What Sun Tzu and Eisenhower share (but we’re deaf to)

I was thinking today of the treatise The Art of War, written in the 6th Century BC by Sun Tzu and considered the most relevant tome on military strategy and tactics in history. Actually, if you look at the 13 chapters that conform it, you quickly understand how the structure and items proposed have been used more than any in military planning (in East and in West). They have also extended in recent decades to business strategy and planning. Find an ultra-short briefing of these 13 chapters here

There is a very famous quote of this book I came across the other day in Jordan Bortz’s blog which goes like this:

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

The reason this caught my attention was a recent debate I witnessed inside my organisation on waterfall versus agile methodologies for software development, whereby some considered waterfall (sequential software development model) as a purely strategic method whereas they claimed agile was purely tactical. I think this is a limitation and narrowing of both methodologies that’s not fair to either.

I believe you can use agile in a full fledged strategic manner as long as you manage agile actions and scrum teams in the context of a clearly visible and well communicated strategic endeavour. Probably managing this obeys a different order and formal logic than a waterfall project, but I am certain agile can be used in a mid or long term strategic context and at the same time respect it’s governing principles.

However, I still hold truth some basic notions, one of which would go something like this, as Dwight D. Eisenhower said:

In preparing for battle I have always found that plans are useless, but planning is indispensable

More also from Damon Poole, who has a bit of a fight on the topic with the above mentioned Jordan.

Nearshoring, outsourcing or else…

When considering nearshoring, outsourcing or other externalisation of processes, a number of strategic considerations have to be taken into account. I read a very synthetic (3 points) but spot on approach in Harvard Business Review recently on the subject which I would like to share:

1. List all your capabilities - including HR, finance, IT management, logistics distribution, product development, and packaging
2. Identify capabilities with high proprietary value. Your company executes these in ways that generate measurably more value than rivals could. And your company would suffer major strategic damage if rivals imitated them.
3. Identify capabilities with high commonality. Outside suppliers could achieve scale or other advantages by providing these to many others in your industry

An interesting note: only 6% of companies which outsource are satisfied with the practise (source: HBR).

Commonality identification illustration flow from esi.es

Diagonal scaling, diminishing returns

Diagonal scaling is making a site faster by removing machines. The term was created by John Allspaw, the operations manager of Flickr, who replaced 67 dual-cpu boxes with 18 dual quad-core machines and recovered almost 4x rack space and reduced costs by about 50%

Horizontal scaling (scaling out) means adding or removing client workstations with only a slight performance impact. Vertical scaling (scaling up) means migrating to a larger and faster server machine or multiservers.

See a video by CIO of CNET, on scaling out and don’t miss the 8 fallacies of distributed computing… and the 9th one!

The Law of Diminisging Returns, referred to also as variable factor proportions, states that

as equal quantities of one variable factor are increased, while other factor inputs remain constant -ceteris paribus- a point is reached beyond which the addition of one more unit of the variable factor will result in a diminishing rate of return and the marginal physical product will fall.

I think the reason I was associating these 2 is because I thought: In Allspaw’s model of diagonal scaling, this law is not only undermined, but is infact inverted.

Illustration of scaling up and out from the microsoft web applications libraries

Looking for something…?

According to Wikipedia, enterprise search is “the practice of identifying and enabling specific content across the enterprise to be indexed, searched, and displayed to authorized users”. There is large amounts of ink on the topic now and a world summit devoted to this critical knowledge management tool.

I was thinking about it because it seems the long tail of company information (over 80%) and therefore know-how and knowledge, is stored in disconnected systems (mail in-boxes and folders, private files…). This accounts for a lot of lost value as well as a lot of inefficiently spent time looking for things outside a total system.

It reminded me of the similarities between the pursuits of the many companies dedicated to ES and classifieds: in online classifieds we try to organise information, make it accessible and classify it in the most efficient manner possible. We want to build value into information by making it easier to get to it, enhancing/enriching it, use it, re-distribute it and act upon it.

