Business Quests in the Information Age

Yahoo! strikes an alliance with Google

"The enemy of my enemy is my friend" seems to be the rule at Yahoo! even when that means striking a stunning alliance with old-time rival Google. According to French news agency AFP and to CNN Money, the two companies came to an agreement for the US and Canadian markets, whereby Google would be able to sell advertising space on Yahoo's search pages. Aside from being an admission that Yahoo! stands no chance to compete head to head with Google in this space, the agreement is interesting in that it contains a provision saying that should Yahoo!'s ownership status change by way of an acquisition or other operation within the coming two years, the company would have to pay Google 250 million dollars.

That provision could be seen as an attempt to ward off any attempts to acquire Yahoo! for the next 24 months even though when a company like Microsoft is willing to pay over 45 billion USD to acquire Yahoo! I doubt 250 million would make a difference even if paid to archrival Google. I would personally focus my interest much more on the time horizon of the said provision because in my opinion it speaks volumes about the internal expectations of Yahoo! as to the time when its future strategic direction will have matured and started to deliver the first results. Microsoft's takeover bid most certainly was a wake-up call for top execs at Yahoo! Now of course, the question that remains to be sorted out is whether activist investors like Carl Icahn will give Yahoo! two years.

Blog Ad Network by Six Apart helps monetization of smaller blogs

Six Apart is one of the few companies of the so called web 2.0 wave whose focus on sustainable business models is a major strength. Using their position as a blogging platform to structure and manage an ad network is really a no-brainer from a business standpoint, while it is also in keeping with Six Apart's consistent policy of offering easy-to-use solutions to its customers. They are uniquely positioned to generate substantial business value from this initiative. I am very curious about their pricing mechanism and about the degree of visibility they will allow into their profit margins from this activity. And perhaps even more than those aspects of the scheme, I will be interested to understand their targeting philosophy (serving the relevant ads to each micro-audience) because that's one of the big battles of tomorrow's advertising.

clipped from www.marketingpilgrim.com Six Apart Launches Blog Ad Network, Blog Services clipped from www.marketingpilgrim.com Blog software company Six Apart acquired creative agency Apperceptive, a company that built blogs for sites such as The Washington Post, The Huffington Post, BoingBoing, and iVillage. Now they’re launching an advertising network for blogs. They are also venturing into design, programming, and blog marketing services. As an ad network, Six Apart is competing with Federated Media Publishing, Glam, Blogads, and others. Here’s how it will work - they will get advertisers, bloggers put the ads up, and the two share revenue (not sure what the payouts are like, but I believe it’s typical to get 20-30%). Six Apart is working with Adify to provide back end support so bloggers can see their payouts and manage their account. they are targeting their services to the little guy The ad network is currently in invitation-only beta and it’s just for bloggers who use Six Apart’s Vox, TypePad, or LiveJournal.

Full speed ahead for Linked In

Linked In is evolving big time with the integration of social networking functionality of a new sort and with the extension of its services to cover company profiles, something I consider awesome. A few months back I wrote a piece stating why I did not believe in Facebook for business and how a combination between carefully chosen Facebook-like functionality and Linked In functionality would deliver major value. Now more than ever, Linked In is becoming a real custodian of professional identity, pretty much like Google will increasingly be the authority to ascertain the identity of individuals (in fact they already act as a trusted third party for customer details verification in e-commerce transactions).
Anyway, here's a nice little video of the product manager doing a demo of the new feature, which will help propel Linked In to a position its look-alike competitors will have hard time catching up with. And by the way, this is the sort of stuff I would love to see more product managers do for their products.

WPP building the next generation agency?

