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Sunday, April 30, 2017

The Ooda Loop vs. Buffett's Moat

Perhaps as long as 38 years ago, I was waiting to enter  a presentation which my agency was giving at the Pentagon. Some of the creatives were a bit nervous presenting new work but all I had to do was show a magazine schedule that had largely run and answer a few questions. While my colleagues paced, I looked for a place to get a coffee.

As I was pouring my cup, I overhead a major and a lieutenant colonel talking about an upcoming visit by retired Air Force Col. John Boyd. He was going to discuss his Ooda Loop strategy. For some reason, I employed a memory trick that I learned as a teenager. I made a ridiculous association and locked in his name and his strategy (I imagined William Boyd, the actor who played Hopalong Cassidy in my youth in fully Hoppy regalia in a jet doing barrel rolls). A few weeks ago, I heard of Ooda Loop again, and like magic, John Boyd came back to me instantly.

During the Korean War, fighter pilot Boyd worked out an approach for making quick decisions that would improve chances of success in environments that were changing quite rapidly. His approach dubbed OODA was--Observe, Orient, Decide, and Act. I would argue that it is applicable to 2017 business, especially in tech.

Boyd observed that US pilots tended to win most dogfights in the air even though their planes were a bit slower than the Soviet MiG jets. The trick was not simply that his pilots were better trained. It was that they were able to make TRANSITIONS more swiftly.

So, he developed OODA. The Observe part was basic. Pay rigid attention as things are progressing. The Orient task came next. Unless you are able to interpret information it is not worth much. You need to digest information and come away with a more sophisticated view than most. Decide is next--just as a fighter pilot has to act so does a man or woman in business. Cut through the fog and make a judgement. Finally, you Act. The best way to mess up a rival be it a hostile jet or a business competitor is to hit them with unexpected actions. If you take action before an opponent can switch their tactics, you competitor will be at least temporarily disoriented.

It appears that many successful Silicon Valley entrepreneurs are using the OODA loop in some form. I have seen write-ups about how the PayPal founders employed it directly and it appears many are doing it without realizing it.

This is contrary to Warren Buffett’s famous “moat.” The great Omaha investor always has stated that he likes to invest in businesses with a moat around them. The cost of entry is high and the well established brand (Coca-Cola, Wells Fargo, Washington Post) has a sustainable competitive advantage over its competition. Such an approach has served Buffett and Berkshire Hathaway shareholders very well. Are the times changing, however, especially in new wave disciplines?

Eighty-eight year old business guru and former Royal Dutch Petroleum executive, Arie de Geus, said a few years ago that, “The ability to learn faster than your competitors may be the only sustainable competitive advantage.” If he is right, we may be seeing a great deal more about the OODA loop in the years to come.

If you want to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Saturday, April 1, 2017

Pounding For Home

“Don’t look back. Something might be chasing you”--Satchel Paige

“Never look back unless you are planning to go that way”--Henry David Thoreau

One of my older brothers has been a long distance runner for 50 years. Today, at 74, he contents himself with 5k’s, 10k’s and the occasional half marathon which I make it a point to be sure to attend. He is a remarkable physical specimen and an inspiration to us young guys. I remember his first full marathon back in 1967--the Boston Marathon! It was a bitter April day and was snowing in Hopkinton, Ma. as the race began. He did very well for his first big race and finished 150th. As my Dad and I picked him up, I asked him what he was thinking as he arrived at Heartbreak Hill (this is a famous location between mile 20 and 21 of the race right near Boston College where both he and I did our graduate work).

My brother’s answer was “six more miles to go, pounding for home downtown.” In the car back to Rhode Island after we dropped Dick Jr. off at his apartment, I asked my father, a former coach and world class athlete, what he thought of my brother’s answer. “Shouldn’t he have felt great about making it up Heartbreak Hill.” My father smiled and shook his head. “You big brother has got it right, Don. The previous 20 miles did not mean much. Always look ahead. That is the mindset of a champion.”

In previous MR posts, I have mentioned how tedious it is for me to meet with old cronies who continue to talk about the good old days of buying three stations in a TV DMA and not having to worry about cable, consumer avoidance, Netflix and dozens of digital platforms. It has been my observation that creators of businesses of all kinds keep building toward a long term goal. They do not dwell on where they are and rarely focus on where they have been. Their eyes are always “on the prize”--their long term goal.

A now famous story about looking ahead was an exchange that took place between the late Andy Grove, President of Intel and Gordon Moore, Intel’s Chairman (credited with Moore’s Law which stated that processing speed for computers approximately doubled every two years). Sometime in the mid-1980’s Grove asked Moore, “If we got kicked out and the board brought in a new CEO, what would that man do.” Moore’s immediate response was, “A new CEO would get us out of the memory chip business.” Grove’s fired back with “Why shouldn’t you and I walk out the door, come back, and do it ourselves?” That, of course, is precisely what happened.

