In 2000, Reed Hastings, the founder of a fledgling company called Netflix, flew to Dallas to propose a partnership to Blockbuster CEO John Antioco and his team. The idea was that Netflix would run Blockbuster’s brand online and Antioco’s firm would promote Netflix in its stores. Hastings got laughed out of the room.
We all know what happened next. Blockbuster went bankrupt in 2010 and Netflix is now a $28 billion dollar company, about ten times what Blockbuster was worth. Today, Hastings is widely hailed as a genius and Antioco is considered a fool. Yet that is far too facile an explanation.
Antioco was, in fact, a very competent executive—many considered him a retail genius—with a long history of success. Yet for all his operational acumen, he failed to see that networks of unseen connections would bring about his downfall. Over the past 15 years, scientists have learned much about how these networks function and how his fate could have been avoided.
1989 was a revolutionary year. From Berlin, Warsaw and Prague to Tiananmen Square and South Africa, the world order was completely overturned. Yet probably the most consequential event happened in a quiet lab in Lausanne, Switzerland.
It was there that Tim Berners-Lee created the World Wide Web and gave it to the world, forever changing what it means to publish information. Before the Web, an elite cadre of editors and producers determined what we could see, listen to and read. Now, anyone can publish.
That’s lead marketers to develop their own content that doesn’t rely on a mass media gatekeeper. Unfortunately, most fail. While 86% of marketers produce content, only 32% consider themselves effective at it. The reason is that brand publishing requires not only new skills, but different perspectives. Here’s separates the winners from the losers.
Southwest Airlines is an unusual company. In an industry notorious for losing money, it has achieved over forty consecutive years of profitability. No one else comes close to matching that record. It makes you wonder why everybody doesn’t just copy their model.
Some have, but most can’t, because Southwest’s model is intertwined with its mission. Most air carriers try to dominate routes, but Southwest focuses on being “THE low cost airline” and that drives just about everything it does, from the planes it buys to where it offers service.
Richard Rumelt stresses that good strategy “brings relative strength to bear against relative weakness.” Competitive advantage is far from arbitrary. It does not come from Excel spreadsheets or PowerPoint decks, but from how a firm sees and fulfills its purpose. Great strategy starts then, not with analysis, but from defining and committing to a mission.
Henry Ford famously said that his customers could a car painted in any color so long as it was black. Many people misunderstand that quote. It wasn’t that he didn’t care about his customers needs, but that manufacturing efficiency trumped style.
Yet our generation’s greatest entrepreneur, Steve Jobs, considered design so important that he cited a calligraphy course as his most important influence. For him, design wasn’t just a product’s look and feel, but its function.
Over the past 20 years, we’ve seen a radical shift toward design as a fundamental source of value. It used to be that design was a relatively narrow field, but today it’s become central to product performance and everybody needs to be design literate. To get an idea of where its all going, I looked in on how Autodesk is promoting design as a basic skill.
“Fail fast, fail cheap, fail often,” has become a mantra for the digital age. Stodgy old dinosaurs may be afraid of failure, but it doesn’t bother the new breed of entrepreneurs. They can start-up, shut down and start-up again. Venture investors, for their part, are looking for just one or two big wins out of ten.
Yet there’s nothing cool or useful about failure. While we shouldn’t fear failure, only a maniac or a fool would embrace it. Failure means that something went wrong, that we messed up. Failure happens when we do things we shouldn’t have.
The truth is that embracing failure is, all too often, a cop-out. Just like managers who suggest a re-org to “unsilo” their enterprise or say they could deliver performance if only they had the “right people,” many in technology believe that failure comes with the territory. It doesn’t. Technology only succeeds when it mitigates failure and makes the world better.
Marketing is often confused with promotion, but it’s more than that. As Peter Drucker put it, “the aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” In truth, marketing is about insights more than anything else.
Unfortunately, marketing can also be a world unto itself. A smart sounding idea can reverberate through the echo chamber and become conventional wisdom. From there, it takes on the role of an established fact and is rarely challenged.
Yet many widely held ideas are misleading, if not completely untrue and that can be a problem. When real budgets are spent on false premises, the result is not only missed opportunities, it can damage the underlying business—Pepsi’s Refresh project is but one example. Here’s a list of five things marketers should know, but usually don’t.
Education has long played an important role in the success of the United States. From some of the world’s first public schools to the land grant universities which spurred innovation in agriculture, our development as long been tied to how we educate future generations.
So we should be concerned that US students performance on the international PISA tests, which evaluate not just knowledge but cognitive ability, have not been great. On the most recent one, we ranked 36th, 28th and 24th in the world in math, science and reading, respectively.
This has, of course, created much debate and some, such as Amanda Ripley in her book The Smartest Kids in the World, have offered suggestions for adapting best practices from the rest of the world. However, we also need to realize that our children will face a much different world than we did and will need to build skills for the future, not the past.
If you want to produce content, you need to think like a publisher. After all, content isn’t an extension of marketing, it’s an extension of publishing. I constantly stress that point to my consulting clients and in articles like this one in Harvard Business Review.
It seems like a simple concept, but many disagree. “Aren’t publisher’s failing?” they say. How can I hold up a struggling industry as a model? If publishing is still viable, why isn’t anybody making any money doing it?
These sentiments are common, but they are not based in fact. In truth, publishing is flourishing, attracting large investments by established companies and venture capitalists, creating massive new fortunes for entrepreneurs and more choice for consumers. While it’s true that not everyone is prospers, there has never been a better time for publishers.
Revolutions are seldom solo efforts. Isaac Newton was the greatest scientist of his age and not one known for his false modesty, but even he had to admit, “If I have seen further it is by standing on the shoulders of giants.”
Thomas Kuhn made a related point in his classic, The Structure of Scientific Revolutions. He argued that precedence in science is somewhat arbitrary—a matter of perspective rather than fact—because new discoveries are rarely tied to the work of just one person or team.
Yet, while very few ideas are truly original, there are exceptions. Sometimes an important new idea seems to have no precursor or precedent, but springs forth whole from a single mind and completely alters our perception of how the world works. Although these are rare, they have a lot to teach us about how to become more creative ourselves.
Wells Fargo is an unusual bank. In the first place, it is headquartered in San Francisco, not in a typical financial center like New York. It is also unusually socially conscious, earning high marks for its environmental record and setting records for financing green projects.
Still, despite its offbeat culture, it has been enormously successful. With enviable operating margins of over 40% and a $260 billion market cap, it is the world’s most valuable bank. Since the financial crisis, it has had 16 consecutive quarters of profitability.
To get an idea of how Wells Fargo operates, I spoke to Steve Ellis, who runs its wholesale services group. Surprisingly, the story he told me had little to do with complex financial derivatives or risky trading strategies, but how it learned to innovate around the customer. Clearly, his experience applies not only to banks, but to any business.