Business Insight Zone

For most of the day I’m away from my computer, but I hope you’ll accept my standing invitation to ask questions or suggest topics that you’d like me to address on this blog. There’s no shortage of ideas in my own notebook, but it’s more important to me that I talk about the business topics on your mind.

How to reach me:

• E-mail me at twalker {at-symbol} hoovers {period} com.
• Find me on Twitter at Twalk.

I look forward to reading what you have to say!

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(Photo by Conor Lawless.)

Mostly I limit the shamelessly self-promotional messages here, but I want to make sure that you know how to get in touch with us here at Hoover’s if you ever have a question or problem about the service.

• The Feedback page leads you to our online knowledge base, a feedback form, our contact e-mail, and a form you can use to offer updates about any company we cover.
• If you want to talk to our award-winning customer-support team, you can call 800.486.8666 between 7 a.m. and 6 p.m. Central Time, Monday through Friday.
• The Products & Services page gives you more information about our subscription levels. If you’re in the U.S., you can dial 866-307-3812 to talk to an account rep who will walk you through the sales process; otherwise you can use this page of international sales office numbers to reach our sales staff.

Failing all else, you can also contact me directly at twalker {at} hoovers {dot} com. My turnaround time runs much slower than our support reps’, but I’ll do what I can to get you pointed in the right direction.

Halloween already? How’d that happen?

The Big Holidays are just around the corner, so you probably have about six weeks of productive work left in this year. That’s not long to fulfill your 2008 ambitions, for yourself or your company.

What will YOU achieve with what’s left of 2008?

(Oh, and happy Halloween!)

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(Photo by sth.)

Killing the Grey Lady

Netscape impresario Marc Andreessen makes an excellent point in this Portfolio (via Wired) interview — which I recommend you read in full:

If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.

Once upon a time I covered Intel for Hoover’s. (That duty now falls to Jeff Dorsch, who knows more about the chip business than I ever could.) During that time, I came to appreciate what a breathtaking move it was for Intel to abandon memory chips — but I hadn’t thought of the comparison to the New York Times or other papers.

The Monitor chooses the online option

An addendum to the interview notes that Andreessen said what he did before the Christian Science Monitor announced that it would stop printing its daily edition, so it’s clear that at least one old-line newspaper company is on the same, uh, page with Andreessen. The CSM’s decision was covered in another Wired item, which includes this choice quote from CSM advertising director Bob Hanna:

“Maybe the reason newspapers could go out of business is because they think they’re in the newspaper business instead of the news gathering and dissemination business. To hang on to a two century old technology just because that’s the way we’ve always done it, that’s a recipe for failure.”

This agrees with my own long-held view, which I expressed in a post in April of this year:

People in the newspaper business have made the fundamental error of thinking that they’ve always been in the news paper business. In fact, they’ve always been in the news delivery business.

Should Motorola kill handsets?

All of this was in my mind when I came across this GigaOm piece, in which Om Malik covers the horrific returns of Motorola’s handset business — $2.625 in losses since the start of 2007. After a commenter offered a mostly sensible-sounding prescription for restructuring the business, Malik responded thus:

My fix for this division - shut it down, save the money and move on to become a smaller and a better company.

The messages that Andreessen and Malik are delivering aren’t easy for their targets to hear, especially because both the New York Times and Motorola have such long histories of making lots and lots of money by doing things a particular way.

Old habits die hard. But sometimes you just have to put a business out of its misery.

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Related links:

• When is it time to kill a project?
• The news delivery business versus the news paper business.
• Marc Andreessen and Charlie Munger walk into a bar . . .
• “Circulation falls at many major newspapers.”
  

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Photo by Mark Coggins.

According to veteran Texas Monthly writer S. C. Gwynne, my beloved alma mater boasts “the most profitable — and most successful” athletics program “of any school in history.” Gwynne explores the ramifications of this success in a detailed 8,000-word feature on the empire that UT men’s athletic director DeLoss Dodds has built during his 27 years at the University. The feature is here . . .

Come Early. Be Loud. Cash In.

. . . but you have to be a subscriber to read more than the opening paragraphs online. So, setting aside my fan’s pride in the Longhorns’ athletic exploits (perhaps you’re aware they have the #1 football team in all the land?), I’ll offer a few business-minded thoughts prompted by the article.

Focus

Texas has finished among the top ten for the Directors’ Cup, “which measures the overall success of a college’s athletics program,” for seven years running — even though it fields only 20 teams across its men’s and women’s programs, instead of the 30 or more at comparable institutions like Ohio State or Stanford. (For instance, UT does not have a men’s volleyball team or a women’s field hockey team.)

