Amazon

Decision-Making for Success: Platinum Problems and The Gifts That Keep on Giving (Part 1)

In my world, there are two categories of problems:
  • Platinum Problems*, and
  • The Gifts that Keep on Giving.
Both are good - but only if you make them good. Otherwise, they make you nuts - and lead you to make bad decisions.

In this post, I'll talk about the first category, Platinum Problems, specifically what they are and how to handle them...before, during and after.

Platinum Problems

Things are going great. They're better than you could have ever imagined. Everything is moving well and quickly. You're growing. You're thriving. You're succeeding.

Welcome to the world of Platinum Problems.

On the surface - and particularly for those outside your function, department or organization - all it looks like is good. To a great extent, that's how it looks to you, too.

Why should you look at it differently?

Because when everything is 'great,' you make different decisions and, most importantly, you make them differently. Suddenly, rather than working from a position of scarcity, you're surrounded by abundance that seems as if it will never end.

It's that last part...the 'as if it will never end' bit...that turns these marvelous opportunities into their counterpart, The Gifts That Keep on Giving. (We'll get to those in the next post.)

The risk in Platinum Problem decision-making is that you and your people forget what it took to get you to 'great' and, instead of continuing doing what you do so well, you start doing other things. You buy. You expand. You hire. And you do it fast...because, after all, you have to keep up with everything that's being asked of you by the outside world.

Most importantly, as a result of all that pressure from the outside world, you stop thinking and you start reacting.

It takes a lot of time, energy and thinking to build success. You and everyone else in your enterprise have to be fully engaged to get there. You innovate. You question. You create. You build.

When, seemingly suddenly, you're a success, the tendency is to stop doing those things. Instead you simply do more of what you've done. You don't do new and different that keeps your current customers happy and creates whole new markets at the same time.

You rest on your laurels without even knowing you're doing so.

Think Starbucks and the way they had to reverse their expansion and the many years it took to put them back on track. Think Sony and how they lost their standing as the leader in consumer electronics and are still trying to regain that status.

What you see is a "Success Arc" that takes the company and/or its products and services from inception to success to failure - unless it's caught in time.

On the other hand, think Amazon's CEO, Jeff Bezos' acceptance that, someday, even his company will be disrupted by another...just as his disrupted so many large and small organizations and industries.

Bezos treats Amazon's success as a Platinum Problem that has to be solved - and solved again - every day in every customer interaction and management decision that is made.

The Solution

What does this mean for you?

When you see success in your organization, stop, take a deep breath (or a few) and become highly analytical. Specifically, and in this order:
  1. Objectively assess what the enterprise did to create that success.
  2. Identify what, of those systems and actions, need to be continued and grown to ensure new successes beyond the current success (e.g., Amazon's "customer centricity").
  3. Determine what you need to do to address the growing needs for the products and services that have caused the current success.
  4. Ensure that you have the appropriate systems, procedures and risk analysis in place to build the business in the immediate and the long-term without causing undue - or unconscious - harm.
  5. Analyze. Make sure you've got the right metrics in place for the immediate and the future. That way, you know - at every moment - whether you're moving in the right direction.
As you can see, what this system does is takes you out of reaction and puts you immediately into a current response and future expansion mode simultaneously. That way, the Platinum Problems remain platinum...which is exactly what you want.

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*Props to my brother, Sam, for teaching me the expression, Platinum Problems.

Ron Johnson and the JCP Tragedy: It's All About the Board

I was out and about today, between meetings, when a friend and colleague - both of us great fans of Ron Johnson, the now former CEO of JC Penney - texted me "Ron is out."

I was sad but not surprised. It was looking like it would go this way for a while and I wondered whether the JCP Board would have the courage of its convictions.

After all, when they hired Mr. Johnson away from Apple, it wasn't like they didn't talk with him first. They had to have had an idea of what he might bring - in strategy, technology and customer orientation.

He had a track record - Target before Apple - so no surprises there, either.

So it's down to performance.

Were the numbers bad? Yes. Were they a surprise? No.

Because the strategy that Mr. Johnson laid out not long after taking over the position addressed the fact that the then current JCP customer base probably wouldn't be the base they'd have once all his changes were in place. The new base might be from the same socio-economic group - although even that had expanded parameters given Mr. Johnson's shop-within-a-shop boutique strategy - but it wouldn't be the same people.

Or probably not.