Just some thoughts from the ICMA General Meeting in Brussels. Have to run to Bibliotheque Solvay for diner, but surely will hit back on this issue in more detail soon (and ES 2.0)

In the image water-garden in Ile Maurice’s Jardin de Pamplemousse

Digital video ad format guidelines… out and about

eMarketer predicts that spending on online rich media and video ads will account for nearly one-fifth of all online ad spending by 2012, up from 9.7% of all online ad spending in 2007.

Check out the IABs draft video ad format guidelines and best practices, released April 2008. More coming out on May 5th.

The young get their news… but where?

We already know it. Internet takes young adults away from newspaper titles and newspaper titles do not recover them in their online resources. “Among young adults, 27% said they read national newspapers less since they started using the Internet compared to a 14% drop by the general population“

Oopps… where did they go?

Probability indicates that the large media groups will still own the information space, but it’s the brands, the means of access to information and the sources of credibility (traditionally the national dailies) that change.

Some days ago I read that Google and New York Times have built a layer on Google Earth (get a last upgrade; enable ‘geographic web’), so you can see what’s being written about in the New York Times via the earth map. This access still relies on the brand equity and credibility of the Times as a medium, but it provides yet another step towards non-conventional access channels to credible information. 

My questions are: Are a the same few monster media corporations still going to dominate the information space? Will they engulf all the new and upcoming diverse forms of creating and distributing media and consolidate it? What does credible mean to the current young adults? How do you create credibility in the new media space (not just UG ratings)?

In the image Orson Welles as Citizen Kane (William Randolph Hearst) via snd

The smart approach to recession

If you are in as dreamy a situation as Apple, with wads of cash, a great looking balance sheet and no debt, you might as well follow Steve Jobs’ wise counsel. This is what Michael Roberto of Conversation Starter quoted him as telling in Fortune magazine (is this meta quoting…?):

“In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time”

Jobs was referring to previous recessionist environments and of course, to the current one. As Roberto reflects in his post on the matter, in a recession there are a number of good actions to take, namely:

Invest in research and development for the next shinny times

Analyze and know your competitors’ Aquilles heels and act upon them in a clever way (think on the fringes; be a parallel thinker?)

Identify critical suppliers and distributors and identify the risk associated to them in the economic environment and how it could affect you

Think carefully about your talent needs and be very careful so you don’t send the most talented people to you competitor’s den

The resilient advertising medium

eMarketer predicts that this year online advertising will grow to nearly $25.9 billion and account for 8.8% of total US ad spending. I know some media players in much more underdeveloped markets who are making this proportion too. Awesome.

In workaholic mode

I really liked this tip list on how to save costs and other clever tricks to use when running a start up, provided by Jason Calacanis. Definitely enjoyed point 11 about seeking talented workaholics when managing a start up.

Verbatim:

“Fire people who are not workaholics.don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.“

Infact, I think it’s fair to say that also in large companies, in new projects, you need to abide by some similar set of rules in taking talent from outside or handpicking it from other divisions. It’s critical to ignite and steer certain projects within the corporation at large and if you don’t infuse innovative projects with individuals who also have a true entrepreneurial edge and a desire to outdo themselves, you may never lift to even the design phase.

Mobile advertising immobilized

It seems there are still too many hurdles to mobile advertising picking up big time. I mean, the forecast of emarketer to 2012 (19M$) is still very quiet compared to the overall advertising market size. I think it’s fair to say that one of the hurdles to this advertising format will not be overcome until mobile users stop getting charged a premium for all kinds of services related to the use of this most precious hand-held device.

The table below is a clear indication of this phenomenon, which is just one (but a biggie) of the significant hurdles to be overcome.

In the meantime, have a look at the different types of mobile advertising: mobile seo, mobile search, mobile social media, mobile display, personalised start pages

Project management gone astray

You could be in one or various of the following situations: projects stuck in logjams nobody can fix; non-strategic projects consuming too many of your critical resources; delays you cannot set objective milestones to; well run project parts which were executed perfectly (as parts) but which don’t wield together as a whole… and so on.

