I love good advertising.  Well, perhaps, appreciate is a better word.  The innovative messages that stick in your head and and drive you to buy a product, understand a position or, at the very least,  make you want to tell others about them.  I think they’re a fascinating study of human psychology.  Often, the great advertisements are humorous.  Some, though, use other inventive techniques to separate them from the chaff of other messages that we’re constantly bombarded with.

BMW has a cool ad campaign for their new 1-Series cars that I saw in last week’s AutoWeek magazine.  On each page, down at the page number, there is a small picture of the car along with some feature of the vehicle - always related to the page number.  For example, on page 5 of the magazine, the following text was aligned with the page number: “Number of spokes on the cast alloy wheels on the all-new BMW 1 Series: 5.”

Cool.  Here are a few more.

Obviously, this advertising campaign is doing its job. It caught my attention, made me aware of a product and some of its features (granted, I’m reading AutoWeek, so I’m the sort of person who already knew about the product) and  was interesting enough that I am re-communicating the messages to others.  I have to imagine that the people who created this ad campaign couldn’t have asked for much more.

Popularity: 35% [?]

It seems that every journal these days, whether it be printed or online and regardless of the constituency it serves, does some quantitative analysis of quality.  Of course, there are also loads of third party quality reviewers (think J.D. Power) and several quality awards (think Malcolm Baldrige) all of which attempt to gather loads of data about actual quality to help consumers decide which is the “best” product they can buy.  Most of these analyses miss, however, the subjective recognition of quality.  That is, the quality in a product that our senses tell us exists or not.  This is, of course, not only difficult to measure, but it’s also relative to our expectations and to our life experiences.  In the end, though, it is often our subjective measures of quality that have a greater impact on our perceived view of overall quality than the actual defects and anomalies we experience when using a product.

It’s this reason why so many products with good user interfaces are often recognized as being of higher quality than those with poor user interfaces.  Maybe books shouldn’t be judged by their covers, but they frequently are.  For software products, a sexy GUI, which is so strongly visually oriented, is seen and interacted with constantly.  For many, it gives a much stronger indication of the quality of the product than the computational guts underneath it, which are only experienced through their interfaces.  In this light, hardware products are even more interesting since our interaction with them involves many more senses - sight, of course, but also touch and sometimes even smell and hearing.

[Note: I'm not referring to ease-of-use here, which I believe is a different, although related, dimension.]

As you might expect, cars are a perfect example of this.  Since most of us have had the experience of interacting with many cars through our lives, we all have some perspective on how a car should work, feel, sound and even smell (ahh, that new car smell).  As we approach a vehicle, we make a subjective judgement of the quality of the car.  Is it rusted?  Is it dented?  Is a tire flat?  Is it dirty?  The really interesting valuation, however, comes as we enter the car and start to interact with it.  Does the door open easily?  Doesn’t it close with a reassuring, solid “thunk?”  Is the seat comfortable?  There are so many sensory inputs, it’s difficult to even list them.  Yet, our brain is taking them all in and using them to calculate that important, subjective analysis of the quality of the car - whether we realize it or not.

Particularly interesting (to me, anyway) is the immediate feedback I recognize from the materials used inside a car and the look and feel of the switchgear.  The switchgear consists of the various knobs, dials, buttons, sliders, levers and switches that let us physically interact with the car and/or give us tactile feedback of the car’s various settings.  While the functions of most cars are relatively standard, almost every vehicle manufacturer makes different choices when it comes to a car’s switchgear.

First, materials.  The materials chosen for a vehicle are often determined by its target market or price range.  Even with virtually limitless advances in plastics and manufacturing, cheaper materials still tend to give most people a quick sense of the subjective overall quality of the finished product with less expensive vehicles often sporting harder, shinier plastic surfaces and perceived of having lower quality.  Again, these are not indicative of the functional quality of the vehicle, but its subjective quality.  Even people who have never been in a Rolls Royce (most of us) will recognize the difference when sliding into a hand-sewn leather seat made from 42 manually-selected hides harvested from cows raised for the specific purpose of donating their overcoats to the drivers butt versus the vinyl, sweat-inducing material in cheaper vehicles and relate that difference to a difference in quality.

