I think we can expect significant shifts in people's television consumption patterns. I think we will see totally different time usage patterns, from snacking on little 5-minute clips here and there to all-out binging, such as seeing an entire season of shows in one or two sittings.

Consumers are going to be increasingly impatient with having schedules, formats and content dictated to them, and will be more interested in personally tailored experiences.

Such changes certainly will shift the funding model for television, in which network executives seem to think you are some kind of criminal if you skip their ads. One outcome is that advertising itself is going to have become more like entertainment than the ads we in the States are used to (which by and large are boring and an interruption). I think we will see higher prices to place finely tailored ads.

I think one trend that will surprise us is that many people will volunteer to receive ads – but only for products in which they are deeply interested. For instance, if one has a passion about a hobby or interest, you might volunteer to be informed of new products and services that are relevant. In this way, ads will become one more way to bond a community together.

What will get zapped are stupid ads for things we are not in the market for at all, and that is as it should be.

Advertisers and the media in general are going to have to create communities around their outputs. I don’t think that threatens mass market phenomena, by the way. I mean, if you add up all the *who wants to be a millionaire* watchers worldwide, it would be a significant number. Which reminds me also that traditional TV will probably have to retreat for primary to events that are time-specific, such as sporting events or contests. Everything else, I think will be consumed by people on an on-demand basis.

Here's the citation:
Collis D, Young D, Goold M. 2007. The size, structure and performance of corporate headquarters. Strategic Management Journal 28: 383-405

In an effort to further the discussion comparing competitive advantage vs. separation, I would like to introduce a very powerful tool developed by McGrath and MacMillan that is summarized in perhaps the greatest business book ever written – The Entrepreneurial Mindset. The tool is the Attribute Map and it shows the dynamic nature of how your target customers react to your offering’s attributes:

The labels going down the table POSITIVE, NEGATIVE, OR NEUTRAL describe the type of reaction from the customers. Obviously, the more positive and less negative the better. The labels on the top of the table BASIC, DISCRIMINATORS, and/or ENERGIZERS define the intensity of the reaction.

For the BASIC category:
- A POSITIVE defines table stakes – you need these attributes to play and you are conspicuous by their absence (Non Negotiable)
- A NEGATIVE defines attributes that the customer is willing to tolerate (Tolerable) if there is no other alternative.
- A NEUTRAL is one that has no or little impact (So What) on the customer but does add cost

The DISCRIMINATORS
- Differentiate between competitors to influence the purchase decision. The POSITIVE (Differentiator) attribute is in the positive direction and the NEGATIVE (Dissatisfier) is in the negative direction.
- The NEUTRAL is an influencer to the purchase decision but is not directly related to the purchase

The ENERGIZER:
- Attributes are so powerful that they overwhelm the purchase decision either positively –the Exciter – or negatively – the Enrager

An example, I usually illustrate the power of the Attribute Map using the history of the Big 3 auto dealers in the 70”s and 80”s when the Japanese initiated their onslaught of the U.S. market. At this time the U.S. consumer TOLERATED the poor quality of their automobiles from Detroit because there was no alternative. The Japanese came in pushing their superior quality and created a revolution since their new offering EXCITED the U.S. consumer toward their cars and shifted the attitude towards the Big 3 from TOLERABLE to a negative DISCRIMINATOR or even to ENRAGERS. Your ideal move against competition is to EXCITE your customers with a new offering while at the same time shifting their attitude towards the competitors to the negative. Interestingly, car quality is now considered a BASIC attribute. This dynamic shift usually occurs over time – this dynamic is what drives the Fair Value Line discussed in the last positing to the right in the Value Map.

Now lets discuss competitive advantaged vs. competitive separation in the context of the Attribute Map. If you have a strong competitive advantage, i.e., you are superior to competition, in an attribute that is considered a DISCRIMINATOR or an ENERGIZER by your customers, then you will achieve competitive separation. If your advantage is in an attribute that is BASIC or even worse, a NEUTRAL, you will not achieve competitive separation!! The goal should be competitive separation, not just advantage. Never assess your competitive position without real insight into what your customer really wants/needs.