Which meant for any thinking being (which one always hopes resides in the Boardroom) that this was going to be a years-long transition. The changes to the stores could be made in the short term, as could be the introduction of new, more fashionable product lines.

But it would take bravery and commitment on the part of the Board to hold firm when the "always darkest before the dawn" part of the change was going on. Because that would be the real transition period. The time when the old guard customers who never wanted any changes anyway had left and the new base was finding its way in.

These guys didn't pull it off. They caved. And they blamed it on the shareholders.

That argument doesn't hold up anymore either - for which every Board can blame Jeff Bezos and his strategy at Amazon. Bezos cares, of course, about his stock's performance - but he cares a lot more about reinvesting every penny he can into building out the business and capturing even more customers in even more product lines - now b2b and b2c.

His Board doesn't cave. They trust him and they're willing to wait with him as he builds the value of Amazon more and more...and then more.

I honestly believe that Ron Johnson could have done the same thing for JCP had he had the support - and courage - from his Board that was required. He didn't.

Add to that the newbie CEO mistakes he made (e.g., too much too fast with too high expectations of the acceptance of change by the customers and staff, backpedaling on decisions before they had a chance to be integrated, etc.) and you've got dominos just waiting to fall.

And fall they did.

But that still doesn't excuse the Board. They knew who they were hiring and what they were getting. It was their job to support him in every way they could.

So now we'll see what JCP turns into. For my part, as I watched the changes take place, for the first time in years not only was I willing to buy there again but I was recommending it - for product and shopping experience - to my friends. And they liked it, too.

Now I'm not so sure. If it's going to be the same customers as before with the same product lines, you can count me out.

It's a sad day for business. Short-termism won - again - and that's the biggest loss of all.
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Winning the Values War: Ellen DeGeneres, Ron Johnson and JCPenney (llk)

With Apologies to Google: I Didn't Understand

Long ago, in the dark ages before the days of immediate internet access anywhere...in fact, before the days of the internet, in general...I was a graduate student known, among other things, for my expertise in research.

In fact, I had such an impressive reputation in article search - because I could and did find anything that needed to be found - I was constantly being approached by other students and faculty members asking for my help in search logic.

I was, to put it mildly, excellent.

Well, the day came that I decided to stop collecting degrees (because that's what it had come to feel like) and go do what I enjoyed most - which was working full-time for pay in organizations, rather than on graduate internships. (Lots of good learning. No cash.)

The years passed and the technological capabilities grew. And then there was Google - which confused me no end. What was this thing? How did it work? Was it trustworthy? Who was deciding what information I was going to be able to find?

So, one day I had a conversation with my friend, Nadine (you can call her "Haute Everything," as I do - or just "Haute" for short) and I asked her: Is Google just a newer version of ERIC?

Now, for those of you who don't know what ERIC is, it was the breakthrough technology for academic research. It stands for Education Research Information Center and it was the Google of its day. Sort of. At least to start.

Nadine, who, in her Haute-ness, is very tolerant, explained patiently that it was sort of like ERIC but it was much, much more. She also told me that what I was seeing was just the beginning of what Google would be.

More years passed and I watched as Google grew to become a verb. And out of that verb have come some of the most amazing achievements and greatest technology minds the industry has ever seen - including those not working for Google any longer.

Today, I was reminded of all of this when I was introduced to yet another facet of the ubiquity of Google: the Google Trusted Stores program.

I had made an online purchase from a site having nothing, as far as I knew, to do with Google (which it doesn't). I didn't use Google to find it. There was no searching or browsing involved that took me anywhere near Google.

Yet at the end of the transaction, I was suddenly taken to a page informing me that the company I had just done business with is a "Google Trusted Store" and was given the option of participating in the Google Trusted Stores program. For free.

Now I'm used to Amazon's excellent service - both when purchasing through them or the protections they provide when dealing with their vendors - and I knew that you could purchase online using any number of Google entry points...but I didn't know that Google had decided to have my and others' backs by providing a consumer protection service.

Or at least a place to go when things go wrong.

Which makes this one of the most amazing of the amazing steps Google has taken - because Google is morphing more and more into a company that understands that, technology-based as it is, as a service provider it still and always works for and with humans.

And humans have a need for a trusted ally - especially when they're dealing with the blank face and low-grade hum of technology.

Haute was right, all those years ago - only it's not just that it was only the beginning. It's that Google always seems to find new ways to create new beginnings...even in arenas that have nothing to do with them. Like my purchase.

