John Akerson's Thoughts

Business, technology and life

Advertising Failure

Diana Adams has a great post on titled “16 ways to use your wrist now that watches are obsolete.” Her post includes some really funny suggestions, with comical illustrations from … including “Backup urinal cake” and “Portable Pot Pie.” (do not confuse)

There is advertising on – and I’m sure somebody is paying fror those impressions and click-thrus.  Of course, some of the best advertising is content-specific. If you can put your product in front of a person who is already interested, you have a much higher probability of making a sale. Google makes Billions from this concept. Other companies, and many people also make big heaping piles of money from this simple concept.  But sometimes it fails. Sometimes the best content algorythms and the smartest advertisers promote their product in the wrong places.  And sometimes those failures are remarkable.

Here’s an example:  If you are reading an article discussing wrist-watches, how obsolete they are and suggesting a direct relationship to… say… buggy whips and egyptian pyramid blueprints… are you really looking to BUY a wrist-watch? Maybe not. The content is there, but the CONTEXT makes all the difference.  Here’s a screenshot of the advertisement, on the page focused on “Wristwatch Obsolescense.”

Although I have a great appreciation for why the watches are up to 80% off, seeing that advertisement on that page doesn’t leave me inspired to buy one.  (as an fyi – the link from the advertisement was this: )  I suspect Google’s advertising bots, smart as they are, are still learning… but context is an enormously difficult thing to learn.

March 14, 2011 Posted by | Business, Competitive Advantage, Marketing, Search Engine Optimization, Social Media, Technology | 2 Comments

300,000 Android Phones

Andy Rubin has only ever made 2 public tweets and only follows one person. His twitter page links to – which was last alive as a website with a binary dog portrait in 2008 or so. This morning he tweeted: “There are over 300,000 Android phones activated each day.” (Andy Rubin is also VP of Engineering overseeing Android at Google, and he knows how to design products that customers LOVE.) @Engadget pointed out that 300k Android Phones Activated DAILY is an increase from August when only 200k were being activated daily.  A 50% increase in 3 months is an incredible business trend.

THIS seismic shift will bring a tsunami of opportunity for businesses that are creative enough to harness it. Tsunamis are destructive too, but thats another story.How significant is this? Two days ago, Penny Crosman in Bank Systems & Technology published “Who will be the Google of Mobile Payments” and discussed the tangled mess of providers, banks, systems and technology.

She didn’t make the case that the “Google” of mobile payments could be GOOGLE. Given 300,000 Android Phones activated *DAILY* that has to be worth consideration.


So – that is only mobile banking, and that is just a ripple. The tsunami has to be understood creatively, by the businesses who will use this explosion as competitive advantage. Want to sell a mobile app? Android has 300k new users each day.

Even considering Android as one of the big 3 or 4 types of smartphone – with Blackberry and iPhone, and … others, it is very safe to say, the trend is for Android smart phone domination. There are only a few models of iPhone, and only one manufacturer each of iPhones and Blackberry phones. (The key corresponding fact, is that Android is on dozens of phones made by an array of companies, and Google shares success with all of them… Motorola, LG, Samsung, HTC, etc.)   To flesh that out a bit… It is in the corporate interests of all of those cell phone producers to help Google succeed by selling more android phones. Even Google’s competitors are selling phones that spread Android. For instance – Google opened their bookstore 2 days ago. As ironic as this can be – Amazon is discounting the Droid Pro to $19 each.  Google is smart and they ARE going to take advantage of this installed base.

When your platform is exploding, and your fiercest competition contributes to your expansion – well, that is a bit like IBM selling PC’s and including Microsoft’s DOS as the key component that made a PC “IBM-Compatible.”  Good for IBM, but VERY good for Microsoft.

Beyond Cell Phone manufacturers, Android users use more data than other smartphone users, which will make them a favorite of cell companies who want to profit from data transmission. “Samsung Galaxy users typically upload 126% more data than iPhone 3G users, and HTC Desire users download 41% more data” (Arieso)

Want to be available to mobile users? 300k per day is a trend that you MUST account for.

December 9, 2010 Posted by | Business, Competitive Advantage, Marketing, Technology | 1 Comment

Smart Phones Rise

I am at Internet Summit 10 and I have noticed that Mary Meeker’s quote about smart phone numbers exceeding personal computers by 2012 has resonated with everyone.  To refresh, her quote is: “smartphone sales will surpass PC and laptop sales in 2012, with more than 450 million units sold.” So – the panel is talking about technology, infrastructure, net neutrality and how important it is to focus on customers…

Dana Todd  asked, “For marketing people like her, how do they deal with that technology” She meant the increase in smart phones, the changes in how people use technology. She wants to know how the increase in mobile information technology will impact what she needs to do as a marketer.  When mobile users exceed laptops, netbooks, ipads and other personal computer devices – how can marketers best deliver what customers need?

How will Mary Meeker’s projection change what people need? How will it change what people buy, what people use, what people want and what is important to people?  (assuming that people = customers)

These are great questions – what do you think?

