There's No Such Thing as a Free Lunch...right?

There were three things I took away from Prof. Holderness's MBA Core Econ class last year:

1) I'm not mean to be an economist

2) If it happens, there's a reason for it

3) There's no such thing as a free lunch

I'll focus on the last two, but because of #1, take what I say with a grain of salt. :) In the article "Free: Why $0.00 is the New Future" the author explains how the internet has to an extent defied the laws of economics by making content "free". From data storage (Yahoo) to flights (Ryan Air), many companies are "giving away" their goods to consumers, generating revenue through other means. 

In this context - Prof. H's rule of "if it happens, there's a reason for it" certainly applies - the reason why companies do this, as the article points out, is that they are able to recoup their cost via another way. In fact, in some cases, they are able to make more than if they had actually charged for it from the beginning. The Daily News's association with Prince is priceless - ok, not really priceless, but you know what I mean. And of course, the reason why Google is free to us is because they are making bucket loads from advertisers and companies that want to be associated with Google. I found the statistic that 1% of paid subscribers pay for 99% of regular users absolutely fascinating. 

So the next rule, "There's no such thing as a free lunch", is perhaps less evident but also certainly applies as well. In essence, we give up privacy, our information, and in many cases our rights, to get things for free. Facebook is "free" - but we give up owning the right to our content and regardless of what you think, we definitely give up privacy. And that's the case for any site - the currency isn't dollars and cents but rather names and emails and addresses and demographic information. Instead of entering a credit card number, you enter that you were born in XXXX year and that you are a M/F. More valuable to them than $1.99. 

I'm not one to cheer for economics, but its nice to see that in the "free" age where "scarcity doesn't exist", economic principles still apply. 

And with that, I apologize for the excess of " "'s in this blog posting, thank you for all of your comments throughout the year, and wish you a very happy and wonderful holiday season!

Adios amigos!

Pickin' Up GQ

My husband and I had a six hour drive back to Boston today, and at one of our stops, he picked up the latest edition of GQ. Now, I could have done work in the car, but instead I chose to do what any girl stuck in a car for six hours would do - flip through the magazine. And there, towards the end and past the pictures of Scarlett Johansson, was a fascinating article titled "The Viral Me". It was like the topics we've discussed in class, combined into one article, on steroids. Below are some of the highlights and what it was I found interesting about these:

1) There is a place in Silicon Valley called Y Combinator that basically exists to recruit brilliant "techie" people (read: the next Zuck) and provide them with the environment, counseling and initial $$ they need to pitch their business idea to angel investors in 3 months. Doing a little research, I found out that through this incredible initiative is that WePay (and Reddit and Weebly) got their start. Only 3% of applicants get in, but those that do...well, its history being made. This makes me consider a point we haven't discussed in class - "foreign" talent. There are so many amazingly brilliant people that are not US citizens, that come to study in the US and because they can't find visa sponsorship, have to go back to their home countries. I read an article in the Economist a while back about how they're trying to pass a law to permit certain students to remain in the US regardless of visa sponsorship. I'm wondering if a place like this company can get a movement started to retain this talent that is so crucial to the development of the US and what your thoughts are on that matter.

2) The article also talks about how far social media is going and how everything dealing with technology must include a social layer if its going to be successful. One of the latest social media platforms is called Blippy, where users register credit cards with the site and everything you buy with that site is posted for everyone to see...including price!!! Isn't this taking it too far??? The author felt the same way I did, but talked about how because of the way the site is structured with buttons like "Awesome" and "Funny" (similar to FB's "Like"), it actually is quite fun to use. I don't know if I agree - what do you think? Would you ever use a site like this?

3) Another point the article brings up is the concept of friction - how hard it is to do something and how social media platforms that eliminate friction will be crowned winners in the end. FB takes away friction because the fields are pre-populated and all you need to do is fill in blanks. Twitter takes away friction because unlike a blog, which you need to be creative for paragraphs on end (or at least attempt to be), Twitter is only 140 characters of creativity. Now there is another platform, DailyBooth, which is Twitter but with pictures. No 140 characters, just pictures. Eliminates the friction of having to be witty in 140 characters. Friction is also what drives the brilliant programmers of Silicon Valley to design new platforms, as they are trying to solve people's issues. The author poses an interesting question - what happens when you eliminate all friction? What do you strive for next? Is it possible to eliminate all friction?

