On Netflix and Inflection Points Part 2

In part 1 I looked at changes to Netflix pricing but there’s a broader point here. Netflix thrives on inertia. They spend a fortune to get you to sign up knowing that inertia will keep you from leaving. You’ve checked the box and mentally you’re off on to other things.That’s why they (and a ton of other companies) spend a lot of money incentives for new customer acquisition, even though it makes existing customers feel ignored. 

But then something happens that makes customers reevaluate that decision and that’s really bad for inertia.

In my world, when companies put in a new ERP system people quit, leave or retire. Sometimes folks get canned. In most cases it has nothing to do with the new system. It’s simply a big enough change to overcome inertia. The change gives people an excuse to do things that they’ve been thinking about doing either consciously or subconsciously.  Typically folks have been ready for a change for a while, they just need something to get them off the couch.

In the case of Netflix, we’ve wound our queue down to zero a couple of times over the last year. When really want to see a new release outside of a theater, we would drop the $3.99 to see it on demand via our cable company. In short, we were kind of bored but we didn’t have an incentive to quit paying our $10 a month. Now we do.

The new Netflix pricing takes effect September 1 leaving Netflix a pretty short window to get us to change our mind. Then they’ll spend a fortune trying to get us back. Breaking inertia is expensive.

Hilton’s Top Chef Marketing Fail

For whatever reason I’ve gotten into Bravo’s Top Chef D.C. this season. Hilton is a huge sponsor. The competition has been held in the Hilton Washington D.C. and Hilton Singapore. The marketing includes hotel key cards when you check and in room promos. They just missed one thing…

In most cases, you can’t actually watch the show in Hilton hotel because they don’t have Bravo…FAIL!

The pay per view section in some hotels offers a few free episodes but you can’t watch the current episode in real time or near real time. I’ve been in a number of Hilton hotels when the show airs on Wednesday and I’ve always had to wait until I get home and watch the DVR version. (The family is monopolizing the DVR that has the Slingbox attached so I can’t stream it. It’s a long story.)

Talk about a lost opportunity.

Job Interview

There is No Divine Right of Success in Business

There is no divine right of success in business. It used to be that if you got a Chrysler or GM dealership and were moderately competent (okay, even moderately incompetent) you could pretty much guarantee a nice living. It used be that lawyers and CPA's at big firms didn't get laid off. It used to be that becoming a doctor would guarantee success if you didn't screw up too often. If litigation hasn't killed that idea, universal health care will. It used to be that was hard to lose money owning the sole newspaper in a major city. Phone companies and yellow pages yellow pages have also joined the list of slow death industries.

It seems like the mean time between unstoppable and out of the game is getting smaller. It took a long time for newspapers and phone companies to be irrelevant but MySpace has already rocketed, peaked higher than the value of a slew of newspapers and is sliding down the chute toward irrelevance. ebay managed to kill newspaper classifieds (with help from Craig's List), put a dent in phone companies with Skype and is now hitting big bumps. Don't be surprised to see ebay slowly slip from the from the average person's radar pretty fast.

There is no divine right of success in business. It takes constant creativity and flexibility. Now more than ever complacency will kill a business. Fast. Andy Grove was right. Only the paranoid survive.

Our Unwillingness to Confront

Several of us recently were lamenting the replacement of confrontation with generic communication. Specifically, we were discussing those situations where people deal with an individual issue by addressing the group. For example, when a passenger boards an airplane with their identification in hand, I've seen the gate agent stop the boarding process to make a general announcement to all passengers that they don't need their ID to board. This isn't effective communication. It's a smack down.

Another example is when an employee questions an expense report policy and the response is to simply reissue the policy to the whole company. Don't insult us, we can read. We're trying to understand.

Dress codes are another example. Rather than confront an improperly dressed employee, managers reissue the dress code and hope the right person gets the hint. Unfortunately, an awful lot of properly dressed people feel that this is directed toward them and companies end up offending a whole group.

