In the early 1970’s, the financial industry was transformed by a strange confluence of events. In 1973, The Chicago Board of Trade opened the first options trading floor and, almost as if on cue, a month later the Nobel prize winning Black Scholes options pricing model was published.
Soon after, Hewlett Packard introduced a pocket computer small enough for traders to use on the floor and that, combined with a glut of engineering talent made available by the closing of the Apollo space program, created a wave of revolutionary change that is still being felt even today.
Almost overnight, finance was transformed from a clubby world of cozy relationships to a mathematical one of complex securities, abstract formulas and computing power. Now, a generation later, the financial industry is about to be remade once again, except this time, it is not obscure financial securities that are being transformed, but very nature of money itself.
When Hershey launched Reese’s Pieces, they knew it would be an uphill battle. Its had to compete with M&M’s, the 800 lb. gorilla of the industry. They hoped co-branding the new product with its popular peanut butter cup would help, but M&M’s dominated the category.
It was slow going for the first few years, but then in 1982 opportunity knocked. The brand was offered a product placement in a new film about a boy who befriends an alien by luring him with candy. The producers were looking for $1 million to provide product placement.
Mars, the owner of M&M’s rejected the deal, but Hershey’s took a shot and it paid off. E.T.: The Extra Terrestrial passed Star Wars to become the highest grossing film ever. Reese’s Pieces became a viral hit and sales shot up 65% in the first two weeks after the movie hit the theaters. If you want to know how ideas spread, you can learn a lot from that little alien.
For a relatively young country, America has had a continuing love affair with tradition. From the way we revere the Constitution to watching football on Thanksgiving Day, we often look to posterity for guidance.
When other countries talk about the past, it’s usually about kings and battles, but in the US we speak of founding principles. Yet perhaps the most important legacy comes from a man named Vannevar Bush (no relation to the political Bushes), who probably did more than anyone else to create the America we know today.
When Bush was born in 1890, America was a backwater. Students in the sciences would usually have to go to Europe to earn a doctorate. By the time he died, in 1974, the US lead the world in science, commerce and military affair. Bush played a central role in making that happen. Lately though, his legacy has been subject to not only neglect, but outright attack.
When Chip Kelly first entered the NFL, he had his work cut out for him. Sure, he’d been a phenomenally successful college coach, but many top NCAA coaches don’t make it at the professional level. What’s more, he was taking over a team that had gone 4-12 the previous year.
The early results weren’t promising. Unlike many new coaches, Kelly made few personnel changes and through the first half of the season the Eagles looked very much like the team they were the year before. Kelly, it seemed would become just one more NFL flameout.
Yet things didn’t turn out that way. By the end of the season, Kelly’s Eagles had won their conference championship and boasted the second best offense in the league. This year, they are off to an impressive 6-2 start and, while the jury is still out on how successful Kelly will be in the NFL, his management style has already had an impact. Here’s how he does it:
We live in an age of movements: Political movements like the Arab Spring and Euromaidan, technology movements like open source and social movements like marriage equality. They seem to self-organize and spread virally, as if they were LOLCats or some other digital meme.
So why can’t we get our organizations to act the same way? You would think that with command and incentive structures in place, it would be easier for leaders to set a direction and get things moving, but anyone who’s run an enterprise knows that’s patently untrue.
And that’s a big problem. Managers need to be able to get their organization behind ideas in order to adapt to changing markets. As we have seen with Blockbuster and Kodak, even dominant firms now go bankrupt in record time and traditional change management techniques are often too slow. To lead today, managers need to create movements.
Peter Thiel, the “don” of the Paypal Mafia has a new book out called Zero to One, based on his Stanford Startup course. It is an excellent book, both insightful and practical. Anyone who’s interested in creating a business should read it.
I recently wrote a post about the book in which I noted that Thiel’s philosophy is very much derived from the work of Karl Marx. Many were surprised, some were angry and others confused. How could one of our generation’s most successful entrepreneurs be a Marxist?
One reason is that Thiel is much more complex than he’s often given credit for. Another is that Marx’s ideas are far more pervasive than most people realize. Yet what’s really important—and why I felt the need to point out Thiel’s philosophical lineage—is that Marx’s idea failed miserably, so if we’re going to reincarnate Marx, we should be clear about it.
Power has always been easier to recognize than to define. To many, it is simply the ability to get what you want, either through coercion or persuasion. Although that may be accurate, it isn’t very helpful, so strategists have long sought to come up with more operative definitions.
However you define it, power is important because it enables you to get things done. Whether you are a politician or an executive, you must seek power to achieve objectives. Yet power never stays constant, but has always been highly dependent on context and, in today’s world of rapidly shifting contexts, emerging sources of power are often the most potent.
Great marketers have great guts. Leo Burnett didn’t need a legion of focus groups to come up with the Marlboro Man. Steve Jobs, arguably the greatest marketing mind ever, famously eschewed market research because he didn’t think customers knew what they wanted until he showed it to them.
Yet big data and technology are clearly revolutionizing marketing. Gartner predicts that CMO’s will soon be spending more on IT than CIO’s. VentureBeat recently reported that marketing technology companies have attracted a hefty $50 billion in investment.
Still, most marketers would prefer to be more like Leo Burnett and Steve Jobs. They take pride in their “marketing guts” and want to follow their instincts, which makes it hard for them to succeed in the era of big data. Too often this is presented as a false choice. The future of marketing is not technology or intuition, but successfully integrating both.
The future, in retrospect, always seems inevitable. When Steve Jobs unveiled a sleek new device, it felt like it was just meant to be. When Elon Musk gives an interview, it almost seems as if he had dreamt Tesla up in his childhood bedroom and only gotten around to it more recently. Yet that’s not how it happens.
In Six Degrees, network scientist Duncan Watts stresses that discovery is done in a messy and ambiguous world, by “real people who suffer the same kind of limitations and confusions as anybody else.” It is, above all, more a matter of persistence than epiphany.
And that’s something that we often forget. Brilliance doesn’t arrive on a rainbow, but can come in the guise of an idiot, muttering incoherently about something nonsensical. Yet somewhere along the line, someone noticed that there was wheat amongst the chaff and helped midwife the idea. It is those stories, not fairy tales, that should guide us.
Like many millennials today, Yale classmates Henry Luce and Briton Hadden left their jobs to create a startup. They found newspapers dry, longwinded and boring and thought they could do better by presenting stories in a faster paced, more personality centered format.
In 1923 they launched Time magazine and it became a runaway success. Hadden died of a freak infection in 1928, but Luce went on to create Fortune and Life in the 30’s and eventually build the greatest publishing empire the world has ever seen.
Many believe that publishing is dead, but the truth is that there is more opportunity now than ever before. It took Luce decades to build his empire, but Bleacher Report and Huffington Post took just a few short years to create hundreds of millions of dollars in. The real problems old-line publishers face today are not ones of talent or even technology, but culture.
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