There were other really interesting tidbits and examples, and a lot of new tools that he talks about. I'll bring the article on Tuesday in case anyone wants to read it (looked for it online, to no avail). That said, I did tear it out of the magazine, so if what you're really after is the pictures of Scarlett Johansson, just let me know and I'll bring the whole magazine in. ;)

Of Course I Can Do Brain Surgery - I'm Part of the Surgeons R' Us Community

I found the article “Community Relations 2.0” very entertaining to read, yet one that didn’t provide a lot of new information. My thought is that after reading a vast number of articles on this subject, which for all intent and purposes is relatively new and uncharted territory, it will be hard to find something groundbreaking in every reading – we are nearly done with the course (*tear*) and thus have done A LOT of reading.

One of the things that did jump out at me is one we’ve discussed before – the power shift from the “experts” to the “amateurs”. The article mentions an empowered patient that convinces his doctor of increasing his dose, based on the patient’s research and testimonials from other patients like him. While this seems reasonable, it does make wonder where the line stops. Physicians go through 10+ years of training, hard work, and schooling to become experts in their field, and all of a sudden patients who have no medical background can influence their decisions. Similarly, as we’ve discussed before, creative minds in agencies go through schooling and years of on-the-job blood, sweat and tears (trust me, I’ve seen it first hand), only to have a guy on the couch come up with something funny and have it become the next Superbowl ad. In fact, PepsiCo is planning SIX (seis, 6!!!) Superbowl ads this year and all of them will come from “ordinary” people with no advertising background. That blows my mind (at around $2.8 million per :30 ss, we’re talking that they’ll be spending nearly $17 million on ads created by someone like your neighbor…not that there’s anything wrong with your neighbor!). When I worked in advertising (for Frito-Lay actually!), we would go through at least 4 rounds of creative presentations and numerous rounds of testing before picking the one ad that would air. And here they are, turning over the reins to Joe Schmoe, spending $17 million on their creative work.

Ok. I’ll stop my ranting to ask the question(s) of the week – do you agree it’s all a bit crazy or is it just me? Where do you think the line will be drawn to separate experts from amateurs (is that even a possibility)? What industry do you think is most susceptible to falling prey to the expert amateur syndrome? Pick one, pick all or pose your own question!

Giving Guidance

In full disclosure, I sadly report that MLopez2.8 has "upgraded" to MLopez2.9, which though it seems like a good thing, just means the blogger is becoming more obsolete. ;) Just didn't want to be accused of not being transparent, one of the many key points in the Starbucks case (Gallaugher and Ransbotham) reading I did for this week.

This case was incredibly useful in showing how to integrate the different components of a social media tactic, through their 3-M model. I'll focus my post on one of the pieces of advice the authors gave, because I've heard it now in two different classes and it seems interesting to me: providing guidance, rather than strict rules, to employees.

It seemed ironic to me that in a world that is so loose, where anything goes, that the recommended strategy is to give guidelines, rather than specific commands (thus increasing the "looseness", which companies tend to dread). Starbucks' guidelines includes "be human", "be humble in replies", "share timely information", among others. So when Bob the Tweeting Barista faces a ranting customer, he uses these guidelines and his own judgement to react. In essence, his reaction may be very different than another employees reactions. Yet, Starbucks has done a fantastic job at addressing customers needs and being a pioneer in the use of social media, so apparently the guidelines work.

In our CRM class, we had Doug Woodard from Staples come in to talk about customer service at his organization. And he offered the same advice - don't give concrete rules, but rather, offer guidelines. "Be accountable"* and "Put yourself in their shoes"* are some of the ones that Staples uses. And like Starbucks, he said these guidelines have done wonders for customer service. Not only do employees feel empowered to take matters into their own hands, but consumers feel individual and appreciated, because the communication is tailored to them.

It all makes sense, really, but with so many different situations arising in social media (think: Dominos You Tube video - THE Dominos You Tube video), it would seem the guidelines need to be pretty comprehensive to cover all situations.

So, my question to you is, what are the top three guidelines you would give your employees who managed the social media space at your company?

*These weren't the exact guidelines, I just remembered the gist of the content and put it into my own words as an example.