From what I read, it takes a lot to become a Google Trusted Store - which makes me think that, once you've achieved that status, you're going to do everything you can to keep it. Which means that, other than finding the stores that qualify, Google probably doesn't have to do much of anything - because they only get involved when something goes wrong and the vendor doesn't provide a satisfactory answer to the customer.

But, from the customer's perspective, Google has their back - and that's really nice to know.

What does this have to do with you?

Well, at its most basic, bricks and mortar or in the ether, it shows just how important and profitable a differentiator customer service is - because if it wasn't Google wouldn't bother. (Neither would Amazon for that matter.)

It also shows you that you want to find out what the criteria are to become part of the Google Trusted Stores program and then go for it. Whether you qualify for their consideration as an online vendor or you're bricks and mortar, you'll have a clear, measurable target for excellence on which to focus.

And, finally, it shows you the value of surprises to your customers on the upside. Every time you wow your customers with a new idea, a new service, a new way of doing business, a new way of showing respect to and thoughtfulness for them, the more they'll want you to be their verb. Or, at least, a regular destination.

Innovation and Strategy: What's Wrong with Facebook?

Yesterday I wrote about a talking head on a business news program that was explaining why it made sense to dump Apple stock. (The link to that post is below.)

In that same program, he also talked about why it makes sense to run like the wind away from Facebook.

That got me wondering:
While the talking head's logic about Apple's future innovations made no sense to me, why is it that when that same logic is applied to Facebook there's a core of sense that makes me think he might be right?
Here's my thinking:
Where Apple innovates outward, Facebook innovates inward.
Let me explain.

Facebook's strategy, in some ways, mirrors Apple's (and Google's and Amazon's). Once you get your users into your ecosystem, whatever you do, don't let them go!

It's the "Cheerful Ruthlessness" strategy I've described before. (The link to that post is below, too.) Under the guise of "You're our customers and we love you" you're actually being held prisoner as they take down everyone in their way.

But, where Apple and the others innovate outward into markets, Facebook is building its business based on what it can provide to other Big Boys from within:
  • Its users. 
  • Its data. 
  • Its targeting.
Facebook is operationalizing the marketing concept of "mass customization" to a whole new level.

But will it translate?

When Amazon "mass customizes," it looks like personalized recommendations from Amazon to you.

What's key about that - and also how Google's algorithms have evolved - is that it looks like it's the company, itself, that's doing the personalization. Not someone to whom they sell their data.

And that's why I'm uncomfortable with Facebook's strategy on a long-term basis. Even its new services - like "Gifts" and "Graph Search" - that give its users access to information about other users, are inward directed. It's all about the data.

The question is: What about the humans?

Targeted ads are great - but if they look, in any way, like the only reason that those advertisers know to target you is because Facebook sold them data that led them to you, you feel more used than user.

It feels like an invasion of that privacy that's so hard to keep on the platform.

Don't get me wrong. I think Facebook is an amazing company. It really did change the world - both personally and on a corporate level - fast and furious. It enculturated social media as part of how we live and work...and that's not going to go away.

The question is whether, 1+ billion users and still but more slowly growing, it will stay the leader in its space.

Facebook needs to do more to understand the human aspect of social media. Not the technology nor the data nor the algorithms. Those are for them.

What will keep Facebook viable - as the industry leader and innovator for the long-term - is looking at and incorporating the satisfaction people find in all the other ways that humans socialize with and without social media.

It's not about what Facebook can do. It's about what they're not doing...for their human population. Not their advertisers.

This is a hard one in the strategy world. It's when you've got the operations to execute on just about anything - which they do - and are hard-pressed to figure out what to execute on.

But, just as Starbucks (another Cheerfully Ruthless company), began to cannibalize itself and had to do a u-turn on its growth, products and services to save itself, so does Facebook need to stop looking at its data as the only answer. By looking in that one direction, only, it, too, cannibalizes itself - only in this case, it's the data that drive the users away.

So the question for you is:
How are you, by what you're doing now, making it easy for your customers to want to find someone else to provide your product or service?
If your focus is wholly internal, you're missing opportunities all around you. Go back to the five questions I laid out for you in my Apple post. That will get you going in the right direction...and keep you there.
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Innovation and Strategy: What's Wrong with Apple? Nothing. (llk)
The Secrets of Success: Cheerful Ruthlessness (llk)

The Secrets of Success: Managed Expansion

It may seem counterintuitive to be thinking about expansion while the global economy is still trying to figure out which direction it will go and how fast it will get there. It's not. In fact, this is the best time to be thinking about all things growth.