November 17, 2010 Posted by | Business, Competitive Advantage, Continuous Improvement, Marketing, People, Technology | Leave a comment

Shifting Media

Media is changing, rapidly and thoroughly. I think the only certainty about this seismic change is that if you could ride a Delorean 10 years into the future, what media will look like then bears absolutely no resemblance to what it looks like now. How will it change?  Opinions vary wildly based frequently on the benefits seen by the person expressing the opinion.

Avner Ronen, Boxee’s CEO thinks that a payment platform will win over TV networks.  Bruce Eisen, VP of Online Content Development and Strategy for Dish Network thinks tomorrows media distribution model will be today’s, unchanged. But things are already changing in extreme ways. Greg Kampanis, an executive from South Park Digital Studios has seen that offering all of their shows as free content online has resulted in “an increase in ratings along with online advertising revenue.”

And Michael Willner, CEO of Insight Communications asks if Hulu is bad for Broadcasters.

Mr. Willner’s most essential point is about the viability of the current distribution model. To quote: “Eisen’s argument is that even if putting this content online for free has short-term benefits for broadcasters ultimately it will encourage more users to cut ties with their cable or satellite provider, undermining the current distribution model.” (I added that emphasis, here, to make my point.)

The current distribution model is like a woolly mammoth and broadcasters are like little birds that ride the mammoths. At some point, the woolly mammoth became a species doomed to extinction. Some birds hopped onto elephants instead. Some found other ways to survive their ever-changing, evolving environment. Some of the birds didn’t make it. Some of the elephants did.   The ones that thrived were the ones that were both smart enough to recognize the changes and fast enough to react.

I think that Bruce Eisen is in a difficult position, and if he thinks that South Park’s benefits are only short-term. Things are not going to settle back to a 1980’s paradigm where media is controlled by the current industry giants.  There are so many disruptors in the current woolly mammoth-dominated media environment. Although many things are difficult to predict, the future of those mammoths isn’t. The smartest will see that the “current distribution model” isn’t the same as the future distribution model.  Acting like those things are the same, is understandable, and protectionist, but isn’t the most productive long term strategy.

A better approach is to consider, given the current distribution model, and the currently known disruptors, what other distribution models can simultaneously deliver value to viewers and profit to companies that act as media managers, creators, producers and aggregators.

I think Netflix is poised to deliver on that simultaneous-value sweet spot, and their freely-available corporate strategy/playbook suggests they already know it. 

Who will their competition be?  Will they succeed? Will Dish? 

What do you think?

November 11, 2010 Posted by | Competitive Advantage, Continuous Improvement, Marketing, Technology | Leave a comment

Kindle is Your Paradise

Killer gadgets today are killer because they let us do everything. Is your newest latest Droid/Blackberry/iPhone a killer gadget? Maybe it is, but maybe not. What about the Kindle that only does one thing? Maybe a better question is, do you want more “killer gadgets?” Or do people need one device that does one thing?

From my perspective, the Kindle is better than a killer gadget. It is a paradise device and a paradise business model. The Kindle does only one thing, really well. That is the point. It is killer BECAUSE it does only one thing. It is paradise because it does only one thing. It can give YOU paradise if you have one, and it is paradise for Amazon. The proof is in this delightful, engaging, brilliant Kindle Ad. Please watch it because it explains everything:

On the surface, if you have $140 sunglasses and love sitting poolside reading your Kindle, it is an easy sell that your Kindle will work better than other multifunction book-type devices. (iPad) Depending on what statistic you pay the most attention to, Amazon is selling either 143 or 180 digital books for every 100 hardcovers sold.   Amazon’s CEO Jeff Bezos says it is “astonishing when you consider that we’ve been selling hardcover books for 15 years, and Kindle books for 33 months.”  That is a tipping point!

Back to the Kindle Ad!  The great irony is that Amazon’s Kindle mirrors the most successful single purpose device in the last decade, in every meaningful way – the iPod. The iPod is a singular-purpose device created a billion-dollar digital download store for Apple. (Perhaps $15 billion) Amazon’s Kindle is another killer gadget, but it is better because it is a single purpose killer gadget. The single-price digital music pricing model has simultaneously destroyed and reformed the music industry and it might yet do the same thing to the motion picture industry. Meanwhile, the publishing industry is being pushed and perhaps dismantled by Amazon’s amazing digital sales… driving per-copy prices down way past where publishers want.

So – coming full circle, here is the situation: iTunes drives Apple revenues with a product to be used on Apple’s iPods. Amazon’s delightful advertisement with their Paradise Device is thoroughly brilliant. It takes Apple out of the black turtleneck cool and plops it down. Where? in a the gut of a man wearing a semi-yellowed white-ish t-shirt over wrinkly khakis (1) at a pool with an iPad (2), sitting side by side with a kindled-up bikini girl. Mr. Apple-man is without sunglasses and looking kind of uptight and stressed, but she finds every relaxed way to look simultaneously hot… and very cool. People might not notice in the commercial, but there is a subtle plate of apples in the background (3)   Back to the stress… in this commercial, this alternate vacation reality – it is the iPad that is stressing him. His iPad is not relaxing and is not helping his vacation one bit! It is not helping him find paradise and it sure didn’t help him select his poolside wardrobe.

