll in the first place.”

The WSJ suggests “better ways to spark innovation” through:

– External partnerships that can “inject the verve of a promising startup into a big company.”

– Public-private partnerships that can leverage government-funded research and development.

– Providing a profit motive for tinkerers to be successful by allowing them “to profit more from their innovations.” For example, tinkerers may “own the rights to anything they develop,” while the company retains “the right of first refusal to invest” in it.

Harvard Business Review (15 January 2013) has a compact guide on “Nine Rules for Stifling Innovation” by Rosabeth Moss Kanter.

These are the absolute don’ts when it comes to innovation:

1) “Be suspicious” of–or I would say competitive with–“any new idea from below”; everyone in the organization can have good ideas, not just the wise owls at the top!

2) “Invoke history”–such as we tried that already and it didn’t work or do you think you’re the first person to think of that? Just because something didn’t work previously under one set of circumstances, doesn’t mean the idea is doomed forever–timing may be everything.

3) “Keep people really busy”–I would call that “make work”–where we treat people so that if they have time and effort to question the status quo, then they have too much free time on their hands. Or as was written by the Nazis on the sign at the entrance to the infamous Auschwitz concentration camp: “Arbeit Macht Frei”–[brutal harsh enslaving] work will set you free.

4)  “Encourage cut-throat competition”–organizational innovation is not about critiquing others to death or creating win-lose scenarios among your staff, but rather about sharing ideas, refining them, and collaborating to make something great from the combined talents and skills of the team.

5) “Stress predictability”–innovation while encouraged with best practices is not something you predict like the weather, but rather is based on trial and error–lot’s of effort–patience, and even a measure of good luck.

6) “Confine discussion…to a small circle of trusted advisors”–I would say that strategy is top-down and bottom-up–everyone can provide valuable input. Almost like agile development, strategy gets refined as more information becomes available.

7) “Punish failures”–while we generally celebrate success (and not failure), we must still give people an opportunity to fail and learn. That doesn’t mean incompetence or laziness is given a free pass, but rather that hard work based on good common sense is acknowledged and rewarded.

8) “Blame problems”–while the blame game can just make heads spin or fall, it is far better to hold people accountable in a fair and unbiased way and coach, counsel, mentor, and train professional learning and growth.

9) Be arrogant–we all started somewhere–I served frozen yogurt in a health food store as a teen…we all go through the cycle of life–and everyone has their time.

I would add a tenth, don’t…

10) Mistreat your greatest asset, your people–Treat people, as you would want to be treated: listen, at least, twice as much as you speak, empathize with others, and try to treat people ethically and with heart.

So can innovation really be made easy?

It’s never easy to do something new, we all have to crawl before we can walk–but we can foster an organizational environment that promotes innovation, sharing, collaboration, transparency, and teamwork rather than one based on fear, bullying, intimidation, and punishment. 😉

(Source Photo: Andy Blumenthal with attribution of the beautiful “Dream” art to Romero Britto)

Strategy, Blue and Red and Successful All Over

Recently, I was reading about something called “Blue Ocean Strategy.”

The notion is that in pursuing differentiation, an organization’s aim is “not to out-perform the competition in the exiting industry [and to fight it out turning the oceans blood red), but [rather] to create a new market space or a blue ocean, thereby making the competition irrelevant.”

While I like the ocean’s metaphor and agree with the need for organizations to innovate and create new products and services (“blue oceans”), I think that competition (“red oceans”) is not something that is inescapable, in any way.

In profitable industries or market spaces, competition will enter until supply and demand equilibrium are met, so that consumers are getting more or less, the optimal supply at the requisite demand. The result is that organizations will and must constantly fight for survival in a dynamic marketplace.

Moreover, as we know, any organization that rests on its past successes, is doomed to the trash heaps of history as John Champers, the CEO of Cisco stated: It’s “easy to say we’re the best…we don’t need to change, but that’s exactly how you disappear.”

In essence, while we may wish to avoid a duke-it-out, red ocean strategy, every successful innovative, differentiation-driven, blue ocean strategy will result in a subsequent red ocean strategy as competitors smell blood and hone in for the kill and their piece of flesh and cut of market share, revenue, and profit hide.

To me, it is naïve to think that blue ocean and red ocean strategies are distinct, because every blue ocean eventually turns blood red with competition, unless you are dealing with a monopoly or unfair competitive environment that favors one organization over any others.

The key to success and organizational longevity is for innovations to never cease.  When innovation dries up, it is the moment when the organization begins their drowning decent into the ocean’s abyss.

So as with the lifecycle of all organizations, blue ocean strategies will eventually result in red oceans strategies.  Once this occurs, either the organization will leverage their next blue ocean strategy or bleed red until their body drains itself out and dies off—leaving the superior organization’s blue ocean strategy to carry the day.

