I always look forward to Mary’s presentation at Web 2.0. Mobile is clearly about to burst thanks to the iPhone. This reminds me of the shifts from mainframe to client server and client server to web.

Key insights from the presentation:

Economy (we are not out of the woods yet)

Good news

• VIX has settled down into normal territory.
• S&P 500 positive earnings estimate revisions are rising.
• Technology spending seems to have bottomed.
• Retail sales and e-commerce growth seem to have bottomed.
• Manufacturing (based on PMI) is near normal.

Not so good news

• Borrowing costs are still relatively high.
• Consumer confidence is still well below normal.
• Manufacturing capacity utilization is very low implying weak demand.
• New home sales are well below normal.
• Credit card delinquency rates are well above normal and rising.
• Residential mortgage defaults are at an all time high and rising.
• Commercial mortgage defaults are rising.
• Unemployment is high and rising (Mary points out that unemployment peaking is key for sustainable recovery).
• Debt levels are at historically high levels and rising.
• US income statement – expenses exceed revenue and expenses are growing rapidly.  13T debt = $110K per household – 2x median annual income.

Technology

• Mobile Internet is and will be bigger than most think.
• Mobile is the next major computing cycle.
• Mobile internet usage is growing faster than desktop usage did.
• Mary predicts 3G usage will hit inflection point in 2010 (>20% usage).
• Location-based services are key to the mobile internet ’secret sauce’.
• The iPhone/iTouch represent the fastest hardware user growth in consumer technology history.
• Next generation platforms (social networking + mobile) are driving massive change in communication and commerce.
• Look to Japan for guidance on where mobile is headed in the US.
• Mobile data traffic is growing at an enormous rate putting strain on networks.
• Mobile-related share shifts will create/destroy material shareholder wealth.

When I was just starting to manage larger teams, it seemed fashionable to work on morale.  Seems like a good idea, right?  You want morale to be high and the troops to be motivated!  I learned a very hard lesson about morale in the process.  In my quest to improve morale, I found that I actually made it worse.  What I learned was that talking to people about morale and how they were feeling about things often led to the opposite intended result.  Those that felt bad about things tended to feel even worse after talking about them.  Those that felt good about things started to think that there must be problem or we wouldn’t be talking about it.    A morale death-spiral.

I try to stay alert for flagging team morale, but not focus directly on it.   Instead, what works for me is to focus the team on winning.  Get people fired up about winning the next big deal, hitting the next milestone and the vision that lies ahead of that.   I found winning to cure most team morale issues.  You quickly find out who’s on board and who’s not.  Driving hard towards the goals will inspire your winners and either convert or chase off the detractors.

You don’t fix morale by focusing on morale; you fix morale by focusing on winning.

I saw this first on Lance Weatherby’s website.  Impressive.

Created by Erik Qualman author of Socialnomics: How social media transforms the way we live and do business

Recently, I’ve had the pleasure of working with several technology entrepreneurs in Atlanta.   I find that very often, these entrepreneurs need to create a positioning statement.  To me, a positioning statement is not something you would put up on your website or in a sales presentation.  Think of it as a guide to crystallizing your unique place in the market and ultimately, a document to reference as you represent your company and brand to the world.

Here is a positioning statement outline adapted from Crossing the Chasm, by Geoffrey Moore:

• For (target customers)
• Who must (solve a specific problem)
• Our product is a new (new product category)
• That provides (key breakthrough benefit vs. current way of doing things – which solves dilemma)
• Unlike (competitor in new category)
• We have (whole product most relevant for you)

I have found that this particular positioning statement works well for technology product companies, but not for services companies.   Creating a positioning statement for a services company is a similar exercise, but I find that it’s much more difficult to come up with a legitimate differentiator for a services company.  There are ways to do this, which I may dedicate to a future post.

In terms of the positioning statement, you can approach this one of two ways:  a) fill in the blanks in about 15 minutes, check it off the list, file it and move onto the next action item, or b) work with your team and advisors to give some meaningful thought to a statement which will be the guiding document for your future marketing efforts.

Obviously, I recommend the latter.  Get your trusted advisors together and work on each component.

• For (target customers).  Who is your real customer?  What is their title?  In what size organization?  In what industry?
• Who must (solve a specific problem).   What pain do they have?  What is their recurring nightmare?   Read Forbes, Fortune and the Wall Street Journal – what are the top of mind issues in the industry?  If you are not addressing a top of mind pain for your target customer, you are in for a long and arduous haul.
• Our product is a new (new product category).
• That provides (key breakthrough benefit vs. current way of doing things – which solves dilemma).  What is the pain killer that you are offering to your target customer above?  If it’s preventative vs. a pain killer, you may also be in for a long haul.  People will buy pain killers much more readily than vitamins.
• Unlike (competitor in new category).  Who is your real competition?
• We have (whole product most relevant for you).  What differentiates you from your competition?  Not just the product, but the services, integration, training, etc.  What do you provide that is most relevant to this target customer with this pain?  Perhaps you can gear your product to a specific industry segment or niche that would differentiate you?   Could you legitimately claim that it’s build from the ground up for a particular industry?  What is different about your offering that is sustainable and relevant?