Interestingly, the look and feel of switchgear may have even a greater impact on the perception of quality that a driver gets from his/her vehicle.  When the turn signal stalk takes Arnold Schwarzenegger size biceps to move and engages with a deafening “snap” sound, leaving the driver to suspect that he/she may have broken the stalk in half, the driver will not likely perceive this as a sign of quality.  On the other hand, when a knob is rotated on the dashboard with detents that are subtle, yet precise, the switchgear can exude a sense of quality that is profound, but almost too difficult to describe.

As you would expect, the greater the perception of quality will frequently translate into a decision to by your product over your competitor’s.   Does it cost more to increase subjective quality?  Probably, but not always inordinately (as in the case with the Rolls Royce, above).  The lesson here is to not to focus all of your quality efforts on the underlying function or performance of your product.  For many products, the customer may be buying the product for those factors, but it’s not the ones they will interact with on a regular basis.  The user interface and feedback that your customer receives from the product will drive much of their overall view of the product and even more of their subjective analysis of its overall quality.  A positive view will lead to happy customers who buy more and help market your product to others.

Popularity: 53% [?]

I’ve consumed a lot of venture capital starting companies over the years.  Not those insane amounts that you read about, but enough to make me wonder what the hell we did with all that money along the way.  For the last few years, though, I’ve been fascinated with the idea that highly leveraged companies can be started on a shoestring because of the huge array of resources available through the web.  Of course, it’s not only the availability of such resources, it’s the price.  The competition that the same availability creates makes providers very competitive.  You gotta love competition.

The web also breaks many of the old rules about distribution.  While there remain many products and services and a large number of markets that still require real bag-carrying sales and service reps, many products that used to be sold face-to-face can now be sold and delivered virtually.  Yeah, I know.  It seems like this is old news.  I’m surprised, however, with the large number of people who still don’t see it.

In his post titled, By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09, Guy Kawasaki discusses his efforts to start his new company, Truemors, with about as close to $0 in capital as possible.  It’s a great post with dozens of lessons and pointers about how to leverage the massive resources available to everyone on the web, let alone it’s implicit access to a zillion customers.  Definitely worth checking out. 

Popularity: 17% [?]

In my career, I’ve been fortunate enough to have sold a handful of public and private companies that I was running at the time and acquire about a dozen others.  Looking back, the activities and process around mergers and acquisitions may have been the most fun I ever had as CEO.  Probably even more fun than the IPOs.

I think what makes M&A activity so much fun to me is that I love the chase, the negotiation and the final discovery of a unique solution that makes that last puzzle-piece fit into a picture that makes the deal work for all interested parties.  In my experience, coming to a successful conclusion to any such negotiation requires a thorough understanding of the goals of the parties involved - only by understanding the real goals of each party can a good solution be crafted if, of course, one exists.  Since there is so much information that is conveyed subtly and non-verbally during an M&A discussion, it is difficult, to say the least, to execute a successful negotiation if the negotiator isn’t involved in all stages of the interaction between the parties.  The relationship that is formed between the people at the table and the understanding they gain of each other is part of the fun and ultimately is a big factor in the success or failure of the negotiation.

While I enjoyed the thrill of the chase, there were always parts that were less interesting and greatly inefficient.  Perhaps the greatest of these was the fact that everyone even remotely involved in the deal felt the desire, need or obligation to convey what they believed to be the correct step-by-step negotiation process required to get to a close.  Now, I’m pretty open to advice (well, mostly), but when someone who’s not involved in the deal wants to tell me what to do and in what order, it strikes me as a bit outta whack.  It’s just not reasonable to try to set a process or path for an M&A discussion a priori or from afar - there are just too many variables and unknowns.

While everyone was happy to put their $0.02 in, the most common platform for getting this type of advice was board meetings.  It got so bad at times that 80%+ of the conversation about the deal was often dedicated to how the negotiation should be done rather than what should be negotiated.  Truly absurd.  As a director myself these days, I’m astonished how often other directors want to talk the CEO (I refer to the CEO as being the responsible party here - if applicable, replace CEO with whoever is responsible for the negotiation) through the steps of negotiation rather than giving him/her specific direction on the corporate or investor goals of any such merger or acquisition.