When you look at these two people, you can tell neither is married. (4) You can tell that she is enjoying her vacation in paradise. She has the shades, the attitude, the smile, the perfect hair, the perfect black bikini, and the perfect device with which to download digital content… and reading. Why is it so great that she has a single purpose device?  Everyone wants the paradise that comes with no deadlines, no meetings, no emails, no texts, no web to browse, no pdf’s, no buzzers, no noise, no distractions, and nothing at all beyond reading. It is only one simple pure function. Yet, nothing is getting between her and her Kindle. It is almost an intimate connection. A bargain that cost less to her than her sunglasses.

In a cluttered world filled with multifunctional device Swiss army knives, the Kindle is a Katana – sharp, purposeful, effective and to enemies, it must seem splendidly frightening in its potential and its execution. In the advertisement, everything in the girl’s vacation is elegant, relaxing and perfect. She is lost in the Kindle, lost in her reading. She has reached that intimate Kindle-paradise and left the stresses of her life behind. It is exactly the moment in exactly the vacation that everyone could use – everyone with lives that are torn by a never ending assortment of multifunction devices that sing like canaries in a mine full of hyper stimulated under-satisfied stress.  Matt Richtel wrote a great piece in the New York Times about how “Digital devices deprive the brain of needed downtime.
So – she is cool… she is hot… she is on vacation… and she can read her Kindle in direct sunlight, with her high-end fashionable sunglasses on. Why didn’t he bring sunglasses? Was he too busy in is iPad world with stimuli hitting him everywhere? Was he really TRYING to read or was he hitting on her? Does he not know how to adjust the brightness and contrast on his iPad? It doesn’t matter at ALL to her. She doesn’t have a care in the world. She is on vacation in paradise. She can relax perfectly with her kindle on her vacation reading her book in her world without interruption. That is exactly what she wanted. She didn’t want the sunlight to blind her. She wanted to be fashionable. She wanted to relax, cool by the pool, and her Kindle is exactly what she needed. Suddenly the Kindle is black bikini cool in a world of drab white t-shirts. It is a single word, a single device with a single purpose, and it is simultaneously cool, hot, functional and inexpensive. Does he need a pair of $150 sunglasses to read his iPad? No, he needs to ditch the iPad for a Kindle. The Kindle is EVERYTHING he needs. The Kindle is singular in purpose and effect. It is the paradise that he seeks, even on a perfect day when he is actually IN paradise.
The Kindle is exactly what Amazon needed. It isn’t perfect, multifunctional, or multitasking. It doesn’t read all the formats. It doesn’t try to make nice with the Nook or other devices. It is a single-purpose device in a world of multipurpose devices that gives people a way to escape all those other intrusions on their lives. The Kindle is the device that wraps an ADHD world into a single stimulus that can draw you in and encompass you the way that an afternoon with a good book could in a world that has gone by, long ago, far away. And for every Kindle Amazon sells to turn your life into a paradise, it will sell, based on current averages, 24 digital books.

Narasu Rebbapragada writes about people who pursue “any machine that does as many things as possible, that’s what I want”  but also talks how  the Kindle “retains the fundamental characteristics of the printed page, (and) encourages deep attention to story.”   Deep attention to a paradise where one device does one thing and doesn’t interrupt itself and you.

Books are to the Kindle as music was to the iPod, and anything more is unnecessary and detracts. You might say that with Amazon’s paradise device, Apple just got Kindled.

September 21, 2010 Posted by | Competitive Advantage, Environment, Life, Marketing, People, Technology | 1 Comment

Less Clicks: Good and Bad

Having less clicks in an advertising campaign can be both good and bad, but not for the most obvious reasons. It is important to remember the business objective behind the advertising so that when you create an advertising campaign, so you can use the campaign to reach those objectives. It is important to measure those objectives and it is important to try to improve your results.   There are times when fewer clicks can be good for meeting a business objective. So lets talk about clicks. 

Generally when you develop a Google ad campaign, your ads are shown on Google as a response to a search, and you pay when people click on your advertisement. (generally meaning that they are taken to the particular landing page on your site where you try to convert that click, and that specific interest in your products and services into an action – a sale, a registration, brand building or whatever)

The theory behind developing your advertisement is to develop the ad that converts the highest possible percentage of ad-views into ad-clicks. Here is an example: If you have 1000 people search for “Buick Regal” in Winston Salem, NC, and you sell Buick Regals in or near Winston Salem, NC,  and you develop an ad campaign, you want to get a high percentage of those people to click on your advertisement.  You might have a text based ad campaign that says something like this current campaign from Vestal Cars:

2010 Buick Regal
Get your Buick Regal Internet Price
Now & call For Special Incentives

If you click on Vestal’s advertisement, you come to an inventory page that shows their current inventory of Buick Regal automobiles.  That seems well formatted, well directed, and as effective as possible. If someone is searching for a Buick Regal to purchase, Vestal Cars is showing them exactly those cars, in that location. If a potential customer searches for that, and clicks that, Vestal has done everything right to (a) convert views to clicks, and (b) convert clicks to action.   In this case, the business objective is to sell cars.  To sell cars, they need customers to consider their cars, to look at their cars, to visit their car lots, and ultimately to find a car they want.   Vestal Cars wants to get people who are already searching on Google for a particular car to see their inventory of that car.  Their thought is likely that a person searching for a particular model of car is apt to be interested in that particular car. In the nebulous world of search-advertising, that is a pretty logical assumption, and I think their well-crafted advertisement is as likely to sell cars for them as anything.  I’m not sure why they’re returning 2010 Buick Regal information instead of 2011 Buick Regals, but apart from that very minor quibble, I really like their advertisement. For the most part, they have done it right.  In their case, a higher click through rate will likely support their business objective – and fewer clicks would be bad.

Google’s Adwords are a very effective way to advertise, and per-click charges make billions of dollars of revenue and profit for Google each quarter. Large companies spend millions of dollars on campaigns annually, and for particular events.  (AT&T spent more than $8m on the iPhone 4 release, and BP spent more than $3.5m for “oil spill” related searches recently.) Those companies, however, are really enormous.

There are cases in which smaller businesses, and entire categories of smaller businesses might not want someone to click their advertising. Think about that. For particular categories, an absolute minimal % click rate might be optimal. For these businesses advertising campaigns, fewer clicks would be wonderful. Why?  Why would you develop a campaign to target less clicks?  That campaign would be done where less clicks is a more effective way to support the business objective.  What would that look like? 

Here’s an example where the fewest clicks possible produces the best results – the most optimal business results.Twin City Towing Tow Truck  Although that is good, not for the obvious reason, it is also bad, and also not for the most obvious reason.

I recently put together a campaign for Twin City Towing.  Their business objective was to increase their volume of towing. To do that, they want Google advertising to increase calls to Twin City Towing for people who want  Towing services and the other services that they offer:   Here are the two advertisements that I put together as part of this campaign.

Twin City Towing, W-S, NC
24/7 flatbed towing – Cars, Trucks
Boats, Etc,Call 336-692-2615
$59 Quick Tow, Car Towing
(336) 692-2615 WS – NC
More Towing & Services Available 

This campaign was designed to target searches that were done in and around Winston Salem, NC for about a dozen terms like “Auto Towing”  “Local Towing” and “Tow Truck.”  All of this is pretty straightforward. I also targeted the advertisements for good placement.

Here is my most important point: A perfect response to this advertisement would be someone who saw the advertisement and called Twin City Towing to get towing services.(not a person who clicks through to Twin City Towing’s website.)

Because the advertising is charged per click, I want great placement on the advertising, and I also wanted the highest response to the advertisement for people, but I also want the lowest possible click conversion.  Here are possible response rates and their implications: If there is a click through rate of 2%, and 100 advertising impressions shown at a cost of $1.00 per click, my cost to reach 100 potential customers is $2.00. If I have a 20% click rate, my cost of reaching those same 100 potential customers is $20.00.  (or, for the same $20, I can reach 1000 customers.)

Think about this: If a business wants someone to CALL for a tow – why bother getting them to click to a website that tells them what to call? Why not simply include the phone number in the advertisement? Including the phone number in the advertising means that a stranded motorist who does a mobile phone search for tow truck doesn’t need to click through to a website, he needs to call a tow truck. Including the phone number saves the customer a step. It is simply more convenient for someone that needs to get towed, and that should increase business.  This is a case in which a lower click through rate simultaneously gives customers what they want while increasing business more cost-effectively. So what has the response been for this ad campaign?  From August 31 to September 6, 2010, here are the actual raw statistics:

Impressions: 959  –   Clicks: 4  – Click-rate:  0.42%  –  Cost per click: $1.29   –   Total cost $5.15

For most campaigns, that would be an extremely low click-through-rate.  If the campaign continues at this rate, a theoretical advertising budget of $100.00 could last for almost 20 weeks and reach almost 20,000 people.  If the business has added two tows this week, their cost for adding each tow will be approximately $2.57.  That is extremely cost-effective advertising, built on a counterintuitive philosophy of Less Clicks.

So – that seems good, but it is actually both good and bad.  Where is it bad?  Earlier I described search advertising as nebulous. The downside of advertising for a response that does not result in a click is that without other changes, it will be impossible for Twin City Towing to know, based on their call volume, and also impossible based on Google’s advertising campaign statistics if particular towing calls are actually coming from Google Advertising.   If there is an increase of call volume from towing customers, it might be cyclical, it might be due to a decrease in car reliability. It might come from Bing, or Yahoo, or perhaps the yellow pages. Because the response is NOT click-based, the perfect response to their Google advertising produces zero in specific and measurable statistics. 