Moore and Grove were creators but they were not mired in nostalgia. Nothing was going to get in the way of progress. Their energy was focused on the future; there was no time for regret or resting on their laurels. Business and life is a road full of potholes. You will hit some and dodge others. The winners will not let age, distractions or negative people get in their way. They will be too busy pounding for home.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Saturday, March 25, 2017

Samuel Beckett--Coach to Entrepreneurs?

Samuel Beckett (1903-1989) was an Irish born novelist, poet and playwright who spent most of his adult life in France. He is known for minimalist writing and being a leader in the theatre of the absurd. In 1969, he won the Nobel prize for literature.

Beckett’s writing was quite spare especially as he aged. In WORSTWARD HO, from 1983, he wrote--“Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”

This concept of “failing better” has been adopted by many in Silicon Valley almost as their mantra and has even been picked up some professional athletes who are clawing their way to the top. Entrepreneurs are often creators and many of the ultimately successful ones work on being brutally honest with themselves. They ask for criticism and, unlike most of us mere mortals, they do not get defensive when you give it to them both barrels. They have a self-awareness that few of us have. They do not run from failure or hide it from others.

Historically, we have all seen this work in the arts. Allegedly, Hemingway re-wrote the ending to A FAREWELL TO ARMS some 39 times before publication. Michael Curtiz shot seven different endings to CASABLANCA and Frank Capra did the same thing with MEET JOHN DOE.  And, most of us at some time in our lives heard the famous Thomas Edison quotation of, “I have not failed, I’ve just found 10,000 ways that won’t work.”

There is also a misconception from my perspective that most entrepreneurs and private investors tend to “bet the ranch” on every new idea that they think is promising. If you study breakthrough technology or successful businesses with a bit of care you will find that the business generally succeeded by surviving a series of small bets. As a very successful entrepreneur told me recently, “By taking lots of small risks, you avoid catastrophic mistakes.  I keep seeing what works and what does not every step of the way. I never stop testing and I know that most of these small wagers will not work. I can live with that.”

If you want to fail well you need to be able to move through even dicey situations. Learn to reframe, improvise and keep moving forward on the fly. And, amazingly, embrace the words of Samuel Beckett and FAIL WELL.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Saturday, March 18, 2017

Are Viewers Paying Much Attention Anymore?

On Sunday, February 26th, I rose early, dressed hurriedly, and jogged out to the curb to begin my weekly ritual of reading a hard copy of the New York Times. As I glanced at the front page, I was very surprised to see an article about media research on the bottom fold.

The piece was entitled “FOR MARKETERS, TVs ACT AS PRICELESS SETS OF EYES.” (https://www.nytimes.com/2017/02/25/business/media/tv-viewers-tracking-tools.html?_r=0) The article covered an issue that many of us have been pounding the table about for years. With so many other devices going simultaneous to TV viewing, just what is the level of attentiveness to commercial messages in the 21st century?

Many of us were exposed to fragmentary and early set top box data as long as nine years ago, when it appeared that there was a great deal of channel hopping going on during commercial breaks. Intuitively, many of us had felt that but we finally had some proof. Since then, particularly among millennials, the use of a smartphone, tablet or laptop while “watching” TV has grown significantly.

The Times article talked about companies who are working hard to capture commercial ratings, if you will, relative to the standard program ratings that we all have lived with for decades. Advertisers are projected to spend upwards of $70 billion in television advertising in the US this year so providing attentiveness detail would be very valuable indeed to marketers of all broadcast/cable budgets.

The lead player in the article was TVision (pronounced tee vision) which “tracks the movement of people’s eyes in relation to the television.” TVision has approximately 2,000 households in the Boston, Chicago and Dallas-Ft. Worth areas which some may say is small compared to Nielsen’s 42,500 national household sample. Their information  is valuable in how granular it is and also their measurement of binge viewing favorites on Netflix and Amazon. If you know what programs have the most engaged viewers, the  pricing of primetime inventory is bound to shift, perhaps dramatically.

Also mentioned in the Times article was Symphony Advanced Media which has constructed a panel of 17,500 viewers who have a special mobile app installed in their phones. Participants, in exchange for a small monthly stipend, allow Symphony to track their usage plus a microphone hears what they are watching. Additionally, participants do a questionnaire on usage. The service captures viewings on busses and in sports bars as well.