For sure, there are cases where the CEO is inexperienced and needs to have their hand held.  If this is the case, the board or other company advisors should get directly involved in the process and not negotiation through the CEO.  In that way, the negotiation will go better for the company and it will be a great opportunity for the CEO to learn how to go about it for the next time.  If the CEO is an experienced and capable person, however, the group should agree upon the key points to be negotiated, which areas are important to all concerned and which are less important so that the CEO has a few negotiating pawns.  Then, the CEO can best determine how those goals will be obtained during the negotiation because they are the closest to the discussion and have all the data.

There are negotiating fundamentals that can be taught, for sure, but once you get past the basics, negotiating is all about the interaction - the wealth of information that comes from the spoken and unspoken.  Some of these details can be communicated to the people who aren’t directly involved, but the success of the negotiating will often be determined by information that is subtly conveyed and difficult to communicate.  In the end, only the person or people at the table can conduct a reasonable negotiation.  It’s just silly to waste time doing it from afar and almost absurd to try to do it ahead of time.

Popularity: 28% [?]

It never ceases to amaze me just how far a service provider is willing to bend backwards to save a customer who has made the decision to bag a service, especially given how little effort they put into retaining the customer in the first place.

I recently went to the eFax web site to cancel my service with them.  I’ve had eFax for a long time, but in the last year, their quality has declined and the number of spam faxes I receive has reached unacceptable levels.  All the while they have been raising prices.  Even worse than the increase in their their monthly fee, a while back, they instituted a per page charge that was bordering on ridiculous.  Not that it mattered since I had already made the decision to leave eFax, but I was further pissed when there was no place to cancel my account on their web site.  Once I found a FAQ on canceling, which took a while, I was directed to an on-line chat.  Luckily, I got a service agent without waiting.  Here’s how the chat went (somewhat edited):

{eFax} How can I help you Will?

{Me} I’d like to cancel my account

{eFax} Can I ask why?

{Me} Sure, your pricing has grown to ridiculous levels and your service is worse than ever.

{eFax} Will, I can understand that currently you are finding it expensive to pay the monthly fees. In the current situation as a special consideration, we will waive off the monthly fee for two months. You can use the service without paying any monthly fees for the next two billing cycles. Please feel free to contact us at any time after that if you still want to cancel.

Your account will be credited with $33.11 so that you may utilize our services without being billed our monthly fee for the next two billing cycles.

Since you will not be charged any monthly fees for the next two months you may keep the account till then. If at all you find that you need our services during this period, then you will still have the account. If however, you still feel that you do not have any use for our services by the end of the two months credit period, then you can always contact us back anytime.

{Me} I’d prefer to cancel it now. Please go ahead and kill the account.

{eFax} Will, I can cancel your account but as you have already paid for the month I suggest you to go for the above offer so that you can derive maximum value for the money you have spent for our services.

{Me} Thanks. A credit is of no value to me.  Please cancel immediately.

{eFax} Also as a special consideration and as a good will gesture to continue our association, we will offer you an additional gift balance of $10 along with the monthly credit.  During this two months credit period, you can keep this service active and if you use it once in these two months we will be more than happy that we were able to serve you. Please feel free to contact us anytime as we are available 24×7.

{Me} PLEASE CANCEL THE DAMNED ACCOUNT.

{eFax} Alright, as per your wish, I will close your account right now. We are sorry that you have decided to leave our service, but if your faxing needs do change in the future, we would be more than happy to have you back. Thank you for being with us and for using our service.

OK, maybe I was too nice to start with.  Since I’ve been down this same road and suffered the same practice canceling credit cards in the past couple of months, I should have known better.  eFax used the same diving save - “you’re a moron if you try to leave us” approach as the credit card companies.  I’m sure that this postpone the decision thing works on many people, which is a shame.  I just hate to have this sort of behavior encouraged.

Hey guys.  If you kept your service competitive in the first place, you wouldn’t have had to throw me all sorts of incentives to stay.  I was completely happy with your service before others came in better and cheaper as a result of you getting worse and more expensive.  Maybe you should spend less time and money on trying to save customers and spend more on keeping them happy.

Popularity: 20% [?]