So is this a good ad strategy?  Would it also work for cab companies? Would it work for other business segments? Are there better ways to quantify how this ad campaign meets the intended business objective?  

What do you think?

September 7, 2010 Posted by | Business, Competitive Advantage, Marketing, Search Engine Optimization, Technology | Leave a comment

Google v Facebook

There is an important equation for the competition between Google and Facebook. 
Google and Facebook are both enormous companies, both are Internet companies, and both are at their core, fueled by competitiveness and greed. Sure Google has that “Don’t be evil” philosophy that was their corporate value at one point. I think Google abandoned that when they joined Verizon in the destruction of net neutrality.

But that is not the issue here.

The issue is a string of Tombstones the people erect at Google’s feet, as if Facebook has vanquished it at something.  These are ironic and irrelevant tombstones, and thoroughly inaccurate and deceptive.   Adam Rifkin wrote a good one yesterday on “Why Google has no Game.”  His main point was that Google doesn’t really get social engagement. His underlying idea is that social engagement is a sort of be-all-end-all of internet value.

My initial reaction was that he was wrong. I read comments on his blog like this one: “if Facebook shut down today it would not impact on my life in any tangible way. However, if Google shut down, I’d be in deep trouble!” (attributed to Kullar) 

I agree with that, and would take it a few steps further.

For me – I would miss neither, but by a narrow margin, I would miss Google more, and here’s why. Google does things with the Internet, on the Internet, to the Internet and for the Internet. Facebook wants to be its own “internet.” That strategy didn’t work for AOL. Facebook is inherently more profitable than AOL because Facebook tries to be its own “internet” without the costs that AOL had in creating its own content. But that is a moot comparison because AOL isn’t AOL anymore. A better question to ask is whether Facebook more profitable than Google. Is it? No. absolutely not and it is not even close.

Why is Google more profitable? Facebook screams “We have 500 million users.” but users don’t translate directly to profitability. Google is more profiable because it is just inherently more valuable. Why? Because Google has enormous data on what people DO, around what people WANT, and around what ultimately inspires people to ACT – essentially Google knows who, what, where, when and to some extent, why people want, what they want, what they do about it, and what causes or inspires them to act – across the entire scope of the Internet. (not just Facebook’s 500 million members – but the ENTIRE internet) Facebook only has data around what people SAY on Facebook. I think Google’s data is inherently more valuable, more relevant, and I think it will only sap their energy if they chase Facebook. I don’t see any benefit for them.  Where is the profitability in chasing Facebook? Particularly when Facebook is a mastadon, big, plundering, and at some point, Facebook’s sub-glacial pace and lack of creativity and profitability will doom it to extinction.  Google has all that data, and as the icing on their profitability cake, they really know how to monetize their data.

I think it is all about money. Follow the money, the revenue and profits.  In that regard, Facebook is not really any competition for Google at all.  People have been surprised by estimates that Facebook’s 2010 revenue could be as high as $1.2b. This is so surprising because Facebook’s 2009 revenue was estimated at $800m.  ON that view, Facebook has increased income by 50% year to year. That seems great, but there are two critical issues with those numbers. One is that Facebook’s numbers are unaudited. It is a privately owned company, so there’s really no hard firm way to know if those revenue numbers are accurate.   The second and more important problem with those numbers is that they are only stating REVENUE… not Profits, not Income.

How does that compare to Google?  A quick glance at Google’s AUDITED and reported numbers shows that  Google’s Q2 revenue was 6.8b – their revenue for 2009 was $23.6b
Google’s net income was >$6.5b in 2009.  That is INCOME. Profit. That is actual money that they made.  Here’s another interesting statistic.

Google’s Q1 and Q2 revenue last year was about $5.5b each quarter.
Google’s Q1 and Q2 revenue THIS year was about 6.8b each quarter.

To put this in another perspective -> Google’s QUARTERLY INCREASE in revenue this year over last year is about $1.3b. To emphasize, that is the INCREASE PER QUARTER, and it exceeds Facebook’s annual revenue estimates.

Google is chugging along at a roughly 28% profit rate.  Again, since Facebook is privately owned, nobody really knows if Facebook has ANY profit, or what their profit rate might be.

So – what is the Google vs Facebook equation? $ = G > F.  It is that simple.

August 26, 2010 Posted by | Business, Competitive Advantage, Technology | Leave a comment

7 Skills to Unemployment-Proof

I read an interesting article at Computerworld this morning: “Ready for 2020? Advice for every career stage.” 

It discussed the differences between different ages of technology worker, and the different interests and abilities. I thought the article had an interesting conclusion: that different workers had different challenges to face. It went on and on about how recent graduates don’t have experience and certifications, and how cell phones are more important, etc. That is obvious. Another article I read recently in Think Big Be Big showed that mobile DATA traffic exceeded cell phone PHONE/VOICE transmission traffic every month in 2009.
Data and Voice

It is a wired world and  I recognize the differences in the newest texting generation, but I completely disagree with the conclusion of the article.