All this is heady stuff. A well placed media executive told me anonymously that he is increasingly using this kind of data to wean people away from large commitments to television as we know it. For the time being, Nielsen will remain the gold standard in audience measurement. Yet, commercial avoidance continues to march at the fastest pace ever. These new services can wrap some discipline around the conjecture that many of us have had in recent years. And, of course, Nielsen is surely not standing still in terms of their development. It will be a long time before anyone gets ahead of the curve but promising new research is sure to realign the media mix of many significant advertisers.

If you would like to contact Don Cole directly, you may reach him at doncolmedia@gmail.com

Sunday, March 5, 2017

New Media and The Hype Cycle

Many of you have probably heard the term "hype" a great deal in your marketing, advertising or media careers. Did you know that there is a phenomenon observed by a renowned research firm known as The Hype Cycle?

The Hype Cycle was, as best as I can tell, was first identified by the Gartner research organization which essentially said the following about a technology or invention:

1) When it arrives or proves viable, the hype is huge
2) It is then found to not live up to its initial hype
3) The hype gets relatively silent and then you do not hear about it for a while
4) Incrementally, things get better and the new technology does the things it was supposed to do when first hyped.

In simple terms, a rule of thumb about the hype cycle is that things often become truly useful after we stop hearing about them.

Is this some esoteric theory from a bunch of futuristic dreamers? I do not think so.

Remember in the late 1990s when the internet was the rage and forecasters said that it would swamp advertising as we know it? Everyone wanted the internet in media plans even they did not understand what they were buying and could not verify the audiences of the online platforms. The great dot.com crash of early 2000 washed out a lot of marginal players and many avoided this emerging medium for a few years. Meanwhile,Google got stronger and has been proven to be an effective marketing vehicle along with many other online platforms.

The late Roy Amara who was president of The Institute for The Future developed a theory about the hype cycle that has since become known as Amara’s Law. Articulated in brief by fellow futurist Robert Cringely, it goes like this--”We tend to overstate the effect of technology in the short run and understate the effect in the long run.”

So, today we hear about driverless cars and trucks and tests seem to be going well. Elon Musk says that he is planning a flying car which reminds me of my childhood cartoon show, The Jetsons. Some politicians talk of an industrial renaissance in America creating millions of jobs but robotics is finding its way in to coffee shops and soon fast food establishments as well as auto plants. Robots will grow profits but kill unskilled and low skilled jobs.

Will all these things happen? Probably. When you stop hearing much about them, check your premise. It could be that they are merely in the quiet phase of the hype cycle and will come roaring back into our real world fairly quickly.

Advertiser supported media, particularly video, is losing share daily to Netflix, Amazon Prime Video, Youtube and others. The hype may not be there as it was a few years ago but their growth is steady and relentless.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Saturday, February 25, 2017

The Slobification of America

Over the last 25 years, it has been clear to me that Americans do not look as good as they once did. People increasingly dress in a very sloppy manner. Couple that with our obesity epidemic in the U.S. and every year more and more people can be classified, even putting it charitably, as slobs.

Most people admit that standards have shrunk. Here are the explanations that I have seen and heard:

“A large number of Americans have no chance for upward mobility so why should they bother to dress with care?”

“It all started with Casual Fridays a few decades ago. Everyone looked good at first, then jeans appeared, then flip-flops, then shorts, and now people look like hell at the office.”

“Many people earn (adjusted for inflation) what they made 30 years ago. They cannot afford good clothes.”

“People should wear what makes them feel good but put some effort in to your appearance.”

“Workers are far more comfortable in casual, even very casual clothes. As a result, they are far more productive.”

Certain things are creeping in to places where sloppy dress was unheard of historically. I have seen people in jeans at the Symphony. A few weeks ago I went to a matinee in Manhattan seeing Cate Blanchett and Richard Roxburgh in The PRESENT.  All tickets cost at least three figures. As I looked around the theater I was the only person wearing a tie--a knit tie, a casual tie, under a sweater. Many men and women were in sweats and they obviously could afford to dress better. A few men had blazers with no tie and looked pretty sharp. And, some of the women looked great. Most did not.

I have been at a few wakes in the past year. One distinguished gentlemen had a big turnout but people were there in sweat outfits, one of which was filthy. At another wake, the brothers of the deceased showed up in short sleeve sport shirts and old jeans.

Go to Disney World, The DMV, Times Square, or to a ball game with pricey tickets. If you dress with any care, you stand out big time.

People often ask me how I can wear a tie most days. Well, it is pretty simple. My shirts fit. If your shirt fits there is no complaint about how tight it is against your neck. Pretty simple but most men use that as an excuse.

