Every manager and entrepreneur wants to grow their business. Get bigger and more powerful, the thinking goes, and you’ll have it made. The added heft will give you the upper hand in negotiations with suppliers and the doors of customers will swing wide open.
That used to be true to a certain extent, but not so much anymore. Digital technology has markedly evened out the playing field. Startups become billion dollar companies overnight while venerable brands like Kodak and Blockbuster hit the skids.
This turn of events presents considerable challenges for managers. While there are still some advantages to scale, the disadvantages often outweigh them. Big firms lots of customers, a large workforce and stodgy institutional investors to keep happy, which often results in strategic rigidity. To compete in the new economy, we need a new playbook.
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The media business, in many ways, is much like the restaurant business. Everyone is a consumer and therefore everyone is a potential expert. From the outside looking in, it often looks like a lot of excitement and fun. Nobody ever sees the drudgery behind the scenes.
That’s why, when people become wealthy, media and restaurants are attractive vanity projects. After all, who wouldn’t like to hang out with celebrities and go to fancy awards dinners? Edgar Bronfman Jr. squandered much of his family fortune this way.
So when Jeff Bezos bought The Washington Post for $250 million (which, in relative terms, is about the same as a prosperous dentist buying into a restaurant), many were skeptical. However, now that Bezos has shared his first public thoughts on his plans for the paper, it appears that he will not only be a boon for WaPo, but for media too.
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Michael Jordan is considered to be the best basketball player ever. With 6 NBA titles, 5 MVP awards and 15 All-Star game appearances, it’s hard to argue that anybody has ever dominated a sport like he did.
Yet he wasn’t always so great. He didn’t make his high school varsity team as a sophomore and wasn’t the first player picked in the NBA draft (he was third). He showed promise as a young player, but then again so do a lot of people who never amount to much.
We often have to make decisions about things like a young Michael Jordan. Many new innovations, opportunities and employees show great potential, but we can only pick a few. So we need to use data in order to make predictions about the future. How we do that can mean the difference between success and failure, so we better get it right.
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I don’t consider myself an early adopter of technology. I still prefer books on paper and I don’t feel the need to try out every device or app that comes on the market. At best, I’m a reasonably fast follower.
Nevertheless, when Google came out with Chromecast, I ordered it within a few days (which still made me too late to get one before the first batch sold out). It came last week and so I’ve had some time to put it through its paces.
So far, I like it a lot. It was easy to set up and I like the way I can control my TV from my tablet. With my Apple TV, I would always search for what I wanted on another device before I would start fiddling with the clunky remote. Yet what really excites me is not what the Chromecast is, but what it’s going to be and how that will change my life.
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In 1960, Harvard professor Theodore Levitt published a landmark paper in Harvard Business Review that urged executives to ask, “What business are you really in?” Even today, a half century later, his challenge still resonates.
By pointing out that no industry grows forever, he gave rise to many concepts we still recognize, such as the customer centered business, Porter’s 5 Forces and value chains. Many executives who seek to be modern are often merely repeating Levitt’s insights.
Nevertheless, a lot can happen in 50 years and just as we recognize many of Levitt’s concepts as still valid, others have been thoroughly debunked, perhaps none more so than the central question he presented. In today’s semantic economy, it serves little purpose to ask what business we’re in. Instead, we must ask why we’re in business in the first place.
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In 2008, Jeff Zucker complained that media companies were “trading analogue dollars for digital pennies.” As chastened media executives repeated the quote over time, it eventually became amended to “trading analogue dollar for digital dimes for mobile pennies”.
It seems quaint now. Clearly, if the eye-popping valuations of companies like Google and Facebook are any indication, there is a ton of money to be made in digital media and, as The Economist reports, traditional media companies are starting catch on.
While many old media giants, like The New York Times, continue to cling to outdated business models and struggle, the fact is that there never has been a better time for the media business. There are more opportunities to make money and to connect with the audience now than ever before. Publishers should stop whining and get on with it.
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One of the great concerns of social scientists in the 21st century has been the digital divide, a stratification of society into those who have new economy skills and those who do not.
The mobile internet and cheap handsets have helped make enormous progress toward closing the digital divide, but have opened up a new rift, this time between firms who are able to use data to create value and those who are getting left behind.
To help bridge the gap, UC Berkeley’s School of Information has begun a Data Science Masters Program that will train a new breed of professionals to manage big data. As the Web of Things becomes ever more pervasive, big data can no longer be considered something only tech companies do, but must be embraced by executives of all stripes.
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Many people are Apple fans. Many others do not like Microsoft. That’s completely understandable. Apple has dominated the last decade by making products consumers fall in love with.
Microsoft, on the other hand, often seems like a lumbering giant. They have, in the past, been heavy handed, built some lousy, bug ridden products and got themselves embroiled in an ugly antitrust suit. On top of that, Steve Ballmer can really say some stupid things.
However, what is not understandable and what is, in fact, irresponsible, is that many business writers and tech pundits seem to be positively gleeful about trashing Microsoft (and, alternatively, praising Apple) without even a modest effort to ascertain the facts. In doing so, they are propagating misconceptions rather than informing the public.
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Everywhere you go, people are talking about innovation. There are conferences and gurus, workshops and webinars, apostles and practitioners.
But what is it, really? It’s hard to go about the practice of innovation when there is so much confusion about what innovation actually is. Some have proposed frameworks (i.e. discovery/invention/innovation), but to be honest, I don’t find them particularly helpful.
It seems obvious to me that a common sense definition of innovation is that it is a process of finding novel solutions to important problems. Unfortunately, in order to make innovation palatable to organizations, many have tried to narrow the definition to make it more purpose driven. That’s getting it backwards, after all it is we that need to adapt.
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Many people, while they deplore Edward Snowden’s acts of criminal espionage, welcome the debate he has inspired about privacy. Unfortunately, that’s a red herring.
While there is a very small chance that your government is snooping on you in any significant way, there is nearly a 100% chance that someone else is, with almost non-existent oversight or restriction.
My point isn’t that corporations are evil and governments are good. The companies that I have worked with have uniformly been concerned with and acted responsibly regarding the privacy of consumers and the integrity of the data that they collect. Nevertheless, we’re being watched and no one is watching the watchers. Here’s what you need to know.
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