That way, you can build your success before you begin using what I call Managed Expansion.

The easiest way to understand it is by understanding what it isn't - and that's its opposite: Reactive Expansion. So we'll start there.

Reactive Expansion is when...suddenly there's lots of money. Suddenly there's lots of opportunity. Everybody is buying. Everything it's growing. It's an up-cycle! It's time to expand!

Well, yes and no - and that's where Managed Expansion comes in.

It's time to expand - but only if you've got robust and well-thought out plans in place for exactly how, when, how fast, in what ways and into which markets you want to expand. Specifically, plans that you've been working on throughout the down-cycle to be ready for just this moment.

Sure, there'll be adjustments in the plans as the landscape becomes more clear. But if you've been consistently working on your expansion plans as a regular part of your job (which it is), then you'll have already seen those opportunities and be ready to move.

In contrast - and what we see far too often - is the Reactive Expansion that companies take on...and then have to reverse.

Think Starbucks. You'll recall that they are one of my examples of "Cheerful Ruthlessness." Well, they're also a perfect example of Reactive Expansion - which they may be repeating but in a different way.

Here's how it works:

A number of years ago, someone in the executive ranks decided that there should be a Starbucks coffee shop on every corner - or nearly. Rather than following what had been lauded as one of the finest location determination systems in the world, they just grew. And grew. And grew.

It just so happened that they were opening all those locations during an up-cycle. Everybody wanted coffee - and, according to this logic, they wanted it absolutely everyplace they went, every day, all the time.

That was all well and good until the down-cycle started and people weren't sure they wanted to shell out a few bucks a cup every time they needed a caffeine fix.

Change of management, change of plan. Now it was time to shut down all those excess locations and for the company and its shareholders to take the hit financially - as well as hitting all their employees with unemployment simply because management made bad decisions.

It was sort of a coffee version of the dot-com boom and bust - all in one company.

Interestingly, Starbucks may be running the same risks but in a different segment of its market: the Keurig/Nespresso world.

Individual, made-to-order, customized coffee-makers for the home are just the thing in the market. Especially as a holiday gift...or so the advertising would lead you to believe.

Only, in this case, Starbucks is venturing into a market that has ongoing high costs - from manufacturing and inventory to shelf-space in its shops - and, contrary to what the thinking may be in the company, does not guarantee a captive, returning audience.

That's because - unlike equipment ranging from inkjet or laser printers and their cartridges to the Amazon Kindle and its in-bred ecosystem of sales - customers don't have to go back to Starbucks for the ongoing, high-profit coffee tubs. They can buy other brands - because everybody's already on this particular wagon - or they can purchase a reusable, washable 'k-cup' from a cheap and cheerful television advertisement.

Starbucks isn't being a leader. It's being a follower - but on a very big scale - which is a Reactive Expansion strategy that is particularly dangerous.

It will be interesting to see whether the company wins, takes a hit on this or keeps its product in play as an also-ran in the individualized coffee field. But that's on them.

For you, the lessons are there to be learned.

Opportunities are always presenting themselves. Some of them make sense for you. Others don't. It's your responsibility - and should be your passion - to consistently be looking for the windows that have yet to open and figure out how you and your organization will be the ones to open them.

The best opportunities are the ones you identify where you will be the go-to resource - product or service - for that particular offering. And that's what you're planning for: a Managed Expansion that builds on what you do best and expands upon it in such a way that existing and new customers are happy to find you doing what you do.

Just don't do it faster than you can manage or put too much time, energy and cash into a high-risk venture that may or may not work out.

Take risks using a Managed Expansion plan by:
  1. Building on what your organization does best
  2. Expanding that definition by bringing even more and better of what you do to the market
  3. Focusing on innovation in existing products and services as well as new ones
  4. Studying what best of breed organizations in other industries are doing
  5. Identifying how those product and service innovations can be adapted to bring further success to your enterprise
  6. Managing your expansion so that you're ready for "+1"...ensuring exquisite, seamless execution.
By taking these steps, you've designed your expansion to succeed - long before it has even begun.
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The Secrets to Success: Cheerful Ruthlessness (ctg)
The Secrets to Success: +1 (ctg)