An Unenviable Decision

Must say, this may be my favorite reading of the semester. It was one of those cases you read when throughout the case, you go back and forth thinking "They should go for it..." and then 2 pages later think "Oh no, definitely don't go for it". And it put our all of our discussions of social media strategy in real life context.

So after much internal debate, I believe Ms. Hessan should not go forward with the Simmon's WOM campaign. I tend to be a pretty risk adverse businesswoman (for better or worse), and think in this case, the risks far outweigh the rewards. Given that WOM is not one of their core competencies, they risk having the campaign failing, and potentially, at the expense of what they do know how to do (engage communities). Further, they risk having the campaign fail for a client they have very much sought after, for a product that is critical to the company and the client is dependent on to prove herself - this is a lot of pressure for launching an initiative that's never been tried before. They also risk their reputation as a place that engages communities to generate insights and the transparency values they've built up. The rewards would be successfully entering a new market, yet they have much ground to cover still in their current market.

Social media, as we've learned, is constantly changing. I don't believe this is their only chance at entering a new field. Opportunities like this one will come up again, and better to do it when they've all come to the decision that it is time and they have the resources to do it.

What do you think? It's 4th down, 2 minutes on the clock, down by 3. Field goal to tie it or go for the win? And on that note, Pats or Vikings? :)

But what if...?

This week's readings were from Gartner Research, so the one I'll focus on is the Virtusa case study. It emphasized the importance of establishing a solid foundation consisting of employee training and goal definition prior to starting any social media initiatives. I couldn't agree more with this reading, since as I said in my first blog post, I feel that some companies still rush into social media because "its the thing to do". Virtusa knew exactly what it wanted to accomplish by using social media and took the time to train employees and provide them guidelines so they could use the medium appropriately. Further, it communicated the objectives it wanted to accomplish so employees knew what it was precisely that they were aiming for when they were using social media.

The case says that "after two minor mishaps, there were no major breaches of security or disclosure of inappropriate information...", and that it is important to let employees steer their course as long as they have guidance. A very Disney ending!! So let's play "what if".

What if there was an unhappy employee who was actually getting ready to quit (ala Jet Blue Beer-In-Each-Hand-Sliding-Down-Emergency-Slide man) and he lets out critical information that has an effect on an upcoming launch of a major project. As a manager, what do you then? How would you revise guidelines and policies? 

Now what if he wasn't an unhappy employee and he actually made an honest mistake that still cost the company and has a critical effect on the upcoming launch - any changes you would make then in comparison to how you handled the previous situation?

Crowd Sourcing Management: Silly or Smart?

Gary Hamel explores the concept (broadly speaking) of crowd sourcing management in Ch. 9 of his book The Future of Management. Why are a few executives far removed from the trenches making the big decisions, usually without the input of those who are in the trenches? Why are companies not developing products / ideas that employees are passionate about, and instead focus on those that management thinks will work? These are some of the questions Hamel brings up throughout the chapter, highlighting the success that comes from answering these questions with "Not sure, let's try it a different way." 

Obviously Hamel's theories have been proven correct to a certain degree. Many of Google's most beloved products, like Gmail, come from the 20% Time stipulation that says all employees must spend 20% of their time on their own projects. And pharmaceuticals such as Eli Lilly have used crowd sourcing to predict the selling power of a new drug. There is definitely merit to much of what Hamel says. 

But. Of course there's a but. In his passionate pursuit for the power of the employee and crowd, he minimizes the importance of senior management. For example, when he talks about why CEO's fail to look to the wisdom of the crowds, he cites that they probably need to justify their salaries or have gotten lucky in prior decisions and think their good fortune will continue. I say, let's take it easy here. Senior management has had the vision, determination and know-how to grow the company (in most cases) and should be given more credit than that. Jeff Bezos and Bill Gates are smart cookies, and while they may benefit for looking to the crowds for insight, no one can argue their success (something he begrudgingly admits later on).

My bottom line: there's a happy medium (again, of course there is!). Hamel's ideas should be explored and when it makes sense, implemented. In other cases, it may just create a ruckus (ie. - an open blog on why a launch failed - eek!! I can see that causing chaos.). 

My question to you, then, is: What idea of Hamel's could you see working nicely in a company that you have worked for in the past or are currently working for? Or on the contrary, what idea of his would be down right silly to implement?