Since I started working with technology around 1982, there has been a constant drumbeat of change. Every piece of technology impacts business. Someone needs to communicate it. It changes constantly. The points where technology creates advantages moves instantly and frequently. Those change elements are constant.

The offshoot is that technology professionals have to keep a relevant skillset, develop skills for whatever is coming next, understand when, where, why and how “their” technology provides value, and understand how to communicate all of that.  That means that with a common set of skills, technology professionals can be unemployment proof. These skills are the ones that provide value no matter what the flavor of the month is.

Here are 7 skills that will help unemployment-proof a technology professional:
1) A love of learning and willingness to learn.
2) An understanding of the impact that technology and business have on each other.
3) A willing acceptance of change in all its forms.
4) An ability to communicate and translate business and technology.
5) A professional willingness to do what needs to be done, when it needs to be done.
6) An ability to demonstrate and showcase your skills.
7) An ability to learn from mistakes and use that learning to prevent new ones.

If you have these, your personal professional competitive advantage will ensure you are constantly employable and constantly employed.  I’m not saying that a short sighted company won’t downsize you. I’m just making the point that with this skillset, you will have other companies ready and eager to onboard you if that happens. You will provide value across the technology and business spectrum. That’s a formula for unemployment proofing.

Can you think of other things? Do you disagree?  Let me know

August 23, 2010 Posted by | Business, Competitive Advantage, People, Technology | Leave a comment

The Safe in My Basement

 There’s an old Meilink Safe in my basement. It is a fire-resistant, high-security safe. It hasn’t been opened since sometime before 1992. I have no idea what is in it. It could have anything in it…  I’vemy safe tilted it from side to side, and heard something inside it that could be coins. I suspect there may be something of value in it, but I really don’t know.  My curiousity is lit.

There are two ways to get in a safe, destructive and non-destructive. The destructive method would probably involve contacting a local locksmith or safe technician to come by and drill a hole in it, insert a scope, and manually align the combination, and pop the safe open.  If I were to choose to do that, the safe might be repairable, but would no longer be very fire resistant. It would lose some of its value as a safe. I like the safe and I like the idea of having a safe in the basement. I would like to use the safe, as a safe.  I think it would be a shame to open it using destructive methods.  I’m not going to do it this way.

SO – the non-destructive way to open a safe like this involves manipulating the safe’s combination until it opens. I have three options: I could pay a local locksmith or safe technician to do it. I could contact Meilink provide proof of ownership, the serial number, and for a fee they would give me the original factory combination which may still work.  The third way is – I could do it myself.  I’ve decided to do it myself. I really like the idea of a challenge and I want to learn something new.  It isn’t going to be easy, but in addition to having the safe, and having access, I will get to learn something.

I’ve watched the Mythbusters attempt to pick the combination lock on a Meilink safe.  Within their artificial time limit, they could not open it non-destructively. They resorted to drilling the safe.  Meilink liked that video so much, they linked to it from their website.   In that video, they were working on a time-schedule. I have more time to crack my safe.  I’ve read MANY books and papers on cracking safes – manipulating safes. I’ve read about lock construction – about how turning the dial turns the wheels, how the mechanisms are made, etc. My career, broadly speaking, is computers, and Matt Blaze’s “Safecracking for the computer scientist” could have been written for ME, personally.  Leonard Gallion’s “How Mechanical Safes Work” was useful too.    I’ve probably watched 50 videos on YouTube.  (As an unrelated side note, for someone visual like me, YouTube is a FANTASTIC way to learn almost anything.) And I registered on a lockpicking website. 

So  – what have I learned?  Beyond the secrecy of the locksmith profession – a sort of extra layer of security through obscurity, I have learned that persisting with the “learn how to crack a safe” approach, is going to be EXTREMELY challenging. Why is that?

Ultimately, safes are designed to be … safe.   They are designed to keep people out. With a 100-number dial, there could be either 3 or 4 numbers.  Theoretically – if there are 3 numbers, that combinationmeans there are 1 million possible combinations.  4 numbers means there are something on the order of 100 million combinations.  I say theoretically, because in reality, there will be less, because some numbers cannot be used, and there may be some play, slush, or inexactness requirements of the combination numbers.  (In locksmith terms,  a dialing tolerance.)  Dialing tolerance is my GOOD FRIEND because a larger tolerance means there are fewer possible combinations.  Assuming a “1”  number of dialing tolerence, and a combination of 25-50-25-50, it is entirely possible that 24-49-24-49, 25-50-25-50, 26-51-26-51, or any combination of (24-26)(49-51)(24-26)(49-51) would open the safe.  It may not seem like much, but that sort of slush could reduce 1 million combinations to somewhere between 64,000 and 300,763. Some of the numbers on the wheel cannot be used – there are places that can ONLY be used for setting a new combination, and other places that can ONLY be used for opening the lock. If those places account for 20% of the wheel’s number, that lowers the total combination possibilities to something between 51,200 – 242,406. That’s better than 1 million, but still would be exhaustive to manually dial. It gets better than that because some lock makers don’t want safe owners to set “bad” combinations. They don’t want you to set your combination, for instance, to 2-4-6-8, or 50-49-48-47… To quote from Matt Blaze’s paper,

“A typical example is Sargent and Greenleaf[Cos01], which recommends for its three-number locks the combination as a whole not consist of a monotonically increasing or decreasing series, that adjacent numbers differ by at least ten graduations,and that 25% of the dial be avoided for the final number (although the mechanism itself on S&G locks requires avoiding only 6% of the dial). Acceptable combinations under these recommendations comprise less than 50% of the usable combination keyspace.”