Together, blue oceans and red oceans—drive the next great innovation and healthy competition in our dynamic, flourishing market.

(Source Photo: here with attribution to freezingmariner)

Goldman Sachs Reputation Sacked?

When Greg Smith published his editorial in the New York Times (14 March 2012) on the alleged debased culture and greedy exploits at Goldman Sachs, this was far from surprising after the many misdeeds of Corporate America over the last decade that saw the rise of Sarbanes Oxley in 2002 and the massive financial bailouts in 2008, which does not represent who we really are and can be.

It’s not that Corporate America is bad, it’s just that they frequently get rewarded for doing the wrong things.

All too often, promotions, corner offices, year-end bonuses, and stock options are the rewards for racking in profits, but are not necessarily tied to innovation and/or customer satisfaction.

I believe over the years this has taken many word forms from snake oil salesman, charlatans, spoilers, and many others.

Greg Smith who worked for a dozen years at Goldman–in of all things “recruiting and mentoring”–described the venerable Goldman Sachs as a place where:

– “Interest of clients continue to be sidelined”

– “Decline in the firm’s moral fiber represents the single most serious threat to it’s long-term survival.”

– If you make enough money for the firm…you will be promoted.”

– At sales meetings, “not one single minute is spent asking questions about how we can help clients.”

– Leaders callously “talk about ripping off clients” and call their clients “muppets,” a British slang terms for “idiots.”

The funny-sad thing is that after all these horrific accusations, Goldman has not come out and full-on-full repudiated these claims.

On March 15, the Wall Street Journal reported “Goldman Plays Damage Control” saying that “it will examine the claims.” 

Rather than denying the accusations in specific ways and pointing out their true moral fiber, the Chairman in a memo to employees chose to downplay the accuser calling him only one “of nearly 12,000 vice presidents” of 30,000 employees. In other words, this is just the opinion of a lone wolf.

More generally, the Chairman wrote coyly that this does “not reflect our values,our culture, and how the vast majority of people at Goldman Sachs think of the firm and the work it does on behalf of our clients.”

In another article, in Bloomberg BusinessWeek (19-25 March 2012), it states similarly that “Goldman Sachs would have you believe it’s learned from the financial crisis. Don’t be fooled.”

The article goes on to list a scathing history of scandal from Goldman Sachs Trading Corporation that “blew up” after the stock market crash of 1929 to Goldman’s settlement with the SEC for a whopping $550 million in 2010. Further, it describes a current conflict of interest case with El Paso and Kinder Morgan that they call a Goldman “heads-I-win, tails-you-lose approach.”

While I have always respected the likes of Goldman Sachs for their unbelievable brainpower and talent,the accusations against them and by extension against others in Corporate America is very concerning.

The notion that customers are but idiots for Corporate America to pillage and plunder is not democracy and capitalism, but greed and evil.

When we no longer value a creed of service above pure profiteering then moral bankruptcy is just a prelude to financial bankruptcy.

No company can stay afloat and be competitive over time, if they do not work to strengthen their balance sheets, income statements, and cash flows.

However, at the same time, no competitor can thrive for long on a culture of greed and duplicity that sees people as victims to spoil, rather than as customers to serve.

While I do not know the details of Greg Smith’s accusations, this last part I know in my heart to be truth.

(Source Photo: here)

>It’s About More Than Money

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Profit is the typical motive of corporations around the world. However, Corporate Social Responsibility (CSR) is becoming more a part of our consciousness as we recognize that life is much more about what we leave behind than how much money we make.

With oil gushing into the Gulf for the last two months now, and doing G-d knows what ultimate damage to our environment, we are reminded that our actions do matter and that we must put our ideals, values, and generosity first and foremost.

Certainly, some companies disregard social responsibility. For example, BP with their slogan of “Beyond Petroleum” and their logo of a helios—a lovely environmentally-friendly green and yellow sunflower—seems to have hidden the true extent of their unsound environmental and safety practices.

In contrast, other companies are getting it right when it comes to CSR. For example, eBay has launched a charitable program called “eBay Giving Works” in which “sellers can commit to donate a percentage of their listing final sale price to the nonprofit of their choice.” Additionally, “shoppers also can donate to a worthy nonprofit at eBay checkout.” According to eBay, more than $150 million has been donated already!

One organization on the eBay charity list is called Save A Child’s Heart (SACH) foundation. According to their website, this Israeli-based charity has performed lifesaving heart surgery on 2000 indigent children in 30 countries around the world and “every 29 hours, we save a child’s life.” They have been certified as Best in America by the Independent Charities of America. Their work is inspirational and the children they save is truly moving. And this is one of many good organizations around the world.

As much as I am repulsed by BP and other such organizations that seem to function with near-complete disregard for fundamental principles of human decency in the name of the “almighty dollar”, I applaud others such as eBay, SACH, and many more that are working to “give back” and do genuine good for people around the world.