I have found that this exercise, if done properly will get you focused on the right business problems and provide great clarity and coherence to your marketing and sales efforts.

Further Reading.  Crossing the Chasm, by Geoffrey Moore is the technology industry standard on this topic.  If you only read one book, this is the one.  The Chasm Companion, by Paul Wiefels is worthwhile and Positioning: The Battle for Your Mind, by Al Ries and Jack Trout is a classic.

When I first started to lead the workforce management business at BlueCube Software, it seemed that we had gotten into the habit of designing product features without interacting much with real users.  We relied heavily on the opinions of people in the office.  This often led to features that ‘worked as designed’, and might even meet customers’ written requirements, but did not work for the end user.

According to Wikipedia, the phrase ‘think outside the box’ originates from the ‘nine dot’ puzzle. The challenge is to connect all nine dots with four straight lines without lifting the pencil from the paper.  The only way to do this is to draw lines outside the confines of the square defined by the dots themselves.

We developed a mantra, “Think outside the Cube.”  We were not going to solve certain design problems within the confines of our workspace.  We needed literally to get out of the building to find the best solution.  Fortunately, our users were large retail and hospitality chains.  Getting to a user often involved simply heading to the local Blockbuster.

While initially resistant, once developers observed real users using their system, it often transformed their approach to development.   Instead of being pushed to get in front of users, they sought out the opportunity to review a business process for improvement, or test drive a new design.    Since then, Agile development, customer interaction and collaboration are more the rule than the exception.

I’m convinced that a large percentage of software developers – for software companies as well as large IT departments – do not interact with users anywhere near as much as they should.

Get into the field to gather requirements, but also to test drive ideas and watch people try to use your product or prototype.

Rinse.

Repeat.

I had the good fortune to be a part of the WebChallenge 2009 team and this past Wednesday, we held the awards dinner.   WebChallenge is a state-wide high school technology contest conducted by the Technology Association of Georgia (TAG) and the TAG Education Collaborative (TEC).   This contest is designed to inspire the kids to learn more about technology and pursue that field of study in high school and college.   You can get more information on the website.

The theme of the competition this year was, “Free Your Community!”  Students were challenged to use free technologies that effectively address a need in their local non-profit community.  So, the use of things like Facebook, Google Apps, Website Baker and JQuery were encouraged to provide something of use to their school or other non-profit entity. 

Congratulations to the finalists which included:

• Central Gwinnett High School
• Elizabeth Andrews High School
• Gwinnett School of Math, Science and Technology
• Morgan County High School
• North Gwinnett High School
• TEACH Charter High School
• The Weber School

Award Winners

Grand Prize – Best Overall Concept and Most Effective Implementation

•  Line Up – Jonathan T. Hunsucker, Matthew A. Palmer, and Samuel J. Elgin – North Gwinnett High School

Most Useful Concept:

• 1^st Place: PACT – Wali Shareefy,  Shubar Bahaduri – North Gwinnett & Central Gwinnett High School 
• 2^nd Place: Zeitgeist – Stanley Ayzenberg, Brian Lagoda, Rina So, Marissa McOmber – Gwinnett School of Mathematics, Science and Technology
• 3^rd Place: Save Atlanta Youth – Jeancarlo Gomez and Afton Davis – Elizabeth Andrews High School

Most Effective Implementation – Free Tech Framework:

• 1^st Place: One Morgan – Imran Momin & Gareth Newton – Morgan County High School
• 2^nd Place: Globalization Project – Ed Silva, Brian Lagoda, Stanley Ayzenberg, Phoebe Clark – Gwinnett School of Mathematics, Science and Technology
• 3^rd Place: Teach Comets – Busra Uduk and Elif Er – TEACH Charter High School

Most Effective Implementation – Open Source Tools:

• 1^st Place: Line Up – Jonathan T. Hunsucker, Matthew A. Palmer, and Samuel J. Elgin –  North Gwinnett High School
• 2^nd Place: Teach Otakus – Trevor Daniel, Andy Worden, and John Moses – TEACH Charter High School
• 3rd Place: Activity Splash – Josh Mangel, Avi Zolty – Weber School 

It was great to see the Atlanta technology community turn out for the event including Lance Weatherby and Scott Burkett who along with Chuck Johnson, were the judges for the event.  Also in attendance were Sig Mosley, David Gould, Tino Mantella and Gordon Rogers.  Chris Klaus couldn’t be there for the event, but I hear he made a last minute donation which helped make the event possible this year.

