Sounds + Food 'n' Retail

Still don't have too much time at the moment, but trying to produce content if possible, in a quick and (hopefully) digestible format. Some qualities of entrepreneurs that I'm thinking about:

• Perseverance: This is a tough, tough issue. I consider myself a person that bites into a project and doesn't let go; at the same time there are times when you have to or should abandon an idea. Even so, a start-up is an 80 hour a week job (let's say), it has stakeholders—investors, partners, employees—and it may take some time to go into the black. Perseverance is probably the most important quality to possess, but I'd love for it to be simpler to know when to persevere and when to abandon.


• Instinct: it's a funny thing, this one. There is of course good and bad instinct (e.g. bravery vs. fear), but sometimes a "bad" instinct is a good one too (fear > jump > evade car). And even if you try to follow your instinct, your rational self—your experiences, education, arrogance, other emotions—will want to interfere with it. The reason to follow instinct is because it's quicker and a more natural way to be (and my theory is that natural = confidence = charisma and all that good stuff). Still a tough one.


• Inside-knowledge: in an industry, sure saves you a lot of time finding contacts and focussing on the right stuff.


• The numbers: are important in a numbers-business. And every business is ultimately a numbers business, maybe not at the beginning when there's lots of growth, but certainly at that point when either your wallet begins to look empty or a competitor is moving in next door.


• Money: is kind of nice. The more you have, the less you need to give away in equity. Of course, rich parents help, but so does having an investment-portfolio. Investing in your industry means that you keep track of the latest trends, of your competition, and if you make money from that, that's a qualifier that your instincts are correct. And, ultimately, giving away equity to the right people, means having a smaller piece, perhaps, but of a bigger pie.

Other things I missed? Definitely! You can always drop a nice comment about it.

The picture is courtesy of fairinvestment.co.uk

Disjointed, because I don't have the time or energy to write a beautiful essay about empowerment—I'm not even 100% certain what it means yet. And in a way, by writing about 'empowerment,' I'm breaking the first rule, which is "Don't speak about empowerment." Or at least it seems that way. Currently, there's around 505,000 articles online about the term, which qualifies it as a hype and as such something that has already been discussed too much. But also, empowerment is basically about trust, a behaviour, and how can you talk about a behaviour, you just behave.

I think I first came across the concept, without even using that term. A few years ago, I read a book on ants, called "Emergence." It was a great book, I thought, about how ants at every level exchange signals, in the shape of pheromones, to indicate what they were doing and whether they needed help. A completely decentralised organisation, and the only thing the queen needed to do was produce babies, which, equivalent in business-talk, is, I guess, take care of human resources. I was so excited about it, that it became a research proposal for my master-thesis in strategic management, and was very quickly rejected, as I guess I hadn't related it well to strategy.

I again came across the concept last week, after reading an interview with the then-CEO, Dennis Bakke, and the then-chairman, Roger Sant, of AES, a power-company, which was, at least at the time of the interview (1998), very big on empowerment. And it seemed to work pretty well for them, if you look at their share-price, it rose pretty steadily up to 1998, and even more up to ca. 2001. Though, it hasn't been doing quite as well these last few years.

Reading the interview, I got the impression that empowerment is a religion, which in itself is hard to quantify into a set of rules. Essentially, at AES, it was (or is, I don't know) a system of open exchange flows; people could evaluate each other's performance, investment-decisions were decentralised and crowd-sourced, job-rotation was common, and micro-teams of ca. 10 people, focussed on different projects and tasks, were spread all around the organisation. And that seemed to work pretty well.

But there were also some downsides, such as that the company didn't work well with other companies—rather, it preferred a contractual relationship—and there were constant pressure to revert back to the traditional top-down model, from the public, share-holders, even employees. Essentially, every employee at AES becomes a kind of mini-CEO, which is clearly not something everyone is conformable with.

And the question is, and I haven't figure that out 100% yet, is how you come from that top-down view of human "resources," to a decentralised ant-like model? The key-word, which is equally hyped but seems to apply, is "delegation"—i.e. shifting executive responsibilities out to a team.

I think the problem of this is quite well spelled out in a recent interview with Brad Bird from Pixar, who was at one point confronted with a team that was demoralised. The former director had taken their work and evaluated it in private, giving written comments to individuals, not giving them a chance to give any input. And in order to turn that team around, he had stand in front of them for two months, evaluating the work, in public, and encouraging to take part, through questions. Two months, it took to go from the traditional model to one of empowerment, and just for that team.

The good news is that for start-ups, this is pretty much the way it should be from day 1. The bad news is that for big companies, or as soon as a start-ups grows bigger, the dissonance between people becomes larger and larger. And you have to—if you want to, at least—find ways to decrease that gap, probably most easily achieved through team-building after team-building exercise.

Anyway, not much more to say about this for now, but empowerment is cool, let's leave it at that.

Ah yeah, I forgot! I liked these interview questions, which were typical of an AES job-interview at that time, and made me think about my own opinion on empowerment:

• Should everyone be treated equally? Explain.


• What do you do when something needs to be done and no procedure exists?


• What self-improvement-efforts are you making?


• Recall a time when people around you weren't being entirely honest. What did you do?