Currently attending a panel with Lance Maerov, the SVP Corporate Development (read M&A) for WPP and Trevor Kaufman, the CEO of Schematic, a company they bought last year as part of their string of nearly a hundred acquisitions and investments in 2007. They're talking about how traditional agencies are acquiring and investing to stay relevant in the years ahead. I have a short excerpt in the video below, but here is a summary of interesting points:

• traditional agencies realized sometime last year that they were quickly becoming less relevant and being challenged by new players. Their response was pretty much that of any incumbent: buy what you can't match. The interesting question is how will they actually address the challenge of truly integrating the acquisitions and achieve a fundamental transformation of the DNA of the traditional agency business;
• topic of building the next generation agency seems to be in the CEO's agenda at WPP, which is a good sign and pretty much what is also happening at Publicis;
• choosing for acquisition targets they went first for companies they had been in touch with for a number of years;
• big focus on BRIC countries and North America;
• the traditional agencies are choosing companies for acquisition based on their size and business potential, looking for good management teams in place because they don't have the skills and resources to take over the management of these companies. In Maerov's words "if an entrepreneur thinks that WPP people will start running his business once the acquisition is done, that's a red flag for us and the deal will not happen";
• areas of interest include behavioral targeting, analytics, interactive capabilities, integration between online and off-line spaces;
• in the video below they mention 24/7 Real Media, another acquisition of WPP in 2007, which they said was interesting because it allowed them to optimize campaigns both online and off-line;
• Maerov said despite the purported slow-down of the economy he sees no sign of budgets being reduced and that WPP will pursue an aggressive strategy of acquisitions, something that is confirmed in this article of the NY Post;
• in the same article they mention a recent acquisition through JWT of 75% of Belgian Tagora, positioned as a dialogue marketing agency, with annual sales of 5.3 m$ (3.6 m€ with gross assets of 2.74 m€ end 2007). Could not find the acquisition price, but I would be interested in getting it...

OnMedia_NewNewAgency
Video sent by alexpapa

 

Le Web 3 - questions

Attending a couple of interesting presentations yesterday I got some pretty good food for thought, which translates in a few questions:

1. in a panel (yes that one was interesting) a guy working for Facebook said they knew for sure the online behavior of their users was similar to their offline behavior. I wonder how they actually know: can they really characterize their audience in terms of behavior?
2. a lawyer who was on the same panel claimed that owners of major sites had to choose whether to protect their users or to abide by the laws and help authorities enforce the legislation citing Yahoo in China as an example. I wonder: has he ever heard anything about civic dissent?
3. somebody mentioned the issue of proprietary corporate content being exposed on social networks and the issue of loss of corporate control over intangible assets such as business networks and networks of customers when somebody working for a company changes jobs. I wonder: how will that affect the relationship between workers and their employers? What does it mean in terms of balance of power and in terms of nature of contracts? Will that actually drive more coherence in the workplace where knowledge workers would be held accountable for their results instead of being accountable for contributing time of presence? What does it mean in terms of how intangible assets should be managed? Is this finally the time of flat and distributed organizations attracting talent through other means than compensation?
4. Evan WIlliams of Twitter gave an account of the power of "less is more" in terms of designing a product and user experience. He said they tried to think about what could be eliminated in terms of product features to create something new. I wonder: how many creators of new stuff, how many entrepreneurs, how many technologists will actually try this?
5. Philippe Stark highlighted the importance of having compelling concepts and made a passionate statement about his ultimate belief that whatever we do is worth doing only if it actually contributes to enhancing the power of love and compassion. He also claims that a product ought to be making a point, a political point, to be the material expression of a statement about the world and what drives it. Strange as it may seem, focusing simply on the concepts of love and compassion one can seriously re-thing and re-imagine probably any business activity and in particular the business of marketing and communications. I wonder: how many people will dare trying this?
6. Hans Rosling highlighted the importance of storytelling in helping the world build a finer and more accurate view of the actual state of the world. He showed how important this is in view of the environmental challenge we face and in particular how ridiculous the claim of developed nations is about the fact that China and India are among the most damaging nations in environmental terms. I wonder: what impact will individual stories and person-to-person experience sharing in the future of business? How can that help business be a force in favor of the environment?
7. how sustainable is the current paradigm of social networks and blogging? What is the real economic value and productivity of effort spent in all the stuff currently being done? Is Facebook really worth billions of dollars?