Another issue is when is “just good enough” ok versus “best in class” or “unique in class”; the latter two usually costs vs. the first. Again, realizing that competitive separation is the goal, you should focus your added efforts to achieve “best or unique in class” for DISCRIMINATOR or ENERGIZER attributes, not BASIC or NEUTRAL categories.

Both web 2.0 and the dot.com surge are/were driven by a common human bias: this is to over-state the implications of major societal/business/regulatory changes in the short term and to under-state them in the longer term. The dot.com era companies were, in many cases, prescient. The problem was that they did not quite factor in how long the changes would require to generate cash flows in the near term.

If you look at the statistics, a lot of the predictions made for the dot.com era have by now come true. The Web is destabilizing industries ranging from media to retail to telephony. More and more people all over the world are buying via e-commerce. I believe something like 30% of retail transactions have some e-commerce aspect to them (whether it is searching or getting information as well as actually ordering on line). Efficient markets for everything from the stuff in your closet (eBay) to obscure sound tracks (ITunes and other sites) and even your mate (think match.com) have been facilitated by the Web. It just took 13 years, not 3, for the changes anticipated to become a reality.

A lot of the flurry over web 2.0 is simply the realization of the power of the Internet and the maturing of some business models (eg, advertising based models) that were NOT foreseen during the dot.com era. Indeed, remember when everyone was so hot on eyeballs but nobody knew why? My poster child on this one is the $780 million Excite@home paid for Blue Mountain Arts, a free greeting card site that had 54 million unique subscribers, but no revenue model. Well, we’ve now found the revenue model and it is advertising. Excite had to sell the site for a humiliating $25 million a short time later to American Greetings. Today, it’s Provide Commerce selling roses to go with the cards that is racking it in, affiliated with the Blue Mountain site.

So what you are seeing now is a resurgence of investment and interest because the Internet-based revenue model (like the TV and radio models that came before it) promise to redirect the billions companies spend on advertising to where users are actually spending time.

Will it have some bubble like features? Absolutely. This unfortunately seems to be how we learn as a society about new business models in a major way. Bubbles have accompanied just about every major technological transition in our economy. Are there some differences between the dot.com era and now? Yes.

Some differences:

There is more emphasis today on having a revenue model and something to actually sell

More and more young companies are building up to be bought out, rather than to go IPO. This means that they are targeting a useful innovation for another company (like Google) rather than trying to lure investors into a big-bang IPO.

There is a bit more maturity about the whole Web phenomenon and investors are looking more for the fundamentals.

Many smaller businesses can now be started for a song, so the downside is lower if they fail.

Are there some dangerous similarities we should be alert to? You betcha

Waaaaay too much money sloshing around looking for a home. When $50 billion companies are in play by hedge funds and private equity investment firms, you know that some big investors, desperate for higher returns, are going to start getting a little careless about their investment standards just to get/keep the deals flowing. That behavior feeds a bubble in almost all cases.

This has the effect, counter-intuitively, on making normal M&A too expensive for normal companies. What that does is begin to put a premium on organic innovation (growth from within through corporate venturing) as well as smaller acquisitions to create new capabilities for established companies.

While all of this works as long as the party continues, once we start to see some of those debt-ridden large companies stall in the market or there is more regulation of these investment vehicles or interest rates come up, or risk appetites sharply drop, it’s like a game of musical chairs – the last investor standing will be dealing with a sharp loss of value.

This is such a wonderful development to hear about. And I'd like to draw attention here to one of our colleagues, Dr. Takeru Ohe, who has been trying to get Japanese business to think more entrepreneurially for several decades now. One of his latest ventures is to run a summer camp that teaches entrepreneurial skills to youngsters, hoping to take that next generation even further.

