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.
Innovation and Strategy: What's Wrong with Apple? Nothing. (llk)
The Secrets of Success: Cheerful Ruthlessness (llk)

An Open Letter to Facebook Employees

Dear Facebook Employees:

You don't know me. I'm not an investor and don't even have a Facebook page. But I'm hoping you'll give me a moment to give you some perspective based on my many years of helping organizations under attack.

Because that's what you and Facebook are: Under attack.

It's typical, just so you know, and to be expected. After all, unless the people involved (in this case the investment industry analysts and talking heads) are the ones benefiting from having been "right" (which is always a moving target), they're going to diss the company anyway.

The good news is, that means that you get to ignore them. Seriously. Just ignore them. Quite frankly, they don't know what they're talking about. They can't. They're not inside. They don't know the amazing work you've done, are doing and have in the pipeline.

Even with all the publicly required information, they don't know what your current or future products and services are. They can't. Nor should they. That's proprietary - and needs to stay that way.

The other ones who benefit from you being under attack are your competitors - existing and emerging. They're hoping you get distracted...and maybe even that you take your eye off the Facebook ball.

Don't. Don't let them win that way. It's too easy - and underhanded, too. If they're going to win, they should win on product and service. Not because they like watching you being kicked when you're ostensibly down.

Which leads me to the most important point of all. It's that word: "ostensibly."

You're not down. You're Facebook - with your hundreds of millions of users, with millions more to come. All of whom will be participating in creating the social and financial success everyone envisioned.

Are you at a turning point? Sure - but so were Apple and Google and Amazon when the analysts were saying the same things about them and their management teams at their respective turning points. And look where they are now.

Follow the guidance your COO, Sheryl Sandberg, gives: Don't leave before you leave. Lean forward.

You joined Facebook because you wanted to. You believed in it. You saw it for all the opportunities it provided - and still provides. That hasn't changed.

So, do what your CEO, Mark Zuckerberg, says: Stay focused and ship.

You'll win - and then the talking heads will say they knew you would all along.
An earlier version of this post was published on Technorati.

AT&T and Corporate Values: Throttling Your Customers, Suppliers and Society

AT&T is "throttling" five percent (5%) of their customers. Their word. Throttling.

Now, if you're a pilot and you're thinking takeoff - then you throttle up.

If, on the other hand, you're an AT&T customer, they're using the other definition of "to throttle." It means to choke. Like asphyxiate. Like to kill - which, in some ways, seems to be their goal.

What they're throttling is their data use. You see, the customers in question took advantage of an unlimited data plan that AT&T offered - which is no longer available.

Much to AT&T's dismay, these customers are actually using what they paid for. Since that's not okay with the company, AT&T is slowing their connection speed to the equivalent of a dial-up. Yes, a dial-up.

Think your very first AOL connection - modem sound effects and all - and you'll relive the nightmares that these AT&T customers are now experiencing (granted, without the sound effects).

Why? What is driving AT&T to throttle their customers?

Revenues and profits.

AT&T doesn't have the infrastructure to support unlimited data plans. Moreover, they evidently don't want to build it. They'd rather their customers buy the 'tiered' plans that are still available - and far more costly to every user.

There are two other impacts of this heinous decision that are just as important - and have nothing to do with AT&T's customers. In this case it's all about their Apple...and the role of the corporation in society.

On the supplier side, the reason that AT&T's customers bought the unlimited data plans (or the tiered ones, for that matter) is because they bought smartphones. Like the iPhone. And the more that the iPhone is capable of doing - from downloading maps so you can get to where you need to go based on the app you purchased to watching the cute kitties gambol about on YouTube - the more data access you need. And the faster you need to get it.

As well, because iPhones, along with iPads (which also have AT&T data plans), are the fastest growing equipment purchases for businesses, that data access isn't just for fun. It can be the make or break of small businesses that can't afford to buy into one of AT&T's 'business' plans.

Now, let's take a look at society. AT&T is doing just fine, thank you. Because of their relationship with Apple (among other decisions) they've got the money to invest in building the infrastructure required to allow unlimited data plans for all. But they don't want to spend it. Which means that they get to keep their money - and, of course, their shareholders benefit - but the jobs that the company can justifiably create are simply not being created. Not by them.

And that means that they are complicit in holding back the progress of the American economy. Their "throttling" policy is also killing job creation that they could, should and need to be driving.

Worse - because it does get worse - on the same day that the news media picked up on the extent to which the "throttling" policy was impacting AT&T's customers, the company put out a press-release-like, fake "news story" which was, embarrassingly, picked up by a number of papers as if it was news.