• What does "fair" mean to you? How important is fairness?


• For what have you been counselled about the most?


• What is the most difficult situation you have faced? What did you feel? How did you react?


• Describe two important achievements.


• Tell me about a time when a decision was needed and no supervisor was available.


• What kind of rewards are most satisfying to you?


• What does "fun on the job" mean to you?

I guess, this suggests that part of the answer to my question lies in an organisation's hiring practices.

The picture is of course of Che Guevara, who wasn't an entirely nice guy, but does stand for this whole "power to the people" movement.

This is going to be a nice and short one. April 2008 can be characterised by three types of posts: general business, food and retail (yay!), and interludes-after-interludes (the latter is just a naturaly consequence of time/creativity-problems, sorry). Previous monthly wrap-ups can be found here.

Let's get started!

General business
I think I started with people-businesses, a topic I find interesting and will likely write more about in the future. Essentially, a people business is one whose value is mostly made up of people, which, I believe, includes most start-ups, but excludes businesses like McDonalds, which has a lot of capital costs. There are a number of challenges related to such businesses, such as measuring/increasing productivity, and finding business models that are compatible.

The next (micro-)topic I discussed, was bootstrapping, which I thought depends on three abilities: low cost-living (duh), time-management skills, and a strong goal-orientation (lots of distractions on the way to enlightenment).

Another micro-topic was on taking a detached view towards business. A lot of business-people and entrepreneurs, serial ones mostly, talk about seeing their business as just another business, rather then a passion, executing the right levers to make it succeed and eventually focussing on the next challenges. You have to be strongly motivated by something though, and I guess, following Ram Charan's logic, the passion is for business itself, which can be an exciting and all-consuming activity. Well, that wasn't exactly what I wrote, but is what I was thinking! ;)

Finally, for general business, I linked to three interesting stories, which I quoted here, but which illustrated the importance of the team, the "test," which shows the level of understanding a leader must have about his business, and the "rule," which is that every action has some sort of reaction elsewhere.

Food & Retail
Let's start with the challenges facing the food-industry, which are currently related to economics and the environment. Economics-wise, everyone is seeing high food-prices due to events going on around the world, including a shortage of oil and an increased demand for farming-goods from India and China. Eventually, an equilibrium will happen, either the demand will subside as production happens locally (unlikely in the short-term), or production will increase. Considering I just heard that dairy prices are falling, I'm betting on the latter. For environmental-costs, we are mainly speaking about the cost of transportation. Food is a very global business, which seems to come at a high price to the environment. No solution is in sight for that yet, I don't believe living locally is as yet sustainable, though there are plenty of proponents for that way of living.

A second topic, I looked at, was beer and the way pubs are funded in the Netherlands, which is often through exclusivity-contracts with breweries. It's an interesting situation, as breweries have been facing the problem of commoditisation for that reason; people order "a beer" instead of a Heineken or a Grolsch (mmh, Grolsch). It seems to be good for the horeca-industry as it suffers from high failure-rates, but at the same time, other countries, like the UK, seem to manage without exclusivity-contracts, at least as far as I know. Requires further research.

A retail-topic was about the differences between Spanish Zara & Swedish H&M, both fashion-businesses, with a different business-structure, but otherwise fairly compatible in attitude, I think. Both have a strong design-branch, focus on cheap, high-quality fashion, and have an extremely high IT-focus, which helps them manage logistics and merchandising at an elevated level. The differences arise with Zara being very vertically integrated, owning producers, supplier, and retailers, most likely because Spain is such a low-wage country traditionally. H&M is not so integrated, probably because of Sweden being such a high-wage country. And while H&M is very strong in terms of marketing, Zara does virtually none of it, but draws high repeat-visits from its customers, due to constantly releasing new fashion-lines (3-5 x more then comparable businesses).

Some lists then, Coke Zero no. 1 in the Netherlands, and incidentally the first food-related topic I wrote about, I think. And a list of the top-horeca-businesses in the Netherlands, mostly hotels, but also some retailers, like Hema, which I like as a business.

Interludes
A lot of interludes this month, as it's my way of recharging creative energy. These posts can be divided into ones posted here, and others posted on Tech IT Easy. Let's start with the first.

The flirt was about some of the variables involving flirting, which I consider useful information, but probably not food 'n' retail. The cookerlude was my attempt to do a regular posting on cooking, but I'm still not sure whether I'll go that direction.

On Tech IT Easy, I wrote a couple of interesting posts last month. Two on blogging, why it isn't for everyone and what competitive advantage means for some. One on copyright, which is a topic I'm pretty interested in and which Fidji Simo continued with her usual insights. And the latest on technology-incubators, which relates to research done for my thesis.

That's about it! Happy to close the door to the last month and already busy thinking about the next one!

All right, in 10 mins or less…

I just started reading a series of essays, entitled "Wish I'd known: Insights and inspirations from the journeys of successful entrepreneurs." Do a search, and you'll find it for free online. One essay finishes with:

"I wish I'd started younger and wish I appreciated how much family and friends would support me beyond what was reasonable and fair. I wish I'd know it was OK to have fun and in so doing not taken myself so seriously—the journey is often superior to the destination."