Congratulations to John Hurlbut for pulling together the volunteers and making the event happen.  And thanks for letting me be a part of it.

The Financial Times recently ran an article on the front page (if you still read news printed on actual paper) implying that Jack Welch has had an epiphany which has reversed his thinking over the last 30 years.  This received a lot of attention in the mainstream financial media.

The author, Francesco Guerrera states, “Jack Welch, who is regarded as the father of the ’shareholder value’ movement that has dominated the corporate world for more than 20 years, has said it was ‘a dumb idea’ for executives to focus so heavily on quarterly profits and share price gains. “  Guerrera continues, “His comments, made in an interview for the FT’s series on the future of capitalism, come as the economic crisis has caused a radical rethinking by many leading executives and policymakers.”

Full disclosure – I am a fan of Jack Welch.  I realize that this may be tragically un-hip, but to me his approach to business is plain common sense coupled with a relentless focus on execution.    So, I was certainly intrigued to hear about Jack’s epiphany.

In the article, Guerrera adds, ” The birth of the shareholder value movement is commonly traced to a speech that Mr. Welch gave at New York’s Pierre hotel in 1981, shortly after taking the helm at GE. ”

So, I decided to go back to this speech to see how the association was made.  I was unable to locate a copy of the speech online, but it can be found in the appendix of “Straight from the Gut,” by Jack Welch.

In the speech, Welch begins by saying that it would be pointless to try to describe the initiatives of GE’s various businesses under “an all-inclusive, all-GE, central strategy – one grand scheme.”

This makes sense to me – the strategy for a low-cost provider can’t possibly be described under the same umbrella as the strategy for a high-value business.  So, he chose instead to talk about a “central idea” that could be applied across the company.  That idea was simple – the insistence on being number one or number two in a market.

This central idea came with a set of three values.  States Welch, “Around this tangible central idea we will wrap these intangible central values – unifying dominant themes … One we’ve termed reality, a second we call quality/excellence, and third, the human element.”

What he meant by reality was the idea that people need to see the world as it is, not as they wish.  Quality/excellence refers to the idea that everyone in the company should be striving to be proud of every product and service they provide.   And the human resource element refers to “an atmosphere where people dare to try new things – where people feel assured in knowing that only the limits of their creativity and drive … will be the ceiling on far and fast they move.”

He concludes by stating that GE will grow faster than the economy.  Welch says, “For those of you who like in some way to associate GE and the GNP, if anything we will be a locomotive pulling the GNP, not a caboose following it.”

Nowhere in the speech does Welch state that the CEO’s only focus should be on shareholder value, quarterly profits, or share price gains.

His focus is on market leadership, differentiation, quality, building great teams and growing faster than the economy.

On his blog, Welch says, “The article also noted that I never mentioned the term ’shareholder value’ in that particular speech. In fact, that speech was all about a long-term strategy for General Electric and how the company was going to operate over the next twenty years. Somehow, that speech got spun in the FT article to equate short-term earnings and shareholder value. That I just don’t get.”

I don’t get it either.

In the FT article, Welch did say that it was ‘a dumb idea’ for executives to focus so heavily on quarterly profits and share price gains.  So what did he mean?  I had the good fortune to be able to attend a class presented by Jack Welch recently.  During one session, he said that any schmuck (I’m pretty sure he used that exact term) can manage for the short term or the long term.  A good manager does both.

So, focusing purely on short term profits and share price is a dumb idea.  Shareholder value is not a strategy.

And from what I can tell, Jack Welch has never said anything different.

This is a picture of my house last Thursday around 8:30PM.

TV is so dead.

Charlie Rose recently interviewed Marissa Mayer, vice president of search products and user experience at Google. Charlie covered a lot of ground on topics ranging from competition to innovation to mobile search.

To me, some of the more interesting discussion revolved around how Google organizes and innovates.  I’ve tried to summarize seven key thoughts below.

1. Be Open to Ideas from Everywhere
2. Launch Early and Often
3. Cultivate Innovation with Small Teams in a Shared Workspace
4. Have a Broad Mission
5. Stay Engineering Driven to Foster Innovation
6. Hire Smart People Who Get Things Done
7. Managing Is the Means, not the Goal

Be Open to Ideas from Everywhere

At Google, ideas come from users (Google Desktop), the engineers (Google News), executives (Gmail) and strategic analysis – seeing users go to the competition for certain things.   I think the key is being open to this.