Excellent customer experience is the cornerstone of branding

There's a very interesting post discussing the attributes of global brands in Harvard Business Online. The author identifies common aspects to global branding and his claim that there is considerably lesser need for adapting to local markets is one that surprises me. Indeed, when considering new marketing practices most of which are based on the premise of customer participation, it does seem quite challenging for a company to force the same perception of a brand all over the globe. Furthermore, although the points identified are interesting, there is something missing: excellent customer experience, which in essence is based on consistency between what is promised and what is delivered. Toyota, Nokia or Intel, all mentioned in the post, have been able to deliver outstanding products delivering a customer experience in line with what was promised:

• Toyota made cars with the best price-to-quality ratio making a total commitment to continuous improvement,
• Nokia made it easy to connect people (most notably with a user interface now adopted even by competitors)
• Intel brought processing power to the masses and beyond

So the market ends up giving its preference (and thus building brand value for those companies) first and foremost because the customer experience is excellent. That of course does not mean perfection: some Nokia phones are not that great and Intel had its share of failed releases. However, it does mean that if you don't have the excellent customer experience, no effort at branding will ever yield results worth mentioning. Perhaps this is the main issue facing Ford (another company mentioned in the post) these days. And excellent customer experience is also what drives buzz, viral and guerrilla marketing phenomena in today's connected world.

Why some people can't Cool It...

It does seem that the discussion of the Copenhagen Consensus and Bjorn Lomborg's positions canlead to some pretty heated reactions. I came across an interesting post discussing such reactions and arguing that it all boils down to the concept of "opportunity costs". It does  look as though the world is going hysteric over global warming when it would be quite crucial to keep cool and make perhaps vital decisions rationally, especially since our resources as so scarce.

Sadly, despite a very "user friendly" / pedagogical way of presenting his points Lomborg is not always well understood. I believe that is because quite a lot of his developments run counter generally accepted ideas and even "common sense" in a way. It's a bit like the resistance to change one faces when trying to help a disorganized and overloaded executive to start prioritizing actions because it takes some nerve and a healthy dose of indifference to accept the idea that there are quite a few things out there on which you will not focus if you are to achieve anything meaningful on those subjects you've decided to tackle first with your limited resources.

Maybe more than an issue with the understanding of the concept of "opportunity cost" discussed in the post, I feel there are phenomena that provide explanations on that count:

1. a reluctance of many people to use money and utility curves to make decisions about "noble causes" as though that would put dirt on those noble causes (perhaps owing to a tradition in many cultures to consider money as "bad" or "dirty")
2. the degree of anxiety created by the sort of media coverage we're getting about global warming and I must say Cool It came as a refreshing perspective as far as I am concerned
3. reluctance to accept the consequences that cannot be avoided and which stem from our past (current?) consumption behaviors... something which is creating a collective schizophrenia of sorts with part of ourselves concerned with success within the existing economic and social context and part of ourselves leaning in the direction of a radical change of behavior in favor of more ecology
4. lack of skill in prioritizing and planning at a collective level especially where the protection of the commons is concerned, more particularly since we were conditioned into believing the theory that competition and the free markets would solve all of our problems without government intervention
5. poor collective sense of proportion and assessment of quantitative facts, especially as regards the quality of projections of likely consequences from warming
6. desire to keep things as they were or are (something that is very characteristic of our modern civilization with its unprecedented recording capabilities), when the world is a place in constant evolution
7. excessive confidence in the effectiveness of public action with ambitious goals, fueled by the lack of assessment of past initiatives led by governments only with long term time horizons (economic development of less-developed countries, agricultural programs in Africa, funding of projects by the World Bank, free trade agreements invariably leading to a violation of the position of developing nations...) Overall we have confidence in a failed model of world governance and perhaps the first challenge to tackle is to reform that so as to be at least confident in the vehicle we are going to use to tackle whichever problems we can rationally consider to be the real top priorities

On the other hand there are also a few intelligent replies like this one that are a real contribution to the discussion from my perspective and which IMHO should not prevent us from using valuable contributions from the Copenhagen Consensus (I certainly consider their analytical and cooperative approach to be a very positive contribution that should bring us closer to a more factual discussion on this important matter).

The challenge of sustainability of business quests

Blog Action Day is the initiative that leads me to posting a few thoughts based on the simple fact that business has been the main driver of environmental impacts we've been hearing about over the past decade or so. By business I mean the more and more systematic use of limited resources and innovation (technical and non-technical) to achieve commercial benefit.