Dodds and his colleague, women’s athletic director Chris Plonsky, have set a very high standard to go along with these limits: every single team is fully funded, meaning that they have ample travel budgets and that they can spend top dollar on the best coachs and facilities. All of this is in service of a breathtaking goal — in Gwynne’s words, “to allow every one of UT’s teams to compete for a national championship every year.”

This is reminiscent of Peter Drucker’s advice, famously implemented by Jack Welch in the early days of his tenure as CEO of General Electric, to be #1 or #2 in every business you’re in — or else get out of that business.

Working within constraints

Besides this self-imposed focus, UT operates under very different conditions than it did back when Darrell Royal was leading the Longhorns to national football titles. Here’s a key passage from Gwynne’s article:

Today’s sleek, dazzlingly efficient program is really only a decade old. And ironically, it is the product of a sweeping financial crisis in American college sports that has gutted many of the country’s most hallowed universities.

The crisis started with a law known as Title IX, which has turned the world of scholastic sports upside down. Passed by Congress in 1972, it ultimately required that women be given equal opportunities to participate in school sports, a change that happened only gradually over the following three decades. No institution was more deeply involved in this process than the University of Texas. But in 1992 a group of female students sued the university under Title IX. They wanted more teams for women to roughly equalize the number of male and female athletes on campus. The key word was “equalize.”

The lawsuit was immediately seen as a groundbreaking case. That was because no school had done more for women’s athletics than UT. . . . In spite of that, the university had remained out of compliance with Title IX, as had most schools across the country. The large number of football players — 130 or more at UT — created an imbalance with the numbers of players on the smaller women’s teams. Instead of fighting the lawsuit, the university settled it, in 1993, by agreeing to start three new women’s teams: soccer, softball, and rowing. That sent shock waves across the nation: If UT could be forced to change, then everyone could.

As Gwynne goes on to relate, many universities have crumpled under the weight of Title IX — but UT has worked within the parameters of aggressive Title IX compliance to thrive more than ever before. Along with its powerhouse men’s teams in football, baseball, and basketball, it is perennially among the best schools in the country for women’s basketball, softball, and volleyball.

You have to spend money to make money.

The view in the photo above is from the north end of Royal-Memorial Stadium, which has recently been expanded, at massive cost, to accommodate even more of the Longhorn faithful for home football games. Like previous renovations to the once-rickety stadium, the North End Zone (NEZ) project has added not just regular seats, but thousands of ultra-high-dollar seats in club levels and luxury boxes. This means much more money flows into the coffers of UT athletics, and not just for the football program — which may be the best-funded in the country — but for all the “non-revenue” sports like swimming and tennis.

It will take years to pay off the load of debt that the athletics program took on to finance the NEZ. This implies a calculated risk that the Longhorns won’t undergo a football drought like they did in the 1990s; losing seasons drive away too many of the high rollers who populate those luxury boxes on game day. But as long as the formula keeps working, UT should remain a force not only in football, but also in all the other sports in which it competes.

The whole and the parts

According to head football coach Mack Brown, the factors discussed above have erased jealousy between the various sports. No team has to wonder why they don’t get any goodies . . . because they all get the goodies.

But the success of UT athletics, especially when paired with its financial autonomy from the rest of the University, means that resentment or distrust does arise among some professors and administrators. As Gwynne relates in the closing section of his article, Dodds, Brown, and other members of the athletics staff have tried to bridge this gap lately by going out of their way to court the favor of faculty members.

At one level, this would be savvy dealing even if it were insincere (which I doubt it is). Beyond that, though, it highlights a similar challenge faced by organizations of all types: how do you get along with ALL your constituencies? Every organization operates in various “worlds” simultaneously, because it has to meet the needs of customers, employees, donors, vendors, audience members, alumni, voters, or whatever other interested parties.

For the last decade-plus, UT’s athletics program has done a historically good job of balancing the demands of its many constituencies — and, having once worked for the University’s alumni association, I can tell you that the demands of devoted Orangebloods are demanding indeed.

Kudos to Gwynne for doing his typically smart job in handling the complexities of this topic. If you can lay hands on a copy of the magazine or get access to the subscriber side of the Texas Monthly site, his article is certainly worth your time.

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Related links:

• The Longhorns’ bowl game: the cost of high expectations.
• The Tampa Rays invest for the long haul — and win.
• Why the business of sports is so worthy of coverage.
• The Red Sox: smarter and richer.
  