I recently read a story about how Volkswagen is considering NOT bringing the upcoming Scirocco (an updated version of their 80’s hatchback sports coupe) to the US market because it might take market share from their currently offered GTI hatchback.  While this may be an excuse masking other reasons for such a decision, if it is the real deal, it seems patently absurd to me.  Like any company, Volkswagen should be worried about how its competitors are planning to take market share away from them, not whether or not they will do it to themselves.  If you create better products for a market you serve you should use them to expand or, at least, solidify your position in the segment, not hold them back until your competition introduces product that threatens your position.  This is even true if you already are the leader in the segment.

I believe that if the new product is 100% of an overlap with an existing product and does nothing to expand the product’s market (this includes the case where there’s minimal expansion), then the original product should be replaced by the new one.  If there is overlap, with each product covering segments not addressed by the other, then keep both products and direct customers to your entire product offering regardless of their specific preferences - because you cover them with the breadth of your products.  Never wait.

Your market is full of competition, even if you don’t see it, it’s there, lurking in the shadows waiting to attack.  To make things worse, with almost no barriers to entry in any market these days (including capital equipment), a new competitor can spring up overnight.  Only by being aggressive - rolling out constant improvements and new, replacement products - can you retain or grow your market share and keep competitors at bay.  Always play offense.

Someone is always working to knock your products and services off their market perch.  To maximize your success, that should always be you.  Your biggest competitor should be . . . you.

Popularity: 26% [?]

Brad Feld has a great post titled, Fear is the Mindkiller, up on his Feld Thoughts blog.  Being a generally anxious entrepreneur myself, it’s hard to deny Brad’s claim that there are huge advantages to letting go of fear, anxiety and guilt.  At least from a wishful perspective.  From Brad’s post:

I have long believed that fear, anxiety, and guilt are useless emotions in an entrepreneurial context.  When I get into an existential discussion with some people about this, they argue that there are contexts where these are useful emotions, but I still haven’t found them.  So – my first advice is “let go of the fear and anxiety (and guilt) â€“ immediately.” 

Brad’s premise is that when you feel such emotions, you should step back, take a deep breath, get away from things and approach any issues that you’re facing once you’re refreshed from your business respite.  Totally makes sense and it’s great advice even if you’re not anxious - it’s always a good idea to step back and get a different perspective.  But it just doesn’t work for everyone.

Long ago, I gave up on trying to remove anxiety from my everyday business dealings.  Fear is something I’ve never felt in day-to-day business, but anxiety and guilt are pretty standard for me.  Perhaps as one of the comments to the original post states, this is because of some deep-seated lack of self-confidence.  Or, maybe, it’s a fear of failure or even the result of years of psychological issues caused by growing up in a dysfunctional family (just kidding, Mom . . .).  None of these, of course, will go away because I take the weekend off.

Personally, I prefer to redirect the energy in the anxiety back into my work, careful not to let my anxiety be communicated to others.  Success and accomplishment do a lot to relieve the anxiety, leaving plenty of emotional space to be filled by the next anxious wave of issues that will surely follow <g>. 

Seriously, follow Brad’s advice, it’s excellent.  Step back and let new light fall on the problems at hand.  Often, you’ll find a new path that is devoid of the negative emotions you had previously.  If that doesn’t work, though, don’t sweat it.  Channel the energy into action.  Don’t let the anxiety absorb energy that could be used to resolve the issue and, ultimately squelch the bad feelings.  If you end up sitting around, wallowing in your negative emotions, you’ll just feed right back into them, making them worse.  Always play offense, it’s terrific therapy.

Popularity: 16% [?]

I ran across a reference to the site, The History of Branding on the trythisonforsize blog.   If you’re at all interested in brands and branding or corporate takeovers and spinouts, you gotta check this site out.  Each one of the logos on the site is clickable.  Clicking any one opens up a new page with the story behind the brand. 

There are links on most pages to the history information on the corporate site and to other resources related to the company and its history.

Warning: cruising through all the information may be addictive.

Popularity: 17% [?]

My general view of business (and life) is that humility is a big part of success.  But that’s almost assuredly more representative of my value system than of any generally accepted business wisdom.  In fact, there may be strong evidence to the contrary.  There are of course many quiet, humble people who have run successful enterprises.  Those heroes are hardly household names, though.  The business leaders that we know of, quote and point to as examples are usually the ones that make the most noise about what they do and what they have achieved. 