Many years ago, when attending Jewish day school, I remember a teacher telling us that “one day when you are on your deathbed, you will look back at what you have done in your life— make sure it’s meaningful and noble (and more than just about money).” I believe this is a valuable lesson personally and professionally.

Perhaps the oil gushing out from the depths of the sea can be a metaphor for charitable giving that can gush out from the hearts of people and organizations. We can counter greed and destruction with selflessness and caring for others.

>Why Reputation Is The Foundation For Innovation

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Toyota is a technology company with some of the most high-tech and “green” cars on the planet. But right now Totoya’s leaders seem to lack integrity, and they haven’t proactively handled the current crisis. As a result, everything they have built is in danger.

Too often, IT leaders think that their technical competency is sufficient. However, these days it takes far more to succeed. Of course, profitability is a key measure of achievement and sustainability. But if basic integrity, accountability, and open and skillful communication are absent, then no amount of innovation in the world can save you.

Looking back, no one would have thought that Toyota would go down in a flaming debacle of credibility lost. For years, Toyota ate the lunch of the largest American car manufacturers—and two of the three were driven to bankruptcy just last year. Moreover, they had a great reputation built on quality – and that rocketed Toyota to be the #1 car company in the world.

A reputation for quality gave Toyota a significant edge among potential buyers. Purchasing a Toyota meant investing in a car that would last years and years without defect or trouble—it was an investment in reliability and it was well worth the extra expense. Other car companies were discounting and incenting sales with low or zero interest rates, cash back, and extended warranties, and so on. But Toyota held firm and at times their cars even sold for above sticker price. In short, their brand elicited a price premium. Toyota had credibility and that credibility translated into an incredibly successful company.

Now Toyota has suffered a serious setback by failing to disclose and fix brake problems so serious that they have allegedly resulted in loss of life. Just today, the Boston Globe reports that Toyota has been sued in Boston by an individual who alleges that “unintended acceleration (of his Toyota vehicle) caused a single-car crash that killed his wife and left him seriously injured.” The Globe goes on to report that “dozens of people reportedly have been killed in accidents involving unwanted acceleration.”

While nothing is perfect, not even Toyota engineering, in my opinion the key to recovering from mistakes is to be honest, admit them, be accountable, and take immediate action to rectify. These are critical leadership must do’s! Had Toyota taken responsibility in those ways, I believe their reputation would have been enhanced rather than grossly tarnished as it is now, because ultimately people respect integrity above all else, and they will forgive mistakes when they are honest mistakes and quickly rectified.

Unfortunately, this has not occurred with Toyota, and the brake problems appear to be mistakes that were known and then not rectified—essentially, Toyota’s transgression may have been one of commission rather than simply omission. For example, this past week, the CEO of Toyota, Akio Toyoda, testified before Congress that “we didn’t listen as carefully as we should—or respond as quickly as we must—to our customer’s concerns.” However, in reality, company executives not only didn’t respond, but also actually apparently stalled a response and celebrated their success in limiting recalls in recent years. As Congressman Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, stated: “Toyota’s own internal documents indicate that a premium was placed on delaying or closing NHTSA investigations, delaying new safety rules and blocking the discovery of safety defects.” (Bloomberg News via the Austin American Statesman)

In other words, Toyota strayed from its promise to customers to put safety center stage. Rather, profit took over and became the benchmark of success.

Even the company’s own managers acknowledge the deep wound that this scandal has inflicted on the company, and have doubts about its leadership. According to the Wall Street Journal, a midlevel manager stated, “Mr. Toyoda cannot spell out how he plans to alleviate consumer worries….it is a recall after another, and every time Mr. Toyoda utters the phrase ‘customer first,’ it has the opposite effect. His words sound just hollow.’” Said another, “The only way we find out anything about the crisis is through the media….Does Mr. Toyoda have the ability to lead? That’s on every employee’s mind.”

Indeed, the Journal echoes these sentiments, noting that under Toyoda’s leadership, there was a focus on “getting the company back to profitability, after the company last year suffered it first loss in 70 years.” In other words, in an attempt to “reinstate frugality,” it appears that CEO Toyoda went too far and skimped on quality—becoming, as the saying goes, “penny wise and dollar foolish.” We will see if this debacle costs Toyota market share and hurts the bottom line over the intermediate to longer-term.

In recent times, we have seen a shift away from quality and credibility in favor of a fast, cheap buck in many sectors of the economy. For example, I have heard that some homebuyers actually prefer hundred-year-old homes to new construction due to their perception that the quality was better back then and that builders take shortcuts now. But somehow Toyota always stood out as a bulwark against this trend. It is therefore deeply disappointing to see that even they succumbed. While the company has a long road ahead to reestablish their credibility and rebuild their brand, I, for one, sincerely hope that they rediscover their roots and “do the right thing.”