In most cases I attribute this to cowardice. People are unwilling to confront the individual and address the specific issue so they make blanket pronouncements and hope folks think it was targeted at them. Instead, one of two outcomes results. Either the target individual is blissfully unaware that this communication is targeted at them so the rest of the recipients are simply insulted or the individual gets the hint and feels that everyone else knows that they were the target. This gives companies the double whammy of really annoying one individual AND alienating everyone else. Good Job!

Get up off of your behind and go have a conversation for heaven's sake!

The Cult of Apple

Daniel Lyons has more on how the Cult of Apple extends to the press.

It's All About Execution

So the crying over the Cowboys not making the playoffs has finally stopped here at home and it's time to take a few lessons from this tragedy. The 'boys didn't make the playoff's because they lacked talent, they are brimming with talent. It wasn't strategy, head coach Wade Phillips showed that he can build a strong defensive strategy and offensive coordinator Jason Garrett is considered a boy wonder off offensive strategy. So what it a lack of teamwork? They sure seemed united as a team for most of the year. Sure there was some sniping at the end but I think that was more a symptom than a cause.

So it must be leadership, right? Isn't leadership the answer to every organization's problem? Yet offensively, Romo sure seemed to be a heck of a leader. He shook off his own mistakes and made big plays. He worked to keep the whole offense involved. Defensively, several of leaders emerged, both on the field and off. NFL sack leader DeMarcus Ware and Greg Ellis come to mind. So if it's not leadership, what then?

It's execution. Most companies have talent. Maybe not as much as the Dallas Cowboys but we know that talent isn't everything. Most companies have a good strategy, if the competition does nothing. Most companies have at non-dysfunctional teams and good, if not great leadership. Most companies also suck at execution.

A lack of execution drives CEO's nuts more than anything else. The CEO has hire the talent and motivated the team. He's got a great strategy to crush the competition but nothing happens. The talent and the team just don't execute.

I see this in lots of companies. People meet, they talk and debate but never go see. Participants discuss but never decide. They come to a half-consensus but no one is willing make a real decision.

Building a culture of execution is the most critical thing a leader can do for their organization.

Layoffs

As I read and hear about layoffs I think about three things. First is Tom Peters seminal Brand You article in Fast Company from ten years ago. Tom's article is part of what led me to start my Dynamics GP blog. Good ERP consultants are rarely jobless but now I've got a much higher national profile in the event of a severe down turn.

Secondly I think about all the great career advice I've gotten from Manager Tools. Everything from quarterly resume' updates to environmental scanning for layoffs to interviewing advices. They've never steered me wrong on any significant items.

Finally there was some advice my dad gave me a lot of years ago. I was working as an accountant for an engineer and he said "Remember, engineering firms value engineers, not accountants." Well now I'm an ERP consultant at an ERP consulting firm. We're last in line to get laid off and first in line to get picked up by someone else. Thanks for the advice Dad!

ebook Vendors Are Doing It all Wrong

ebook vendors have it all wrong. Everyone is selling books the old
fashioned way, one book at a time with newer "hardback" books being
more expensive. QUIT SELLING BOOKS! Adopt the Netflix model for heaven
sake. Let me pay $15 a month for x number of ebooks at a time.


I read a lot of books, 2-3 a week on average. I read a lot of library books because 2-3 books a week is an expensive habit and if I bought them all it would eat into my food, clothing and shelter addictions. I read some ebooks, mostly with ereader, and would like to read more that way. I love the portability when I'm on the road but ebooks are essentially the same price as regular books so that expensive habit is still a problem. We'll leave the economics of why that makes no sense alone for now.

The big ebook vendors in my mind are Sony and Amazon, both focused on proprietary devices, the Sony Reader and Amazon Kindle respectively, along with a host of multi-device vendors. Of those, I find ereader to be the best by far. ereader is striving to be on any platform they can, including the iPhone which is another reason I include them here.

With Netflix, a movie is consumed in roughly 2 hours. Netflix works because the cost of shipping is low for DVD's. It wouldn't work with bulky cassette tapes. Other folks have adopted this model for physical books but the shipping costs make it prohibitively expensive for both the vendor and the end user. Shipping costs are eliminated for ebooks.