Launch Early and Often

Marissa advocates building a prototype that captures the imagination of the users, building a team around it and iterating quickly to improve it.  Marissa said, “a big part of our innovation process is iteration, try something, get a lot of feedback, try something new … launching early and launching often.”

Foster Innovation with Small Teams in a Shared Workspace

Marissa believes that a big part of Google’s ability to innovate lies in their culture of working in small teams and shared workspaces.   She states, “We’ve tried to keep the teams really small which leads to a sense of empowerment, people making decisions around what’s the best feature, what do their users need, how are they going to build the best product, and it allows also for them to be really agile. You know, we try and avoid meetings … one of the great things that happens with a small team is you can put them all in the same office.  At Google we usually have three or four people in each office and that works really well because when they want to make a decision, people just roll back from their desk and say, ‘Hey -’.”

I couldn’t agree more.  At BlueCube Software, we not only organized around this concept, our CEO literally architected the building around it.

Have a Broad Mission

” Larry and Sergey  had the foresight to give the company the mission of organizing the world’s information.  … with that broad mission you know every Googler has an idea. Every Googler has an idea as to something that’s not being done right now that could be done.”

Stay Engineering Driven to Foster Innovation

Marissa talks about how the traditional view is that most startups begin as very technology or engineering driven companies but as the company becomes larger, they have to become either sales driven or marketing driven.

“…you can kind of play a game with most companies where you can ask, are they marketing driven, or are they sales driven? Pepsi – marketing driven, SAP – sales driven. ”

She believes that a part of Google’s success and ability to continue to innovate lies in the fact that it has remained very engineering driven.

Hire Smart People Who Get Things Done

You can have the greatest ideas in the world, but if you don’t have the right people, you can’t execute on them.

Marissa states, “… what drives technology companies is the people, right? Because in a technology company, it’s always about what are you going to do next.   So then it comes down to, well, who is going to build that thing that you do next. ”

For Marissa, the key is to find people that are both smart and get things done.  She believes that their background and references are the best way to evaluate these traits because so few people are good interviewers.

Managing Is the Means, Not The End

When Charlie asks her about being a manager, she says,  ”Well, I think I spend a lot of my time managing. But I think that the goal really is to lead and to fill our users’ needs. And yes, in doing those two things, you ultimately have to spend some time managing. But … it’s a means, not the end goal. The end goal is really providing leadership, vision, especially in search, and ultimately really filling our users’ needs well.”

Sarah Lacy, with TechCrunch recently wrote an article entitled, ‘Friedman Misses the Point and Economic Reality of Silicon Valley“.  In the article, she hammers Tom Friedman for his comments in a recent column for proposing what she believes is a $20 billion bailout of the VC industry.   Sarah states, “Venture capitalists don’t want a bailout.”

The problem is nowhere in the column does Friedman call for a bailout for venture capitalists.

He starts by stating that he is sick over hearing that GM and Chrysler are looking for another $20 billion or so in government aid.  Friedman states, “when it comes to helping companies, precious public money should focus on start-ups, not bailouts. “  And rather than suggesting that the government should decide in which startups to invest, he merely suggests that we give it to people who know what they are doing in the arena of world-changing innovation – the venture capitalists.

Lacy berates Friedman for saying we should invest $20 billion in venture capital when the industry is having trouble investing $30 billion a year.  He picked that number because it was the amount of the recent request from GM and Chrysler, not from any research he did on annual VC investment amounts.    Perhaps if we let some of the dinosaurs fail, there will be more resources and more ideas in which to invest.  Perhaps the investment should be on STEM education.  His point is to stop throwing good money after bad and to invest it in our future, not spend it on protecting our past.

Friedman proposed that the VC firms receive 20 percent of any upside on these deals and the taxpayers get 80 percent.  Lacy thought these terms weren’t rich enough.  Fine.  Structure it like any other typical VC fund.

At least Fred Wilson takes the idea and tries to do something positive with it.  Fred states, “My friend Brad Feld told me about a new legislative effort in Colorado to give angel investors a 50% tax credit for making investments in early stage companies. That makes better sense to me. Let the market work but lubricate it a bit with tax credits, particularly for the angel sector which has been the most hurt in this downturn.”

Bill Gurley, also slams the specifics of the idea, but again provides some constructive guidance regarding working on the demand vs. supply end of the problem.

In the article, Friedman says our motto should be, “Start-ups, not bailouts: nurture the next Google, don’t nurse the old G.M.’s.”   Perhaps the specifics of his idea are flawed, but let’s take it and morph it into something  free-marketers can embrace.