This leaves only 22,330 combinations. That’s quite an improvement from 1 million, but I am not going to map out 22 thousand combinations and try them all. It is more valuable, I think, to understand the premise, than to do a brute-force type of attack.

I’ve learned that almost all Meilink safes of this vintage were made with either a Yale or a Sargent & Greenleaf lock. It would be great to know what TYPE of lock mechanism it has, – because knowing the model or type of lock would help me narrow whether it was a 3 or 4 number combination. Unfortunately, the combination lock mechanism doesn’t seem to be a Yale, and does not seem to be S&G either.

I’ve manipulated the lock  many dozens of times, spinning it slowly, rapidly, listening, feeling, and noting clicks, sticks, clanks, and all sorts of actual and false points at which it seems there may be something happening. There are about 20 of those.  I’ve recorded those numbers in spreadsheets, and developed a mathematical way to extrapolate all possible combinations from the group of numbers that seems to make noise or feeling differences in the turning of the dial.

Assuming I’ve felt and/or heard the right points – I have a list of numbers.  My quest has begun.

What kind of quests do you plan this year? How are you approaching your personal quest? Are you taking a destructive or a non-destructive path? Are you paying for results, or working for results, or some combination?  Do you have a safe in your basement? Do you have a potential treasure waiting to be unlocked and discovered? How are you gaining knowledge?

January 13, 2010 Posted by | Life, Security | 3 Comments

Higher Bars and Changing Times Require Changing Metrics

I originally called this “Higher bars, Changing Times, and how BusinessWeek misses the point of the Big Shift.”  I still think that BusinessWeek misses the point but I think the requirement for changing metrics is more important.

John Hagel III, John Seely Brown and Lang Davison wrote a wonderful paper: The Big Shift: Why it Matters.  You can read it here.  I highly recommend it. It is insightful analysis and clear original thought. That is too rare.

Late last night I read a brief description of the Big Shift paper on page 10 of the November 23, 2009 BusinessWeek. (although I could not find the article on BW’s site)  I was struck by the conclusions drawn from the “Return on Assets” chart, which BusinessWeek pulled and perhaps distorted slightly from page 12 of the 24 page “bigshiftwhyitmatters.pdf”   BusinessWeek suggested that the report, and in particular the findings on Return on Assets (ROA)      “provides fodder for those, like BusinessWeek’s Michael Mandel, who argue that the woes of the US Economy extend(s) beyond the financial sector and began showing up well before the housing bubble”

 That small chart is such a minor part of the report. (I reproduced it here from and with credit to their paper) – The paper is delightfully brilliant, but I immediately thought that the pessimistic BusinessWeek conclusion that I quoted above was mistaken, perhaps even backwards. I think that changing

Chart from "The Big Shift"

Chart from "The Big Shift"

times, and inflation, when combined with the paper’s ROA chart, suggest that our economy is very strong – amazingly strong, and extraordinarily robust and resilient.

My three points:

 1)     The rate of inflation is not trivial given a chart that goes back to 1965, and economy of scale has fundamentally shifted due to technology, and the rest of our ever-changing world.

 Adjusting for the rate of inflation wouldn’t necessarily make the Return on Assets chart look more flat – but considering an actual company, its asset value and returns, AND its changing requirements might lead to a different conclusion. 

 The Bureau of Labor Statistics’ inflation calculator: shows that over the time of that$1000 in 1965 = $6835.02 in 2008 chart, $1000 of 1965 dollars equates to something like $6835.02 of 2008 dollars.  Excluding the recessionary pops in the tech bubble in 01-02 and the pop in the housing bubble in 08-09… ROA looks like it is gone from just under 5% to about 2%.  Regardless of the consumer price index or the perhaps more appropriate producer price index, a percentage is a percentage – but consider a fictitious company that is making 5% ROA in 1965 with $1,000,000,000 of assets. Thats a return of $50,000,000. Adjusting for inflation using the consumer price index suggests a  company with $6,835,020,000 in assets in 2008. That company would have a return of $341,751,000 with a 5% ROA – but only a return of $136,700,400.  Is that a decline from 5% ROA? Is it a decline from $50m to $136m? (when adjusted for inflation) 

 2)     Given the advances and changes in regulations and particularly in technology – which are CLEARLY covered in the Big Shift paper – the bar is simply set higher, everywhere. Any company has higher requirements to earn sales – to get returns – to exist.  Enormous Seismic changes in business have emerged and been adopted across the entire economy. These changes initially provide competitive advantages to companies, but many are now essentially baseline requirements for doing business. These changes don’t happen without extraordinary increases in total assets.