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Image by JoshS1, used under a CC-Share Alike license.

When I wrote about hustle-meters yesterday, I forgot to cite one of my inspirations: my pal Austin Kleon’s book-writing calendar:

HarperCollins will publish a book of Austin’s fabulous Newspaper Blackout Poems next year, and he’s using a simple hustle-meter of his own — a calendar hand-written into a Moleskine notebook — to keep himself on track for his manuscript deadline.

Where do YOU draw your inspiration to hustle?

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Image used by permission.

Writing in the previous post about the boost Sony got from Hancock, I was reminded of the insane box-office run that Will Smith has been on. We talked about Smith at some length nearly a year ago, when he was promoting I Am Legend:

The work ethic of Will Smith: “deliberate practice” in action.

Since then, that film and Hancock have brought in more than $1.2 billion between them.

Just for fun, I thought I’d take a tour through his filmography and see how his recent work has fared on IMDB’s All-Time Worldwide Box office list. Here are his last eight films, in reverse chronological order, along with their rankings on that list and their total gross receipts:

38. Hancock (2008) — $623,546,274
45. I Am Legend (2007) — $583,986,216
189. The Pursuit of Happyness (2006) — $297,986,036
118. Hitch (2005) — $367,600,000
180. Shark Tale (2004) — $306,162,022
147. I, Robot (2004) — $342,795,350
230. Bad Boys II (2003) — $261,900,000
86. Men in Black II (2002) — $425,600,000

Total receipts for the eight films as a whole: $3.2 billion.

Of the films Smith has made this decade, only Ali (2001) and The Legend of Bagger Vance (2000) aren’t on the list — and Ali brought Smith his first Oscar nomination for Best Actor. (He was nominated again for The Pursuit of Happyness.)

Looks like his “sickening work ethic” is paying off.

ADDENDUM, one hour later: This Premiere feature offers excellent insight into Smith’s mindset and work ethic, for example by conveying his belief that “99 percent is the same as zero”:

Triumph of the Will

Near the end of the piece, Smith shares his career goals — which seem to be within reach:

When people look back at my filmography I want to have the most eclectic choices of roles in the history of Hollywood. The most-valued career. [beat] And the most box office.

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Photo by stevelyon, used under a CC-Share Alike license.

Whither the venerable electronics maker? Let’s read along from the Martin Fackler’s New York Times together, eh?

Sony’s Quarterly Profit Falls by 72 Percent

Well, that can’t be good.

TOKYO — Sony reported a 72 percent drop in profit in the most recent quarter on Wednesday, hurt by a stronger yen and the global slowdown. . . .

Sony has joined a procession of Asian exporters reporting lower earnings . . . They have blamed drops in global and particularly American demand, contradicting the once popular notion that Asian economies were decoupling from the United States. . . .

More and more I see analyses that emphasize this point about the interconnection of economies. For many years we’ve slung around the term “globalization” as though it were a new phenomenon, instead of something going back at least as far as Vasco da Gama. And previous slumps — whether we’re talking about the Great Depression of the 1930s or the Asian financial crisis of 10 years ago — have spread their woes across many countries.

What’s different now is the velocity of that spread. The deep integration of the industrial and consumer economies of the world’s more-developed nations, along with the immense size and speed of global capital flows, takes old problems like trade or currency imbalances and magnifies them in a gigantic 24/7 financial echo chamber.

Or, for short: when U.S. consumers stop spending money, trouble ensues.

Tie all of this up with the age-old problem of investor irrationality, and the results can turn absurd:

Many analysts say share prices of top Japanese companies have fallen so far as to defy reason. Not only Sony but many of Japan’s best-known brand names — including Toyota, Panasonic and Bridgestone — have seen their market value drop below their so-called book value, the total worth of their buildings, equipment and other physical assets.

As of Tuesday, Sony’s market value was $21.4 billion, or about 0.58 percent of its book value, according to Paul Migliorato, head of research at NamiNori, a Honolulu-based equity research firm. . . .

“The market is treating Sony and Toyota like pariahs,” Mr. Migliorato said. “Any sense of reality has been hijacked by momentum and fear.”

Two points come to mind here:

1. Sony actually had a very nice run before this, after a few years of bumpy road. For its last fiscal year, which ended in March 2008, Sony increased revenue by 27% and net income by 347%, nearly tripling its profit margin along the way. It has even boosted sales of the PlayStation 3 video game system — though not enough to catch Nintendo’s Wii — and enjoyed more hit movies from its entertainment division. (Last year, Sony’s savior was Spider-Man 3; this year, that role is being played by Will Smith’s Hancock.)