Words to live by!

Last weekend, I wrote the acknowledgements for my thesis. The cherry on top, which I'd left for one of the last things to finish. And it would've been impossible to write it before anyhow, as even in the last lap there were/are people driving me on.

During the writing, one person died, another got terminal cancer. Both much too young and undeserving of such a fate. And both of whom I consider good friends, whom I trusted and who trusted me. In part it was the thoughts about them that prevented me from giving up.

But, strangely perhaps, it was also my little brother, just 19 years of age, that was unrelenting in pushing me forward and not letting me quit. It was as silly as him telling me 6 months ago, "I want you to finish this in three weeks," which got me to get my act together, perhaps taking longer than three weeks, but not stopping until I was done.

And it was all the people I interviewed for this study—my subjects, and ultimately my customers—all of whom unquestionably agreed to share their wisdom and whom I ultimately do it for.

It's only about a page worth of acknowledgements, but it is for the people on that page that I spent countless months writing, that I ultimately produced a 120 page-document for, and without whom I wouldn't be anywhere close to where I am today.

That… is the value of support and why nothing is impossible!

(No picture, as I found nothing that could do them justice)

Take a look at this quote, which I posted a few days ago:

"There should be a rule: before helping the environment in one market, we should be required to think through the impacts on other markets." (source: Freakonomics blog).

Or, to put it differently, every action has a (sometimes equal) reaction (I think the traditional phrasing ignores the human element). The idea that everything is interconnected is both fun to right-brained generalists like me (not a compliment), and scary at the same time. The global economy is very complex and, I would say, impossible to regulate.

There's a couple of things going on the world, which I'm sure everyone is aware of. There's a number of wars, there's the weakened dollar, there's some kind of housing-related recession going on, there's a shortage of oil, our planet is perceived as suffering and currently being saved (I hope), there's India and China, the rise of the Anglo-Saxon system, etc. etc.

And some of the biggest problems facing the food-industry (depending where you are in the chain), are rising food-prices, which relates to that oil-shortage (both in terms of pricing, but also because of alternative fuels using farm-products), the rise of India and China, and some other factors; and the costs of keeping green, which has largely been inspired by companies like Wal-Mart, but also by the (exaggerated) need for global diversity by customers (which the food-industry is also partially to blame for).

The solutions vary, and are, so far, very defensive in their nature. For the cost of going green, most pollution comes from transport and the solution is to either use the most eco-friendly way to go: on land, by train, across water, by ship; or to go local—which companies like Marqt seem to focus on, but which also comes with the pitfall of seasonal shortage.

For rising food-prices, again one solution is to go local, to save on transport and have some control over how farmers work, and be able to charge higher prices to the rising local-conscious consumer. But a bigger solution is for more food-production to happen (much of it currently goes to India & China, or to biofuels), and possibly from smaller farmers. The problem here is that it will take time (some estimate decades) for smaller farmers to get ready.

Both are definitely big picture-problems, and will take time to solve. One thing, I'm personally looking at, are micro-lending sites like Kiva.org, which put you into contact with local farmers, allowing you to help them out in your own way. From a Venture Voice interview with one of the founders, I understand that some of these investments happen within the context of a community, where each member keeps watch over the other's use and repayment of the funds, in order to ensure a good outcome, and so loans will continue to come in. But, while I think it's well worth the effort, this is still a small-picture solution to a much larger problem.

The way it looks right now, the solutions have to be planned in the long-term and on a large scale. There is definitely space in the farming-segment for more production to happen. In the mean time, food-prices will continue rise, as will the price of educating consumers to make more responsible choices. I like Tesco's approach in labelling the origins of their food and allowing people to make more carbon-friendly (locally focussed) decisions. But that doesn't solve the problem for farmers in remote areas of course.

Sigh, if you just got a headache, I sympathise, as I just got one too.

Further reading:

• NYTimes: Environmental Cost of Shipping Groceries Around the World
• Economist: The new face of hunger
• Buzzfeed: Food Hoarding

The picture is courtesy of ABC News.

This wrap-up covers material up to April 6th, 2008. I will dedicate another one to this month and then hopefully go back to a monthly schedule. Looking backwards is hard, but I find it useful…

Normally this would be a monthly wrap-up, except I postponed it by quite some time. In this post, I try to look back in order to see how far I've come and bring a general set of themes to what I've covered so far.

Tag: The internet
I spent a considerable amount of time writing about the internet, somewhat influenced by my thesis and that I've been blogging for longer on Tech IT Easy.

One thing I looked at extensively was social networking, because, hey, that's the age we're in. I looked at lifestyle-brands, which require a more contextual approach, and how the internet can act as a platform for business to communicate with customers more richly and bi-directionally. A related topic—social network as competitive advantage—was published on Tech IT Easy. At the same time, I don't completely embrace social networking like Facebook, which I'm bearish on and have, to a degree, sadly been proven right.

I also looked at the role of the internet in terms of physical retail, for which a company, called NearbyNow, is offering an interesting service to both retailers and consumers; they allow consumers to browse and reserve goods through the internet or their mobiles, and give more exposure to retailers. At the same time, my outlook for the physical retail of media is bleak, and I expect all of it to go via the internet soon.

