Thursday, June 29, 2006

Good Marketing + Bad Quality =Lousy Combination

Last week I described my frustration with American cars that I’ve owned, especially when compared to the Japanese cars that have also been part of our family’s auto stable over the past decade. Basically, I noted that nothing ever went wrong with the latter, and something frequently went wrong with the former.

I thought about this as I went with a buddy to the NASCAR Save Mart 350 Race last week. All the big boys were there: Tony Stewart, Earnhardt Jr., Greg Biffle, Jimmie Johnson, the Busch brothers, the ultimate winner Jeff Gordon, and the like. Here’s what I thought:

NASCAR is the fastest growing sport in the U.S. Its fans are legendary in their fanatic loyalty. The data show that the brands whose logos are plastered on the cars--products like Post-It, Viagra, Cheerios, and Tide, and organizations like Home Depot, FedEx, Harrah’s, and Jack Daniel’s—gain substantial exposure, customer interest and uptick in sales from their investment. NASCAR fans clearly respond to the marketing.

With one exception: The ripple impact of NASCAR doesn’t extend to the very cars that are doing the racing. Every single car in the race is a Dodge, Chevy, or Ford. Yet all three companies are in serious financial trouble and steadily losing market share to foreign competitors. (Technically, Dodge is a “foreign” competitor since it’s now part of Daimler, but it’s still basically an American-produced product).

How weird! Think about it. NASCAR exposure seems to effectively generate a great Return On Investment for every product except the cars themselves. It used to be simple in Detroit: “Win on Sunday, sell on Monday.” That’s clearly not the case any more.

Moral of story: Good marketing will definitely help a high-quality product and a high-performing organization, the kinds whose logos cover the racing cars. But even the best marketing won’t prop up a product or company that doesn’t have those qualities, at least not on any sustained basis. Putting lipstick on the pig doesn’t change its fundamental attributes. If the product or organization isn’t state of the art, you’re ultimately throwing away marketing dollars.

Oh, one more thing. I understand that next year Toyota will sponsor a car in the NASCAR races, thus ending the Americans' marketing monopoly. If I was Detroit, I’d be worried.

Tuesday, June 20, 2006

Grrrrr, Another Little Quality Problem

To those of you who regularly read my weekly blog, I apologize for not posting one last week. My family and I took a micro-vacation. Everything went well, with one exception. My car developed a front-headlight problem.

I’ll tell you why that ticked me off so much. We own three cars: two Toyotas and an American auto. We bought each one of them brand new in 2001 and 2002. Here’s my quiz question to you: One of those cars has a mechanical problem every six to eight weeks. Guess which one it is.

The problems are never enormous breakdowns. They’re the small, niggling ones, but nevertheless significant and irritating. Like a driver’s seatbelt that is stuck, a right-direction blinker that’s on the fritz, or a passenger airbag that (according to the ever-friendly dashboard computer) needs to be checked. And let’s not forget the inevitable once-every-four month recall notice for some arcane something-or-other in the underbelly.

The people at the dealership are very nice, but just working the logistics to get the vehicle to them and then pick it up is a royal pain in the neck. My wife keeps telling me to dump my car and replace it with a Toyota. Maybe she’s right. Over the past decade we’ve owned a string of Toyotas and two American cars. Never a problem with the former, constant little ones with the latter.

I’m fed up, not only because of the hassles, but because I’m a rooter for Detroit to get its act together. Yes, I know that Ford and GM are saddled with enormous legacy costs that put them at a severe financial disadvantage when compared to Japanese vehicles. But none of that matters if they can’t make cars that work.

I’ll tell you why this discussion is so important. In every business nowadays, zero defects is simply the price of admission. Customers assume that the products they buy will run right until they’re finally ready to be discarded or replaced. Period. End of story.

But there’s more. Zero defects only allows the vendor to play in the game. To survive. But not to thrive. The bar has been raised. Competitive advantage in the car industry is about zero defects for starters—and also about design, fits, finishes, new technologies (like hybrid), customization, after-sale service, and such.

But forget the design and service and all. How can Detroit hope to compete (other than constantly lowering prices and thus killing any hope for sustainable margins and profitable growth) if I, a customer, can’t even count on the car to run error-free for more than six weeks at a time? If you’ve got an answer to that question, please let me know. Maybe I’ll figure it out as I dutifully head to the dealership tomorrow.

Thursday, June 08, 2006

Turn Your Organization Into a Virtual Community

It was a beautiful afternoon in the San Francisco Bay Area a couple weeks ago and the St. Louis Cardinals were in town for a series with the Giants. On the spur of the moment, I decided to go to the game that evening with my son—but I wanted to find two excellent seats near third base at a fair (that is, close to face value) price right away.