Are people dressed more casually more productive? I have done some of my best work both in pajamas or in an expensive suit. My apparel has no bearing on my thoughts and I am skeptical that dressing carefully for a professional appearance hampers one’s creativity.

Surprisingly, allies to my feelings come from unexpected sources. Bill Maher, took a five minute vacation from skewering politicians lately and railed about the growth of American slobs. He said, “When you leave home, we can see you.....This is not about money, it is about pride.”

As a child, I saw many people who were struggling financially. Their clothes may have been old or few, but they were clean and pressed. I often wonder if steam iron sales have declined over the last 20 years.

In 2007, I witnessed something that put it all in to focus for me. I was in Atlanta, and after a good day at work, I stopped at a barbecue joint for some take out. There was an elderly lady sitting alone at a table who was dressed simply but very carefully. A few minutes later a couple in their early 50’s entered and joined her. The man was very heavy and had on a wife-beater tee shirt, a John Deere cap and jeans that only accentuated his prodigious posterior. The mature lady, who was his mother said, “Dwayne, a man over 50 should not wear jeans. You look ridiculous.” His wife chimed in, “Momma, Robert Redford is over 65 and he still wear jeans.”

Without missing a beat, the old girl responded, “I got news for you. Your husband ain’t no Robert Redford. Clean him up.”

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, February 16, 2017

The Hollowing Out of Conventional Media

A few years ago, my wife and I decided to take a day trip to a city a few hours away. It had once been an industrial powerhouse and was the second largest city in its state. The population had declined and I noticed that it was on lists of the cheapest places to buy a home in the United States. It was a low priority on our “bucket list” but it was a pleasant Saturday morning so we thought, why not?

When we arrived, it was a pretty depressing place. From the highway that cuts through it, I had noticed over the years that the whole city looked as if it needed a coat of paint. Close up, it was really hurting. Many storefronts were boarded up, and there was very little action in the downtown area. We stopped in a shop where a nice lady told us that the locals who owned the last substantial manufacturing plant had sold out to a very well known global company. Very soon thereafter, the plant was transferred overseas.

This process is known as “hollowing out.” As the manufacturing sector deteriorates in any economy a plant or entire company is sold and the new owners go offshore for low cost production. The company name may stay the same, dividends are still paid, but the company has been “hollowed out” for domestic purposes. Some of you may consider this a stretch but I see the same thing happening for many conventional or, as I call them, legacy media properties.

Talk to someone whom you know in the newspaper business. With readership and subscriptions declining, newsroom are relatively vacant these days. Some papers that were considered major players years ago may have only a few sportswriters left and they use wire service and syndicated writers to provide national news and much of their editorial commentary.

In radio, things have really become difficult. A sales rep may now represent several stations in a market and billing may tend to be skewed toward online or promotional versus good old 60 second commercials.

TV may be effected very dramatically but you do not notice it as much as they still provide local news across the day. Look closer and you observe advertisers on regularly that the management would have scoffed at 20 years ago. News crews doing remotes are much smaller than they were years ago thanks to technology. Long time anchors often have not had a pay raise in years while others have had substantial pay cuts recently (where does a 58 year old anchor go? He or she has no bargaining clout).

A retired TV salesman whom I know sent me this revealing e-mail re “hollowing out.”

“Don, my former administrative assistant was retiring after 25 years at the station. I was invited to the farewell luncheon and was flattered. The meal was nice enough and was at an old watering hole for us sales guys back in our salad days. There were 20 people there including the general manager. At 72, I was the oldest by far at the table. When I arrived someone asked me for $5 to put toward the gift card that they were giving her. I laughed and gave her a 20 which made her eyes pop. Near the end of the lunch, the general manager stood up and said that he had to go to a conference call. He put $15 down on the table and said everyone should kick in that amount. A few people were clearly upset. I waited for the GM to leave and then went and grabbed the check and gave the waitress my credit card. As the group broke up, a young woman whom I had never met before hugged me and said softly, ‘I did not want to come today as I really could not afford it but I did not want to be rude to my best friend at the station.’ I told her that it was no big deal as she had my back for 18 years and it was the least that I could do. Was the GM a monster? I don’t think so. It is just that every nickel has to be accounted for at headquarters. Times have really changed.”

Clearly, this may have been an extreme example but not many TV stations have the 40-50% profit margins that once had. Local stations have been hollowed out. They still have a news product although clear headed observers would admit that it is weaker than in the past. Tech has helped them with costs and some are making decent money with their websites. The future, however, does not look bright as Netflix and other commercial free video options continue to steal away the upscale and younger demographics from over the air stations.

The times, they are changing. As we shift toward more digital and online/mobile options, the hollowing out of legacy media properties will only accelerate.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com