Tags: Logistics & green tech
In terms of logistics, I looked at different methodologies of storing and transporting goods across the globe. Very interesting how each continent/country is getting around its disadvantages (e.g. high labour costs in Europe) and compensating with other factor (e.g. more technology in European warehouses = less labour dependancy).

Also green tech is another "trend," well, I expect it to stay around for quite some time. I outlined five reasons why I think business are and should be going green. The mirror-post on Tech IT Easy spawned some interesting discussions.

Tag: Business strategy
Of course, business strategy is somehow involved in all business-topics, nevertheless I did look at a number of issues specifically. One was on entry-strategies into difficult markets, which is something I can't really describe in a few words, but requires speed, stealth, and brains.

I also commented on new business developments in a number of retail-outlets, and how it is only those that are synergetic with a company's core-focus, and can reap advantages like scale & scope, that end up being worth the effort.

Not to forget, I wrote about IKEA again, first, in note-form, talking about the international moves that the company made and why; and second, a summary of the lessons that I learned from IKEA.

Finally, I looked at the social element, human resources, and how companies use coaching and social operating mechanisms to scale their strategy and passion across the organisation. Ford, again, makes an interesting case study for that.

Tag: Entrepreneurship
As always, and somewhat difficult to separate from the above. I looked at the interdependent components of strategy, and financial, organisational, and product-market strategies are really part of a greater whole, when writing your business-plan.

I also looked at some statistics in franchising, and the lower failure rates are one reason to consider it a worthwhile entry-point into the industry. Still, it's not risk-free; There's clearly a lot of work to do beforehand, in terms of choosing the right franchise with growth-potential, financial risk to fund your business, market-risk, when you launch, and competitive risk, after your up and running. Some of this should be overcome with the help of a franchiser, however. Related to this, I posted an overview of the week of a franchise-owner, which was quite diverse and exciting, as well as a look into the drugstore-industry in the Netherlands.

On a softer level, I believe that entrepreneurship is ultimately an exercise in focus, which goes so much easier when you love what you do, but also an exercise in believing in the impossible, even when "facts" may prove you wrong. Micheal Masterson also had some good tips for starting & running companies, more from an investor's perspective.

Tags: Branding & marketing
Again, I already linked to some related post under the internet-heading; I believe that social networking is a big deal in that area these days. Related to this is also the concept of referential marketing value, as opposed to direct marketing value, which wrote about a little here. Clearly this is a dimension that is fairly complex but which the figures show should not be ignored.

I also criticised cinemas' moves into the luxury-segment as faulty branding, because luxury isn't a big differentiating factor during the movie-viewing experience; technology and timing is.

Tags: Food and retail
I could've probably placed these in any of the above categories, but this is after all the food and retail blog. I still take a dual approach here, looking at food-retail through retailers, and then through actual food-venues, like restaurants. There is a difference, but I'm not sure whether I want to or should discriminate between them.

In terms of supermarkets, I discussed a number of worrying trends going on in that world, namely there's less consumer-spending on food and supermarkets are forced to respond by consolidating and pushing efficiency up on the agenda. But I also find the presence of supermarkets like Marqt encouraging and hope they do well.

Also, I recently summarised some points I got from a book on Ahold. It's an interesting company to follow as it's been around for about a century, and has survived several similar challenges, we are facing today (high fuel-prices, recession, etc.)

I also discussed snack-food, which I find particularly flawed in terms of health and which could use an influx of alternative, yet good-tasting snacks.

And I looked at restaurants, which I find scary, but I remain open to. Starbucks level of vertical integration is also a little worrying. It's a like a beast that, as soon as it had to retrench from the market, it eats up more companies from the supply-side, in order to gain a competitive edge over other coffee-retailers. There's just something that worries me about this move.

Finally, I took notes from a very interesting lecture by John Schneeberger, who offered some interesting insights into the world of vegetarianism, organics, and local produce.

Other
Other topics that I didn't mention here, include my links (where I try to link to interesting stories) and my interludes (where I try to write about more fun and personal stuff).

Thoughts (written at the beginning of April!)
There's two challenges ahead, as far as my blogging goes. Topic-wise, I'm fairly open to both big-company and small-company problems, which may be too broad. I also perhaps don't focus enough on food & retail in particular, though that's because I'm a generalist and am still deciding on my passions.

Presentation-wise, I've been analysing some other people's blogs, e.g. TechCrunch's & Jeremy Fain's early days, to see what these guys did different. TechCrunch used a very mechanical approach, the same template for discussing companies, no colourful language, and a regular pattern of several posts a day. Jeremy also blogged a lot and brought information to the table that he himself came up with or that he got from discussions with people.

I do too little of that, because I don't make enough time for it and am more introverted in my approach. I can't really say whether my approach will change from now on, but I'll try to bring more of my personal experiences into posts. Those appear to get a better response (still working on that).

Dear reader,
If you've been following my blog, which is kind of you, you may have noticed both a drop-off in posts, and, more importantly, a drop-off in relevancy.