 Take any company from 1965 – say a bank. In 1965, a bank had costs for buildings, technology, people, marketing, and processes. All of those fixed costs are now an enormous order of magnitude larger than they would have been in 1965. That bank has to be equipped, staffed, and technologically able to meet customer’s expectations in 1965 and today, but those expectations and regulatory requirements and competitive forces are orders of magnitude both greater and more complex.  In 1965, for example, checks written on the account of one bank, cashed at another bank might ordinarily take 5- 10 days to clear.  Today the float is almost always less than 24 hours, and in some cases, can be only seconds. In 1965, there were no ATM’s, online banking, online bill payment, online monthly statements. There was no Sarbanes Oxley. There were very different legal and practical considerations for interstate and truly national banks. A bank with $6b in assets, today, has vastly different requirements – and it must staff to meet those requirements.  So – if you look at that bank today, and say that it only has a 2% return on assets, that suggests a return of $136,700,400, in a world in which they have legal requirements that may include, say, keeping 7 years of electronic statements that can be accessed online instantly by their customers – and customer expectations that require them to have a thousand ATM’s, an online banking platform that is secure, scalable, and approaches or exceeds 99.99% availability. 

 This comparison extends across industries – I picked banking because I know it more intimately. (disclaimer: Since leaving Deloitte in 1999 as the Corporate Internet Technology Manager I’ve worked on Internet, Intranet and online banking elements for 3 banks via merger and acquisition.) Pick any other industry or business concern – and change has been enormous. In medicine, for example, in 1965, there was no HIPAA, no mail order pharmacies, no HMO’s, no outsourcing, no offshoring, etc. Hollywood didn’t have digital piracy, digital movie transmission, Redbox, and a cluster of cable companies waiting to first run their movies. The music industry had payola but no MP3’s or internet. Every industry has global competitive forces, global competition for talent and complete shifts. Pick almost any industry, and there are simply higher bars and different bars that companies must clear to succeed. Those higher requirements have resulted in larger asset requirements, but meeting those requirements, to me doesn’t really equate to lower efficiency.  It is a maintenance of Return on Assets regardless of changes.

 That’s critically important.

 Rather than the gloomy BusinessWeek (Michael Mandel) type-suggestion that your chart reflects underlying woes that exist in our economy – I would argue that given the changes in the economy, in customer expectations, and in government regulations, it is amazing that companies manage to meet those expectations and requirements and yet have only declined from 5% ROA to 2%. From the other perspective – the 2% ROA is delivered while meeting significantly larger competitive, organizational, regulatory requirements in essentially every business that still exists.

 3)     Companies have invested in knowledge assets that cannot be tracked on balance sheets. This is nothing new, but knowledge assets are a larger percentage of total

Growing Knowledge Assets

Growing Knowledge Assets

assets – and perhaps that means that ultimately ROA percentages have dropped even more than suggested.  The Big Shift addresses this knowledge requirement (see chart) but more importantly than mentioning it is – how can we quantify it?

 Those steeper requirements – higher bars – greater requirements – are not a symptom of an economy in woes – they are merely a reflection of changing times.  Across the economy, companies meet those requirements, grow, expand, and produce, and continue to return on assets…amazingly. Distilling it to Return on Assets can be justified, but conclusions from that distillation can’t assume “other things being equal” because the current return is based on the higher bars that changing times require.

 To quote The Big Shift

“The answer is not to find ways to squeeze creative talent and customers in a zero sum battle to capture more of the existing pie, but rather, as we will see, to discover new ways of organizing and operating to more effectively create and capture new value.”

 Michael Mandel writes in  BusinessWeek (link here)  that he “told Hagel that he didn’t want to write about his “big shift” until (he) saw industry data, so (he) could understand which industries were driving the corporate performance decline”

 Does Mr. Mandel start with the premise that there is a corporate performance decline – wanting only evidence to support that premise? I can’t tell. If declining ROA equates to declining corporate performance, he is right. I think the world has changed too much since 1965

Perhaps the big shift is also a big shift in the way that we should evaluate corporate performance metrics, and in how we define success. Should we have more capable methods for tracking knowledge assets? That will be frightening for some executives because it might entail that a company that has significantly outsourced and offshored has significantly less assets (essentially that it has lost significant assets) when compared with a similar company that has outsourced less or not at all…

What metrics could be developed to track the value of knowledge assets? should those assets be monitored, and valued in ways similar to other business assets?

To me, it is obvious that there are higher bars and changing times.  The Big Shift that John Seely Brown, Lang Davison, and John Hagel III write about – is a shift that may require changing metrics – at the very least. This Big Shift brings Big Questions…  and I believe the answers will be essential because the shift reflects a clear paradigm shift. 

What do you think? Am I right? Am I missing the point?

November 18, 2009 Posted by | Business, Competitive Advantage, Continuous Improvement, People, Technology | Leave a comment