Not long ago, my desire would have been delusional. But thanks to craigslist (www.craigslist.org), I was easily able to locate a season ticket holder who wanted to unload two third base seats at face value at the last moment. Best of all, I chose someone who lived ten miles from me. We agreed to meet at a parking lot off the freeway. I gave this complete stranger $70 in cash, he gave me two prized tickets, and my son and I headed to AT&T Park to see Albert Pujols and Barry Bonds.

My point is not to bore you with baseball stories, but to suggest that an extraordinary new phenomenon is rapidly emerging. Sites like craigslist, MySpace, Flickr, YouTube, and TagWorld are innovative avenues that allow people to find others, to connect with others, to learn about others, to learn from others, to enjoy each other, and to share data and photos and dreams and experiences with others. MySpace alone boasts an incredible 72 million members around the world who selectively interact with each other in a transparent, boundariless and real-time environment .

Why is this important? Because nowadays, companies that want to succeed will have to create that sort of environment for their own employees. And most of them don’t. While the technology exists that lets me quickly locate someone for a mutually beneficial exchange of baseball tickets, employees in most organizations regularly bump into rigid boundaries and opaque cultures that keep them separate from information and from each other. How easily and quickly can a given employee access whatever unfiltered, unedited financial or customer data that he needs? How easily and quickly can she locate the exact person within the organization who has the exact “match” of expertise and interests that she needs. And do these employees find it exciting, and fun, to do this?

Think about it. All this stuff happens every day at MySpace and craigslist and eBay. Now consider your own organization. How easy and fun is it for Employee A to post data, opinions, feedback, analysis, updates, questions, interests, passions and expertise on an internal corporate website—and how easy and fun is it for Employee B who might want that “stuff” to easily sift through the virtual, cataloged organizational community and find, then connect, with Employee A, regardless of Employee A’s rank, function, or location?

Of course, you don't want to create a work environment where employees are mindlessly surfing the web all day just "for fun". But consider the possibilities of an attractive, well-lubed, transparent, fully functional, utilitarian web-based platform that allows people to find whoever and whatever they need to get things done in a newer, better way. Let me repharase that: If you want to predict tomorrow’s winners, bet on those organizations that can provide both the technology and the culture to generate a friction-free virtual community—a community that allows people to quickly pool talent and knowledge for innovative problem-solving and commercial breakthroughs. And one more thing: imagine extending that community to customers. Talk about turbo-charging R&D, customer loyalty, and brand equity!

The trend for virtual community is already happening, but is it happening in your organization?

Thursday, June 01, 2006

Final (Thank Goodness) Thoughts on Lay and Skilling

So Ken Lay and Jeff Skilling are now officially guilty of the lies and deceptions that cost investors and employees billions of dollars—and which damaged the integrity of the capital markets that are so essential to the health of our free market economy. It’s encouraging that the legal system does work even when the defendants spent $60 million on high priced attorneys whose job was to dress up scoundrels in a way as to make them indistinguishable from the folks who lost their entire retirement portfolios.

Here’s what always rankled me the most about their defense. When Enron was flying high in the late ‘90’s, Lay and Skilling were more than willing to take full responsibility and ownership for the company’s glowing status. (And they were certainly more than willing to enjoy the public perks, privileges and compensation of their positions). Can you imagine either Lay or Skilling stating in, say, 1999: “Gosh, I can’t explain our success. I don’t really know what’s going on. I’m sure it’s all due to people throughout the company doing things that I have nothing to do with, and often don’t even understand. In fact, I don’t have that much to do with what’s going on.”

But after the company’s crash and burn, that’s exactly what they said. How disingenuous. The reality is that leaders set the tone, initiate the primary courses of action, bless the initiatives, articulate the standards, and both promote and live the values that ultimately all define the persona and direction of the company. That’s precisely what Lay and Skilling did for years. And then they denied it when their company imploded.

My own research shows that high-integrity leaders step back and let team members share the glory and rewards. In fact, they lean towards attributing all successes to the people who report to them. On the other hand, high-integrity leaders don’t blame others when things go sour. They take public and personal ownership for setbacks and failures. They truly lead by the old adage that “the buck stops here”.

Lay and Skilling did the opposite. They played the roles of geniuses and Supermen during the good times, and the roles of finger-pointers and idiots (“I knew nothing”) during the bad times. I know that’s not a criminal offense, but it’s the leadership offense that bothered me the most.

Remember Jerry, George, Elaine and Kramer in the last episode of Seinfeld? They learned nothing from their trial, and reverted back to their usual “M.O.”s while sitting in their jail cell. I think that’s precisely what will happen with Lay and Skilling. In this case, it’s too bad life is not a sit-com.