 

Some great authors in HBR explained that the problem is that in companies “we look at projects individually and try to push them, as such, through the pipeline with speed and cost efficiency”. But who keeps an eye on the big picture? Who decides which is the right blend of projects we should be nurturing in a period of time? Who sets the pace for strategic versus maintenance? Who provides metrics and confidence to roll out mega-projects with a calm mind?

The authors suggest a few techniques:

“Achieve the right blend of project types: including breakthrough, platform and derivative products; R&D efforts; partnerships

Eliminate strategically irrelevant initiatives

Replace project management with process management: unplug the bottlenecks; smooth the workloads; increase the time to market

Build small projects into large initiatives early: to deliver fast measurable payoffs and iron out problems before they doom the effort”

I like all the principles hereby stated. They are pragmatic and propose a good high-level framework to reduce noise and achieve speed to market in a reasonable priority setting.

More reading: Why Good Projects Fail Anyway by Nadim F. Matta and Ronald N. Ashkenas

Project plan schema visualization (Gantt chart) courtesy of Ambysoft

Lead generation leading the way

It seems unavoidable that result based marketing is taking a lead on Internet advertising formats. The last available Internet Advertising Revenue Report from the Interactive Advertising Bureau (IAB/PwC 2006 Full Year Results) indicates the highest growth rates in lead generation advertising formats. Second highest growth segment is classifieds… :)

Can’t wait for the next edition, should be coming out in the coming days. Look out for it and see what changes are taking places in the morphology of Internet advertising spending.

For the condensation of the data in the report, see this table.

Direct Marketing: less hype, more leads…?

The Global Marketing Effectiveness Report (the name sounds very serious, right?) establishes that amongst B2C and B2B marketeers, direct marketing fares as the most efficient channel. It was, they claim, “the #1 medium for marketing effectiveness in 2007″. The survey was made with over 3,000 marketeers worldwide. In the United Kingdom, a mature venue for marketeers, direct marketing is still less than 25% of total marketing spend. (The researchers mention that although all the noise is being made around online and mobile advertising, all the cash is still in the likes of TV and print). However, they consider direct marketing best for 2 main reasons:

It generates engagement; it provides much better response

It makes sense when you consider the same set of marketeers goals in 2008:

Growing company revenue was a key, followed by generating leads for future sales. Infact, only 15% of the surveyed guys were primarily concerned by building long term brand awareness in their marketing strategy. Is brand longevity dead?

Oh, and by the way, marketeers worldwide said that 65% of their marketing efforts had “no discernible effect on consumers in 2007″.

In the image a very unfortunate outdoor advertising campaign by Chupa Chups found in Adweek

Direct value in direct traffic

In order of value, the SEO company Engine Ready has identified that direct traffic (as in: “they know your brand”) is the most relevant to e-tailers. So the most valuable are those typing URLs directly or bookmarking. Their conversion rate is estimated at 3,3% and they spend (in the US) an average 170$ per order. They’re also very engaged (312 seconds per session; 6 pages viewed on average).

They are followed by referrals, the second most valuable group, but also the one with the highest bounce rate - leaving soon after arrival. To here all clear. But what I found interesting is that the third and fourth positions are, in this order, paid search (1,4% conversion; 138$ per order) and then organic listings (also 1,4% and 117$ per order, but 5 pages per session, which is quite close to the #1).

It’s definitely very interesting data to understand how to optimise the marketing investment and the SEO actions. In any case, it seems organic listings still yield high quality, at least from the amount of pages per session.

In the image, quite off topic, Marc Andresseen, co-founder of Netscape, futurologist and originator of The New York Times Deathwatch

More value, less products: the innovation radar

The Innovation Radar, first described in 2006 by professor Mohanbir Sawhney and 2 peers, tries to identify innovation beyond product development and R&D, where it is normally silo-ed in traditional analysis. For that they have built a radar which covers 4 major dimensions or business anchors:

What: Offerings a company creates
Who: Customers it serves
How: Processes it employs
Where: Points of presence it uses to take its offerings to market

It’s a nice tool for companies concerned about their capacity and depth of innovative exercise, as it broadens the spectrum beyond product delivery and into value creation.