2. “Be fearful when others are greedy and greedy when others are fearful.” Looking at the abyssal share prices of Sony et al., the wisdom in Warren Buffett’s motto becomes clearer than ever. One of Buffett’s signature practices is never to buy an asset that he can’t get at a bargain price, and one of the things he observes closely is the relationship of a company’s price to its book value. Buffett distinguishes himself from many other financiers by his careful attention to the potential downsides of investments; buying a company at less than book value — especially if you think the company is basically well-run and you expect to hold the investment for some time — is a good way to insulate yourself from losses. One wonders whether Buffett is shopping among Japanese blue chips for bargains.

Sir Howard Stringer took the CEO job at Sony a few years ago with much fanfare: savvy Brit with strong American ties takes the helm at Japanese icon, and all that. When you look at the top- and bottom-line results from last year, you can hardly fault his management. But when you look at the results he just handed in, it’s clear that he’s got his work cut out for him.

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Related links:

• Sony management deserves no pity.
• The Nintendo Wii: Hitting its way into the Hall of Fame.
• Company of the Day (09/18/07): Sony.

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Online wine impresario Gary Vaynerchuk has talked about the dire need to “hustle your face off” if you want to make a serious go of it as an online entrepreneur.

But how do you know when you’re hustling enough?

Well, in the long run you’ll know because you’re seeing the results you want to see. But since Gary is also right to preach patience, that approach may not give you effective feedback over the short run.

My advice: make a hustle-meter for yourself.

This idea is stolen directly from the coaching staff of the Chicago Bulls, back when Michael Jordan & Co. were running away with one NBA championship after another, but it goes far beyond the realm of sports — and you don’t need a sports background to understand it.

The relevant point is that those Bulls teams were great on defense. Especially during their record-breaking 72-win season, they were known for the crushing defensive pressure they applied to their opponents during key stretches of games.

But defense can be hard to measure in the short run. There are statistics for blocking shots or stealing the ball, but they don’t capture the total level of effort that a team demonstrates. So the coaching staff started tracking “defensive touches” instead. Every time a Bulls defender poked the ball out of an opponent’s hand, or deflected a pass, or put a hand on the ball even momentarily, a mark went down on the tally sheet. Blocks and steals counted, too, but only as part of the bigger picture.

Over time, the coaches figured out what amount of touches represented an exceptional level of effort. And finding out the team’s current number of touches became a regular fixture of locker-room meetings at halftime and after games.

Now, apply this standard to yourself.

• If you’re selling something (or selling yourself in looking for a job) how many calls a day represents an adequate level of effort? How many e-mails?
• If you’re managing a team, how many one-on-one talks per week do you have with your team members — even informal chats in the hall?
• If you’re running for office, how many hands are you shaking each week?
• If you’re trying to become an expert in something, how many books are you reading in the field each month?
• If you want to get good at something — say, public speaking — how often are you practicing?

The list goes on, and the specific metric is up to you. But somewhere there’s a measureable number that will help galvanize you to action.

You tell me: What will your hustle-meter measure?

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Related post:

• Hard times call for an entrepreneurial outlook.

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(Photo by ccgd, used under a CC-No Derivative Works license.)

Jim Grisanzio, a project manager at Sun, posted a nice follow-up to the item I wrote last week comparing Ford to Toyota.

Small Improvements Leading to Big Results

Since Jim works on open-source technology — and works in Japan — he has an interesting perspective on the Toyota method of kaizen. As we discussed the other day, Toyota prizes small changes that compound incrementally, rather than “Big Bang” changes that try to revolutionize things all at once.

But Jim cites two more big advantages to the kaizen method:

• It’s open-source: everybody can contribute, within a framework.
• It works within constraints, and indeed was born of necessity during very hard times for Japanese industry.

In today’s tough economic times, many companies are looking for magic fixes to their problems. My sense is that the combination of those three algorithms — incrementalism, open-source collaboration, working within constraints — is the prescription to cure many ills.

Do yourself a favor and check out Jim’s post and its comments, as well as the other articles linked below.

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Related reading:

• Jim Grisanzio: Toyota’s (Open)TPS
• Jim Grisanzio: A way of Thinking
• Dan Markovitz: Kaizen vs. Kaikaku
• James Surowiecki in The New Yorker: The Open Secret of Success
• Charles Fishman in Fast Company: No Satisfaction at Toyota
• Succeeding under constraints.

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