The storyline? It was all about the amount that AT&T has invested in the New Jersey area infrastructure. Only it takes a while to realize that that's all they're talking about - and that the investment was from a few years ago. Not now. Not when their customers and the broader American economy need it.

Just for fun, let's put the two together.  Frankly, if I were in the Apple senior executive team, I'd be seriously rethinking my relationship with a company whose decisions are adversely impacting our reputation - as well as, potentially, our sales.

AT&T has existed, in one form or another, since Alexander Graham Bell - with a history rich in innovation and success. It's time that today's executive management recognize their responsibilities to the wider world they're supposed to be attracting and supporting.

[This article appeared on Technorati.]

The HP Dilemma

Are there any right answers for HP? Can it play in a world that isn't tied to its recent past - let alone its founders' vision for the company and the way it would operate?

Leo Apotheker, HP's CEO since September 2010, is the newest executive to try to figure out what the right answers are for the company - and yesterday's earnings call gave everyone an excellent idea of what he sees in HP's future.

He sees another version of IBM.

Product versus Service

Say HP to most people and they'll think printers. They might think PCs as well, but printers are inextricably bound with HP's brand and reputation.

And that's about all the past HP will keep as it moves into its future.

In direct contrast to Mr. Apotheker's two predecessors, Carly Fiorina - who acquired Compaq - and Mark Hurd - who acquired Palm, the company is now going to move very quickly away from hardware. Except those printers.

Forget the tablets and phones - even though they were just introduced. They're not working - so they're out. Now.

As for the PC's, he's looking at spinning off the company and as soon as HP can find a buyer, those will be gone, too.

What's taking their place? Services. The cloud. And the acquisition of Autonomy, one of the leading enterprise information management software companies.

Who'd've Guessed?

In many ways, what is most interesting is the surprise on the part of the markets and media regarding this move. In fact, it was predictable.

For all that Mr. Apotheker said he wanted to make HP as "cool as Apple," there was no way in his space that he could pull that off.

Besides which, Mr. Apotheker's previous position was as CEO of SAP, the German enterprise software giant. He's not primarily a hardware guy. he's a software and service guy. So, of course, he'd manage to his strengths.

It just worked out nicely that the economy was such that hardware purchases were moving on a downward trajectory. It made it easy for him to justify getting out - and going where he undoubtedly planned on going from the start.

The HP Way

The only real questions that are left are:

  1. In a market that has become saturated by players like IBM (services) and Amazon (the cloud), can HP find a niche for itself that it can own? and
  2. Can Mr. Apotheker, both within the company and in the eyes of the marketplace, revive the reputation of HP - a company that is seen to have lots its way? and, finally,
  3. Will he have enough time to accomplish his goals?

It's a tough go for CEOs - particularly when they're short-term oriented and are looked to for short-term results. Mr. Apotheker is at the helm of a company that has shown in its past that it can do wonders in innovation, marketshare, shareholder value and corporate culture.

But that was when it had a long-term vision and stuck to it.

Let's hope he's now pointing it not just in his preferred direction - but in the right direction.

[Note: This article was previously published on Technorati.]

A Cloud-Based Disaster for Small and Home-Based Businesses

I'm a great fan of David Pogue - mostly because, even though he's best known for his NY Times technology columns and Missing Manual book series, his first (and also) successful career was as a conductor and musician on Broadway.

(I know. One has nothing to do with the other - but there you have it. I come from a family of musicians - including on Broadway. Deal with it.)

On the tech side, one of the reasons why Pogue is so good is because he's willing to say the things that need to be said - whether it's about Cisco's decision to shut down the Flip Camera, taking on the cell phone carriers about their extra, unfair fees or, today, the future of the cloud.

Pogue didn't go there, but if you're a small business owner - particularly home-based - you were reading a real warning of problems and costs to come.

Because what Pogue wrote about is not how wonderful the cloud is and how you should move everything you do onto it - which is what we keep hearing from Apple, Google, HP and everyone else - but what it's going to cost us as the likes of Comcast, TimeWarner and other broadband providers start capping and controlling access and speed to the internet.  And the cloud.

If you're a member of any small business lobbying or support organization, the Rotary or even your local Chamber of Commerce, it's time to start getting your message ready to your internet service providers.

Left to their own devices, they'll keep increasing your costs while reducing your services. For them, you'll be a blip - at most - on their radar. Probably not even that.

For you, this is fair warning.  It's time to act.

(Originally published on Technorati.)