If you can be successful either way, why does it matter?  Generally speaking, the more people you know and, more importantly, know you, the more access you have to resources, investment, supporters, partners, the media and customers.  This access opens doors and reveals paths that may not have been obvious or even available to you otherwise.  Again, this is not to say that you can’t make it fly if you’re not an active, outgoing promoter of yourself and your business; but increasing your visibility simply makes many aspects of creating and running a successful business easier and isn’t easier something we all seek? 

I found myself thinking a lot about this topic recently when I read the story of Reginald Fessenden, who is actually responsible for the first two-way, transatlantic radio transmissions and being the first to correctly described how radio signals actually work.  No wait, wasn’t it Marconi who did that?  Guglielmo Marconi is generally credited with the invention and discovery of most radio technologies.  As it turns out, while Marconi was brilliant and clearly responsible for some of the most important discoveries of his time, he was also good at playing the patent and publicity game.  Fessenden, a brilliantly but much quieter and humble scientist, was overshadowed by Marconi (and others).  Apparently more interested in the science, Fessenden’s company went under while Marconi’s companies were, in general, very successful.

Reading the story of Fessenden, then got me thinking of Philo Farnsworth and Nikola Tesla.  Both brilliant scientists who were steamrolled by brash, self-promoting contemporaries.  Farnsworth invented not only the television, but the first real camera and broadcast mechanism.  Of course, David Sarnoff of RCA fame is generally remembered to have played this role in history (although Sarnoff really hired Vladimir Zworykin to do RCA’s work on television).  Farnsworth did most of his work in obscurity and the companies that he (and others) created around his work failed.  Sarnoff, on the other hand, had already made RCA into a large and successful enterprise and used that platform as well as his strong personality to take credit (in the name of the company) for the creation of television.

Tesla, who is considered one of the most brilliant scientists and engineers of all time is well known for many discoveries and inventions.  However, with respect to one of his greatest creations, large-scale power generation, he remains in the shadow of another brilliant, but much more vocal scientist, Thomas Edison.  While Edison was doing his damndest to get DC power transmission to work, Tesla created the first simple and reliable AC power generation facilities (including the first hydroelectric power generators) as well as AC motors to utilize his new form of power transmission.  Edison spent much of his highly visible career discrediting Tesla and is generally given credit for what we take for granted today.

In the end, what’s the correlation between strong self-promotion and success?  There are too many subjective components to quantify it, but empirically there is more upside to brash self-promotion than to the lack of it.  None of this means that you should be an asshole, of course, but spending more time increasing the world’s awareness of you and your company will likely offer benefits that will far outweigh the energy you put in to making yourself more visible and more closely associated with your solution and market.

Popularity: 22% [?]

iinovate has a great podcast with accompanying YouTube videos of an interview with Eric Schmidt, CEO of Google.  They have broken out one segment where a luminary, in this case Andy Grove of Intel fame, asks a question.  Grove queries: 

“From the outside it looks like Google’s organizational structure is best described by . . . Brownian motion . . in an expanding bottle.  Does [Eric Schmidt] think it will work forever.”

I find Schmidt’s answer to be revealing.  It’s so convenient to think of Google, its inner workings in particular, in some uniform, consistent way.  I know that I’m certainly guilty of this.  The stories of days off to innovate, corporate massage therapists at everyone’s disposal, cappuccino machines in every closet and Guitar Hero duels whenever employees feel the urge are captivating.  It’s also easy to let visions of this environment overtake the realization that real work gets done in spades within the company’s walls.  Schmidt states that legal, finance, M&A, investment and even sales are all run in “a very traditional way.”  Further, he says that it’s only the “creative side” that gets all the attention and can be described as Brownian motion which, he thinks, is a reasonable description. 

Doh!  Of course.  That makes complete sense.  There goes my fantasy about the insides of the company being in some kind of total, but managed chaos.  I guess there is no tooth fairy after all.  Next, someone’s gonna tell me there’s no Santa Claus.

Check out the iinovate post for the other, longer part of the interview.

Thanks to Guy Kawasaki for pointing it out.

Popularity: 35% [?]