To put it bluntly: I'm bored of the topic! I've been researching this industry to the extent that everything seems similar, rising food prices, fmcg-marketing strategies, the "organic" differentiator, etc. etc., it all feels like I've seen it before, and I'm struggling to come up with new and interesting topics.

In addition to this, and this is entirely my fault, I'm stuck with a project that doesn't want to finish itself, my thesis that refuses to get published, or rather that I refuse to be published. The effect is that I'm sitting behind a PC… a lot… and not experiencing/talking with insiders/etc. enough to get fresh perspectives on the field of "third places" and feel productive in that setting.

I'm not going to abandon this blog; no, very likely I'll continue to publish several posts per week. However, some, if not all, will not exactly be on topic; they will likely be discussing things going through my mind, on business, on art, on technology, etc. and hopefully on sounds + food 'n' retail as well.

Until I dig myself out of this valley, and I will, I hope you'll be patient and not hold my lack of focus against me. I still aim to be a producer of excellence in mine and your world.

Sincerely,
Vincent van Wylick
Main honcho @ foodandretail.blogspot.com

An interesting quote from the Economist this week. Particularly, because I personally suffer from it, and imagine a lot of other people & businesses do too.

Mr. Fellows [CEO of Callaway golfing equipment] believes that the "fundamental principles of running a company don't change just because the product category is different." In his view, Callaway's problems stemmed from the fact that it saw itself as a golf business, not as a consumer-goods company. He resolved to focus on "what the consumer wants, not our own feelings about what the game of golf should be."

It doesn't matter if you're the CEO of a company, an investor, a sales-person, a blogger, etc., I think everyone has an idea of what they want and what customers should want. But what it really comes down to is the latter.

Face Value, my favourite section in the Economist, every week.

The picture is courtesy of digitalfreak.net

When I started this blog, and my general thoughts about the area of food & retail, it was all about the people. A quality staff and happy customers, what more do you want? And I have to say, from past experiences, that I don't really like businesses that don't place people first.

For instance, one individual I worked with, suggested using handicapped people to put together a product manually. I instantly disliked him. Not that I don't want handicapped people to be productive, but it was the thought behind it; to find a "stupid" workforce, which you can save tons of money on. It was just distasteful.

Another company I worked for was very process-orientated.
There's nothing wrong with that of course, but it was a big company with a reputation for innovation and that is why I joined. And you expect such a company to at least push forward a solid project. Well, as it turned out, the organisation's core-strategy was to start a large number of risky projects and have them compete with each-other. Those that would fail would simply be abandoned, and their staff was expected to fall on their swords… metaphorically. The effect was an incredibly high turn-over of employees, all three projects I worked on no longer exist, and it deeply soured my feelings about this company.

Both these examples, to me, represent a lack of respect for the human element. I realise that business is a hard world, but if projects were designed to be solid in the first place, there would be less of a need for these kinds of practices. Just my 2 cents.

Part 2 - the challenges that people businesses face
HBR (Again! I'm sorry, but I read a lot of HBR-articles!) published an article about people businesses some time ago, which I enjoyed. Following are some notes + thoughts about it.

• People businesses are defined as: "operations which are characterised by 1. high overal employee costs, 2. a high ratio of employee costs to capital costs, and 3. limited spending on activities, such as R&D, aimed at generating future revenue."


• In a top-40 list of people-businesses, published in that same article, only a few qualify as food and/or retail related. These are the Hospital Corporation of America, Tenet Healthcare, Marriott hotels, and Accor hotels.


• For instance, a business like McDonalds does not classify as a people business; it has substantial assets in terms of brand & real-estate, and relatively low people-cost.


• People-businesses face a number of challenges, related to performance measurement, people-management, compensation, and business models.


• Measuring productivity is more important in these businesses, then other economic performance indicators, like return on assets or investment. The challenge is finding the right indicators (employee productivity & profitability), as well as benchmarking it against other companies (employee figures do not always need to be made public).


• To manage people, you need to align employees' interests with business objectives & execution. And you need to find ways to measure performance (see above) continuously and see where your weak spots are.


• Compensation is key, as productivity is very sensitive to it, and is a primary determinant of shareholder risks & returns. Other factors to consider are variability—productivity varies across the workforce and how do you get the most out of a diverse workforce—and reach—sometimes the lowest on the ladder are as, if not more important to a firm's performance, and how do you motivate these people to do their jobs as good as possible?


• There are a number of business models are used in these types of businesses: pricing per hour is a safe method, but does not account for extra performance; a fixed price per output allows companies to shave costs off the inputs and thus increase their profit-margins. It is very susceptible to a high-skilled workforce; a success-fee or commission offers the best returns, but also the greatest risks; some companies use a hybrid of these three.


• The strategic weakness with these types of businesses is that your assets are mobile and can walk out the door. By creating value above and beyond your employees, you can diversify some of that risk away. Of course, you could also try to keep your employees ;).

In other words, I am no longer sure if e.g. a retailer qualifies as a people-business. Looking at other large chains however—Starbucks, Ahold, Ikea—you see that considerable expenditure is geared towards training these people and the secondary conditions—healthcare, etc.—are extensive. But, I guess it depends on the ratio of physical assets & brand vs. employee-value. If the first two far outweigh the second, I guess that makes the difference.