The topic is huge and I do not have sufficient knowledge and time to tackle it in an exhaustive manner, but I've started putting some thoughts together as to what causes business to contribute negatively to the global environment because I believe that understanding that is a key to structuring business practices that can be both sustainable and competitive on the market. In essence, what I'm saying is the following:

1. today's situation is not something that happened overnight: it is the result of two centuries of industrial revolution
2. the current status is a by-product of economic and business processes as they were structured for the industrial age
3. some of those practices are at fault while other should be kept (i.e. let's not throw the baby with the bath water)

An the question is: can we use market mechanisms and financial vehicles similar to those that created the problem to solve it? In other words, if we could use existing assets (i.e. including good practices created with industrialisation) and resources to build successful businesses whose activity will have as a by-product solutions to the deteriorating environment, then we probably have a winner. And since it all starts with proper measurement of what is actually going on on the font of sustainability, I will mention a trend that is picking-up steam, as testified by posts like this one:

1. socially responsible investing, a global movement to which Triodos, one of my customers has been contributing for the past 25 years or so, another example being the Domini Fund
2. the creation and publication of sustainability indexes like the one recently launched by KLD. Their common ancestor is the Domini Social Index, whose companies seem pretty decent on their returns by several accounts.

I have started working on a mindmap of key areas and causes explaining the contribution of business to the deterioration of the global environment. It's still very much a draft. My goal is to examine the relevance of setting-up an investment vehicle dedicated to taking over a specific target group of European companies (allow me to keep that bit for me) in view of boosting their performance (in an integral sense, i.e. including environmental and human development aspects). After all, most companies are incorporated without an end date, so I guess it is in the nature of business to be seeking sustainability. The question being of course how to achieve sustainable consistent positive performance... Perhaps I'll have more on this within the next couple of months.

Laziness: an enabler of common sense?

A friend sent me a link to an interesting post about the risk of collapse of the Web 2.0. The article argues that users out there will become tired of playing around with platforms like Friendster, MySpace or Facebook as the "natural" human attribute of laziness becomes dominant as a driver of online beavior and that this will actually lead to a burst of the Web 2.0 bubble.
The point is valid in the sense that as the power of "new" fades, the motivation of individual users to spend time doing work for free will drop. However, there are still quite a few things happening out there which may be done without the people doing them getting paid and which bring at least indirect benefits to those people, such as for example public image or the opportunity to show how good they are at specific tasks or in given industries. In other words, in the vast mass of participants to phenomena like Facebook, there is a fraction of people who actually derive business value out of their participation to the platforms that are so characteristic of what has been called Web 2.0, like for example Wikipedia or targeted blogs like Culture Buzz.
The question then becomes: how does one actually measure the indirect benefits they get from participating to communities like LinkedIn or Facebook? By which means one can assess the relevance and value of platforms allowing users to host online applications is another question, that I think is particularly relevant in view of a comment made by my friend David on a recent post about Facebook.
I will also add that although I have no illusions as to the dark sides of the human psyche, I don't believe laziness to be inevitable or undesirable. Usually we humans face problems when we abandon ourselves to the extremes like complete passivity as resulting from extreme laziness or frantic activity as caused by workaholism... Bottom line: in order to identify value drivers for the web 2.0 space better skills in psychology may be needed.

Solving the climate crisis with game theory

This article provides an interesting perspective on the current dynamics of paralysis in the way the international community deals with climate change. It also offers pretty interesting and practical actions that could help break the deadlock and start moving towards measurable improvements in the way we use the global environment.

clipped from www.economist.com Playing games with the planet A version of the “prisoner's dilemma” may suggest ways to break through the Kyoto impasse AT ANY given summit on climate change, it is never long before some politician declares how “urgent” or “vital” or “imperative” it is to stop the planet from overheating. And yet few governments are willing to tackle the problem by themselves. In practice, what these impassioned speakers usually mean is that it is urgent—no, vital!—no, imperative!—for all countries but their own to get to grips with climate change. Yet in a recent paper, Michael Liebreich, of New Energy Finance, a research firm, draws on game theory to reach the opposite conclusion. The dynamics of the prisoner's dilemma, he points out, change dramatically if participants know that they will be playing the game more than once. In that case, they have an incentive to co-operate, in order to avoid being punished for their misconduct by their opponent in subsequent rounds.