Spread across these, a company can innovate way beyond product or technology and can also track the status of it’s innovative capacity well beyond them. Infact, from these 4 key anchors the radar provides a vision enabling companies to innovate in these 12 areas:

Offerings, platform, solutions, customers, customer experience, value capture, processes, organization, supply chain, presence, networking, brand

More on using the innovation radar to drive organic growth. Image courtesy of Enterprise Leadership

I wanna be a management booklet (or do I?)

Today I was reading one of those visionary presentations that you always wonder if the author wrote under the effects of some opiate. But I came across a slide that addresses exactly the 3 questions I was asking myself in the morning when I woke up in the same anxious anticipation that wakes me up every morning since I moved here.

Those 3 questions where masterfully articulated by the author as follows:

Strategic decisions: what business are we in and where are new opportunities for growth?

Operational decisions: how do we structure our business units to most effectively compete for and win market share?

Tactical decisions: which customers are available to us and how can we convince them to chose us over any and all functional equivalents?

Nicely put. Now I continue to rake my mind and scrutinise my peers to answer these questions in the most value adding manner for the business ;-)

More information in AuroraWDC and also in ReconG2

Illustration courtesy of Pay Attention or Pay

Narrowcasting and the behavioural target

Behavioural targeting (BT) anonymously targets Internet users based on observed previous behaviour. It works, some experts say, under a rule based model whereby if a user does X, he is presented with Y, based on application of recency and frequency as key indicators.

Recency informs of how long since the user performed a certain action; Frequency establishes how often

The 3 basic questions BT asks are: where is the user now? where was the user before? what did he do there?

However, what I see as a clear challenge for the model, is that it will need to predict between intent based actions and routine based ones. How to predict intent is something I cannot answer ;-) I like the fact that it is a narrowcasting model versus a broadcasting one, it should no doubt deliver higher relevancy if the rules are efficiently designed and implemented. On the other hand, I still would like to see how to achieve and fine tune this efficiency: recency matters, but what about behavioral profiling; editorial adjacency; media utilisation models; depth of content versus vertical industry consumption…?

Narrowcasting illustration courtesy of Qeam. More information on this topic can be found in OMMA Behavioural

Online display advertising more in than out

All the noise is made around search advertising, but despite all the hoopla and the rise of video ads and rich content, display advertising online is still fore-casted at 1/5 of all online advertising sales in 2011.

The source of this statement is eMarketer

For an interesting view of ad spend per channel in US Internet until 2011 have a look at the chart below.

Hope you all have a lovely and sunny spring, like Eero.

Classified resilience, economic downturn

This is an interesting comment, especially for someone like me who works in classifieds and, in many of the business areas I am involved in, depend on micro formats, contextual ads and, in general, smaller text link type ad revenues much more than display intensive and hyper graphic ad environments.

“Some believe that Google, which is largely dependent on text ads it places alongside search results, is likely to be more immune to an advertising recession than rivals like Yahoo and Microsoft, who earn a greater share of their revenues from display advertisements” (New York Times, 31.01.2008)

Of course I do not believe anyone is immune to a recession, but it’s interesting that micro formats (like classifieds) always seem to fare better in recession-ist advertising environments.

Nevertheless it seems that even the big heroes such as Schibsted, are suffering the impact of the slowdown. I think a good proof of this is the way the Spanish online real estate operations (namely Fotocasa) have shown slower growth in Q4 of 2007. There is no comment yet on what could be the impact on Spain’s Internet darling for the company, the traditionally very profitable and leading Infojobs portal. Print revenue for International Classifieds has gone down 25% versus Q4 2006 and online has increased 56% in the same period.

The Russian Internet

The last country report on Internet in Russia was released by the Public Opinion Foundation (FOM) at the end of March 2007. It presents interesting data on number of people online, by regions, in this massive country. By Winter 2006-2007 it seems 28 million Russians were online every month. At that time that was about 25% of the population, versus 72% in Australia or 53% in Spain for the same period.

See below how the Russian 6 month audience of Internet users in the Winter 2006-2007 was split per regions.

More information in the research where this map came from