I guess it's up to individual businesses how they want to measure their firm's performance. The most straightforward is certainly return on assets or investment. But even that leads to some question-marks, particularly in today's highly software-based economy, where assets are no longer as necessary, or pricey, as they once were.

For my part, I still think that people are a key-asset to a business, and it's interesting to look at how exactly you motivate a workforce and get the most out of them, as well as how to overcome the challenges related to a people-based business.

Equally interesting is how to align the business-model to match the needs of your assets—the people. Since people are motivated by (financial & non-financial) compensation, do you keep the pay-rate aligned with time-spent; fixed; aligned with performance; or a hybrid of the three? I think the hybrid is always the best choice, but even then some combinations work better than others.

And retaining employees is also an interesting problem; though much less so in countries like France, where getting rid of them is a problem, and differently in places like Silicon Valley, where inter-firm mobility is a key-requirement for many employees. I think the solution is completely personal and cultural, and everybody's answer will be different on this.

The picture is courtesy of prairienet.org

I am not a born bootstrapper, let me make that clear from the start. I just like titles that include words starting with the same letter (is there a term for that?).

Bootstrapping is, in my own definition, "the ability to generate growth on minimal financial resources." I was first going to call it "the ability to survive on minimal resources," however that would make most of the third world bootstrapping-geniuses.

No, it's when entrepreneurs have an idea that they want to grow into a commercial business, and since finding funding is difficult and less preferable for some, they do so with minimal financial means, perhaps while maintaining another source of income and by generating organic growth—revenues derived from within the company. In sociology, there is a concept called bricolage, which means more or less the same.

What makes a born bootstrapper, or rather a good one? I think it requires three qualities:

• The first is certainly the ability to live cheaply, and I'll refer you to one of Jeremy's post where he makes the point quite eloquently. The ability to live without luxury, eating at discounters, buying second-hand furniture (or dragging it off the street), living in cheaper areas, and, most importantly, to delay paying the bills, are certainly key-components here. As is, making resource-choices for your business. Easy to do when you work in software, less so in physical businesses, though inventory is fun to play around with.


• The second quality is time-management. You need to generate growth within your company and pay the rent, so you have to make choices. You have to find alternative revenue-streams, perhaps get another job, and work on your business during your free time. It requires you to set some clear priorities, skip the weekly cinema-visit or the time spent with your loved ones.


• The third and final quality, is to be goal-orientated. You could place that under time-management, perhaps, but where bootstrapping is most likely to fail is when motivation drops. You need to keep your eye on the ball at all times; the priority for a bootstrapper is to grow the business, not keep a stable job, and you need to see the light at the end of a tunnel and keep going until you reach it.

Anything I missed?

The picture is courtesy of rockies-ice.com

Ten tips, taken from an essay written by Masterson, entitled "The Winner's Rule", from the book "Just One Thing

Advice is a funny thing. I don't think it's advice at all; rather it's a set of criteria or truths, and fairly shallow ones at that. They ignore the context a person, a reader, a student, a business goes through. And what if we all met these same criteria? Wouldn't the world be a much more boring place? As such, treat all "advice" with care.

I can classify Masterson's points into two categories: Business-related & person-related.

Business-related
1. It's not a business until you make the first sale.

2. The most effective way to enter a new market, is to offer a popular product at a drastically reduced price.

3. Sell, sell, sell: keep on increasing the perceived value, allowing you to ramp up the price, and increase profit margins.

All of these are sort of straight-forward, I think, though certain terms should be qualified. For instance, what does a 'sale' mean? It's easy to understand it within the context of a product going over the counter, but what about service-companies or the many web-businesses that fund themselves through advertising (if that)? I would nominate the first "rule" to be: It's not a business until you make money.

The second and third points, to me, seem like a typical VC-thing to say. Scale, scale, scale. Sell cheap and sell much. And worry about increasing the profit-margins later on. Again, it should be qualified, depending on the type of business. For instance, the internet is a market-place for countless cheap (or free) and mass-products; but as a result many products/services have become simple commodities, with no one willing to pay for them, and businesses having to look towards advertising as a funding-source (shudder).

Personality-related
4. When choosing a business, pick the one that can be grown without your personal involvement.

5. Before investing, know exactly how much you're willing to lose, and get out before you hit that point.

6. First, improve your strengths. Then, eliminate your weaknesses.

7. Focussing is more effective, than a diversified approach.

8. Let your winners run, and cut your losers off… quickly.

9. 80% of success comes from 20% of your resources.

10. Try to always focus on the good of the whole, vs. the good of the one (applies to any relationship).

Lot's more to say here.

Completely agreed with point four, as entrepreneurship should not be about enslaving yourself to another organisation, at least not for life. Many entrepreneurs seem to ignore that rule, however. Also, VCs often prefer to replace the founders with more qualified executives to "grow the pie."

Point five is spoken like an investor and is very much dependant on the perception of risk you have. Entrepreneurs are reputed to be risk-taking people, however the smart entrepreneur takes a calculated risk, and understanding how much you're willing to lose is part of that.