There are very few books that I want to read that I can consume in 2 hours. So the hold period for books should be even longer than it is for DVD's. All the vendors need is a mechanism to check out and return books.

The beauty of this is that the Digital Rights Management is already in place for ebooks and no one is complaining about it. After all, I might loan a physical book to a friend but I wouldn't cut up the book,  put it on the copier and make a copy so my friend can have one. Buy you're own freakin' book. We already think about books differently than we do music or video so publishers get lots of protection on this one already.

The beauty of ereader's DRM is that is uses the credit card number used at purchase to unlock the book. You might share that with your spouse but you're sure not putting it on the internet!

Sony and Amazon are taking the Apple route, proprietary device with an "app store". ereader and others are taking a more device generic approach but they are still selling books. I will consume considerably more ebooks when I can rent them, not buy them.

NBC: "We Have So Few Ideas, We're Giving 10pm to Leno

How bad is at NBC that it looks like they are giving the 10pm eastern time slot to Leno, every weeknight? So I guess there is not much on NBC's creative plate. If Leno doesn't work what's next, reruns of Friends and Seinfeld?

Out Tax System, Explained with Beer

Here is an explanation of our tax system using beer. The only thing missing is that the rule book makes encyclopedias seem small.

Rich vs. High Income

Periodic Ramblings of a CPA has a nice post on the distinction between being rich and having a high income. Much of the political rhetoric this season has focused on taxing the rich when in reality they mean taxing those with a high income. It's not the same and thing and it does affect the economy differently. Read the post, I don't have time today to summarize.

A Real Breakdown of Who Pays Taxes

Too many journalists are mathematically challenged. If you've ever been involved in a news story you know that many are factually challenged as well. Periodic Ramblings of a CPA takes a look at who really shoulders the tax burden in America. Here's a hint, it isn't the middle class as the press would have you believe.

Higher taxes on the rich often reduce incentives. Reagan commented that at his maximum tax rate as an actor (90%), it didn't make sense to make more than a certain number of movies per year. At a certain level, he was working to keep only 10% of his take. But if he doesn't make more movies, his lifestyle doesn't change but lots of other people don't get paychecks as well (all those guys at the bottom of the credits).

Not impressed by Reagan? How about JFK:

Our
true choice is not between tax reduction, on the one hand, and the
avoidance of large Federal deficits on the other. It is increasingly
clear that no matter what party is in power, so long as our national
security needs keep rising, an economy hampered by restrictive tax
rates will never produce enough revenues to balance our budget just as
it will never produce enough jobs or enough profits… In short, it is a
paradoxical truth that tax rates are too high today and tax revenues
are too low and the soundest way to raise the revenues in the long run
is to cut the rates now.

In Defense of Exxon

Periodic Ramblings of a CPA expands on Bean Counter Magic's defense of ExxonMobile.

A More Reasonable View of the Bailout

Gary Becker, in the Wall Street Journal (via Execupundit) has a more reasonable view of the bailout.

Is Exxon Evil?

Beancounter Magic takes on the prevailing political spin that ExxonMobil is evil. Hmmm... Evil corporation paid $28 billion in taxes last year. More than all of us individual tax payers combined. Perhaps we could use a few more evil corporations.

The Voice of Reason

Execupundit comes through as the voice of reason. Another 1929? Unlikely.

Deloitte Planning for Big Layoffs?

The blog re: The Auditors is speculating on big Deloitte layoffs coming up in the next 60 days. More info here.

Funny Headline

From the WSJ: U.S. Seals Bailout Deal Now we're bailing out the SEALS? Are the Green Beret's next?

It's ALWAYS MY Money!

Why is everyone suddenly worried about spending MY money to bail out Wall Street? Why weren't they worried about spending my money for universal healthcare? Or the fact that it was my money when they worried about the effect of tax breaks? At least Wall Street has shown a long term ability to recover. Wall Street both gives and takes over time. Politicians just take and are then shocked at the results.