To put in a plug for Columbia - we are running a course on creating strategy in July (24-26) that I direct (which means I'm there the whole time) which hopes to draw on some of the entrepreneurial energy now infusing the economy. See the web site http://www0.gsb.columbia.edu/execed/open/programs/japan_strategy.cfm

With respect to innovation, one study suggests that you need 3,000 ideas to get one commercial launch - see this article: Stevens, G.A., J. Burley. 1997. 3000 raw ideas - 11 commercial success! Research Technology Management 40(3) 16-27.

In a recent study my colleague Thomas Keil and I have just finished, we found that very different management processes are needed to make sure that outcomes other than launch result in good ideas getting circulated in a company.

The difficulty is that as companies become successful, their performance increases to the extent that they stamp out those people, practices and methodologies that don’t fit the success model. In a word – they get very fixed and rigid on perceived right way to do things, which makes it extremely difficult to embrace change when it happens. In Kodak’s case, this was coupled with an entitlement culture which meant that people never thought there was any risk of things going wrong in the core business.

How to spread a new culture throughout the company? Well (perhaps unfortunately) a near-death experience has a way of focusing the mind and overcoming resistance to change. So you need to create or capitalize on a compelling case for making the change.

Then, you need to have visible, early successes to share the news and convince doubters that the future is in good hands. It is also absolutely vital that the senior team model the behavior they want in the culture. Rewards, recognition, promotion and other goodies for risk-takers is good. Strong positive symbolic messages help too.

Finally, I think it is important to realize that you don’t change a culture through culture change programs. You change a culture through the way that the organization competes to win. Doing work differently eventually leads to a different culture.

Another issue that I don't think we have grappled with very well is the fact that as the economic basis of our businesses change, the skills we need to deploy change as well -- and yet we make few provisions for upgrading skills throughout the life of an employee, consistently and on a planned basis.

What is fascinating is how companies get themselves into these situations over and over again. Almost the exact same scenario played out years ago with British Satellite Broadcasting and Rupert Murdoch's Sky TV satellite network. The two went head-to-head with incompatible systems, losing millions of pounds each month, until a merger deal was finally forged, combining the two into B Sky B.

The assumptions underlying such 'war of attrition' situations are similar. One party believes that if they can just outlast the other, they will have a monopoly hold on a major market, which will make it all worthwhile in the end. Or, conversely, they believe that eventually their superior product, business model, customer service, whatever, will swing enough customers their way that they will prevail. Not usually true.

In class, we play a game in which we auction off a dollar - the winner gets the dollar, while the loser has to pay the winner. With competitive pressure behind them, I've been able to sell that dollar off for $2, $3 or even more. Savvy managers, though, stop before they get sucked into that situation.

For more on Phil and the book, check out his website -

http://www.the-halo-effect.com

$38 Billion - Amount Americans spent on pet food and care in 2006, nearly double that spent 10 years ago

$2,000 - cost of a doggie nose job in Los Angeles

$395 - cost of a Burberry dog bed

$50 - price of an oatmeal body wrap for big dogs at LA Dogworks, a doggie spa

47% of dog owners say they buy holiday or birthday gifts for their pets.

About three years ago, I was having a conversation with two CEO's of major computer manufacturers who observed that Dell's strategy was simply piggybacking off their R&D and other investments in innovation in the computer industry. They feared then that Dell would stunt the growth of the entire PC category be rendering innovation un-economic. Looks as though the model has actually come back to hurt Dell - its competitors have innovated not only in their products but in their production prowess. Moreover, turns out that many customers actually like to interact with a real salesperson when purchasing complex or new equipment. So advantage to HP, Best Buy, and other retails, disadvantage to folks like Dell.

Instead, think of the ventures organization itself as a group in transition. Its job is to incubate ideas, develop people and capabilities and explore new terrain. At Nokia, for instance, the NVO (for Nokia ventures organization) was established as something of a service business, explicitly intended to pursue innovations with either market objectives or technical objectives beyond the remit of its more established businesses. This has the effect of creating natural interdependence between core businesses and ventures, because ventures do not have access to the resources they would need for growth without working with the core businesses.