Point six and seven are a personal weakness of mine, I'm too damn curious for my own good sometimes, more interested in exploring areas (of myself or in life) that are unknown to me, rather than that which is known. That may change, but is certainly not a criteria that I personally meet. I wrote about focus before, btw. Differs from person to person.

Point eight comes with experience, I think. On the one hand, you need to have perseverance, even when things are hard or going badly, especially during the early stages of a start-up. On the other hand, a reality-check is price-less. I suggest bouncing your ideas off as many people as possible.

Point nine is true, nothing to add.

Point ten is about understanding the core-principles of business and, even as an employee, doing all you can to make that business (instead of yourself) profitable. Ram Charan is a good man to read on that.

Good essay, made me think about my place in the world.

Read more entrepreneurship articles here.

I took this title from a report on the future of Dutch supermarkets (English pdf). It identifies a number challenges to come, one of which is "stomach share," which is apparently a big deal because of the following three factors:

• Population decline: which translates into less consumers buying food
• Increased longevity: and older people have a lower caloric intake
• Increased awareness of health-issues: which also translates to a lower caloric intake.

The market is shrinking, people are spending less of their income on food, which will have have consequences on the channel (supermarket), the sales concept, and the value chain. And it will affect those players negatively that cannot leverage these four factors for optimum positioning.



What the authors are seeing is that players from the bottom of the market (the discounters) are moving upwards, by broadening their assortment of goods, and players from the top of the market (luxury-stores) are moving downwards, by improving their prices. A number of underlying things are going on here: luxury-stores can become cheaper by improving the efficiency of their stores and sourcing cheaper brands. And discounters can increase their offering through their relationship with suppliers.

Following HBS-quote, from an article entitled "Finding success in the middle of the market", sheds some light how Tesco does it:

A company controls midfield by fielding a complete product line that includes backs and forwards. In its supermarkets, Tesco, the successful UK retailer, offers consumers three options—good, better and best—in most high turnover product categories. In addition, Tesco doesn't just sell groceries through one-size-fits-all supermarkets. Recognizing the need to shape as well as respond to an increasingly segmented market, Tesco reaches its consumers through at least seven different store formats, from convenient Tesco Express outlets at one end of the spectrum to full assortment hypermarkets at the other. But, within all its stores, Tesco implements the same merchandising principles: Better, Simpler, Cheaper.

Can you guess who the loser is yet? Well, according to both the report and much data on the net, the losers are the new, innovative concepts, that may offer certain values to consumers on an ethical or health level, but are not able to reap the same advantages as more established players are.

That is also the answer why so many organic companies are being bought up by fmcg-companies. There's an interesting overview here; but if you want to follow one in real-time, check out this Inc. magazine blog run by Honest Tea, which has recently given away 40% of their company to Coca-Cola.

Of course that is only part of the answer. Consumers are not just focussed on price. And, while consumer-awareness of the global situation and their own health is clearly growing, that's not the whole answer either. People's lives are becoming ever more complex and convenience is a big selling point these days.

It's those companies that can combine a high level of consumer-responsiveness, together with assortment and price, that will capture the hearts of consumers. But I guess what is out, is the solo single-product-serving player in the market, purely focussed on softer advantages like "ethics," and forgetting that consumers still(!) have limited disposable income for their food-expenses, as well a limited time to engage in these activities.

Yesterday, I read an HBR-article by Roger Martin, on his book "The opposable mind", the ability for people to think contradicting thoughts and act on them at the same time (this may sound familiar, if you've ever read 1984).

My first instinct was to throw it out. I didn't like that he used the first few paragraphs to discredit other thinkers on leadership; and I didn't find his proposed method for coming up with a business-model particularly compatible with the general idea of "chaos" that he was proposing (more on that later). I even wrote an impassioned article about it, but waited a day before publishing it (no April fools from me this year). None of my criticism was directed at his core-concept, btw., I do believe in the ability to think contradicting thoughts, and act on them also.

After a night of sleep, I came to the conclusion that Martin's article was effective. Because it required me to think the article had faulty qualities, while the core-idea was right. And that was the very idea of 'double think'! Then I started thinking, what other areas could you apply this to? Pick one!

• My perception of the internet is that it's indiscriminately linear—we forget things the day after they are published. So how could you make it less linear?
• The perception of food is that it doesn't do well in e-commerce—they perish and people value touch. So how can you sell food via the internet?
• My perception of restaurants is that it requires a genius cook, who is both expensive and hard to handle. So how can you start a restaurant without such an individual, or better yet, how can you start a restaurant with one?

Essentially, 'double think' translates into a belief that the impossible can be made possible; all it requires is faith and homework!

Martin's method for coming up a business-model looks like this:

In other words, you need to identify your core-customers, understand that their decision-process is not linear; understand the equally multi-dimensional architecture of your business, industry, and economy; and come out with a product/service that meets these opportunities.

Whether this is the best way to come up with an impossible idea, I'm not sure. But it seems like a logical thing to do after you come up with an idea and are looking to place it within a commercial context.

He uses one example throughout the article, that of Red Hat Linux, which, I completely agree, is one of the best examples to choose. It is free software, but it's a commercial success, which goes against conventional thinking, at least at that time. And instead of just acting as a commodity or becoming proprietary charge-ware, they decided to make a services-company out of it, and a market-leader at that. So how would you turn your open-source product into a commercial success? If that isn't 'double think', I don't know what is.

The reasons to love bookstore-cafés is that you get a chance to discover new stuff to read. The reason to hate my particular café is that, every week, even when I ask for a *normal* coffee, the waitress continues to regurgitate the same phrase: "will that be a large of a small?" Anyway…

I read a nice article in the New Yorker today, about a stressed out restaurant-entrepreneur called David Chang, who runs several noodle-bar-styled restaurants in New York City. The Yorker's articles are always so long, but it was a captivating article. I took some notes, which I'll share with you now.

• Waiters make way more money than chefs, simply because of the tips; the figure mentioned was $1700 per 32 hours vs. $350 that chefs make. Turning chefs into waiters, which seems like a logical decision in a noodle-bar, comes with the challenge that these types are not always that domesticated (can't help thinking about Chef! here).


• The front-end of a restaurant—servers(?), the set-up, beverages—is relatively simple (compared to the work that goes into cooking) and can be consolidated across multiple restaurants.


• Personal integrity in cooking—e.g. cutting fish-cakes properly, even though the customer won't notice them in a bowl of ramen—is the difference between a quality-restaurant and a McDonalds or Uno.


• Standards: A piece of chicken can taste wonderful to a customer, he won't know why, but it's actually because it's been prepared (marinated, dried, etc.) for more than 24 hours.


• Quote: "The great thing about fast-food is that you could sell out without worrying about it, because fast-food isn't pretentious and selling out is in the nature of the business."


• Quote: "Cooking is honest work; gives you a way to measure yourself."

Thoughts
The thing about restaurants is that I'm painfully ignorant about so many things going on in that world. Cuisine is like art—it's dynamic and filled with critics. For instance, there's the "foam" trend, mentioned in the article, hot in the 90s, but which I never heard off.

For me, I'm always interested to find out more about this industry, because I want to be part of something that produces culture. But I'm constantly thinking about whether it's wise to enter such an industry without a basic familiarity. It would be like me entering the tech-industry, without being aware of open-source, how to write code, or do project-management; it's just not done.

Food for (mostly, my own) thoughts.

The reason I like Star Trek, most sci-fi in fact, is because of the space-opera aspect. You don't just tell a story, you design a universe around it. I've been a fan of the show, ever since the age of 10 when I got to watch TV at home. In some ways, sure, the time spent watching the show impoverished my life by taking me away from other endeavours, in other ways, it enriched it by contributing to my ability to dream.

As I grew older, I started paying much more attention to the story-telling aspects of the franchise. For instance, did you know that until the second season of Star Trek, the next generation, the writers didn't create a place for the crew to relax? It was only then that the makers came up with the concept of Ten Forward, hosted by the infamous Guinan (see pic). Later, in its spin-offs, Deep Space Nine and Voyager, we also saw a big role being played by the "lounge", hosted by Quark and Neelix respectively.

It was felt that by introducing this aspect into the show, a third place, it allowed the characters to show a different side of their lives, necessary if you want to teach a complete philosophy about society, as Gene Roddenberry was in fact doing. And of course, it spawned plenty of dramatic stories, that would otherwise never have happened. It allowed for romance, friendship, and conflict to happen, for aliens to meet and interact with one another.

What's interesting about the franchise that each series had a different archetype, which also affected the room for "drama." You could see it as both an evolution and devolution of a story. Star Trek, the original series, was the raw outline of Roddenberry's philosophy about the future of society. The next generation was much more developed and allowed for deeper interpersonal relationships. Deep Space Nine was again an evolutionary step, and much of the stories centred around "life" on the station.

Both Voyager and Enterprise represented a devolution. Voyager introduced the "morale officer", in my opinion, an engineered effort to bring a certain warmth to the story. But it was much less about teaching philosophy, as it was about survival. It showed that Roddenberry's universe was in fact small and could break apart at the edges. But it was still a good story.

Enterprise represents a return to those raw ideas. Perhaps it was felt that the franchise could cover no more new ground, and that a new philosophy had to be designed. It was also a story of survival and the raw pioneering spirit, shown in part in Voyager. But it felt like a military mission, there was little room to form complete characters. Instead we were presented with deep dramas, echoing the 9/11 events, which turned the characters into one-dimensional creatures, much perhaps the way the news depicts the main characters involved in the post-9/11 era.

To me, at least, Star Trek is a good analogy for certain principles in life. That it is not enough to search, but also to build. That friendships and societies are built, not only from the hard work they require, but from the breaks we take to reflect on our actions, and the places that are engineered to cater for that need.

Food for thought.

The argument for mass-production is that it enables innovations to become cheaper and hence raises the general quality of life of consumers. The argument against mass-production is a more controversial one: that it destroys the unique quality of, let's call it, art.

Starbucks is a very good example of those principles. It brought a higher standard of coffee to the American masses, who, according to Howard Schultz's Starbucks biography, had long been oppressed by low-quality coffee from retailers and coffeeshops alike. At the same time, as the recent crisis at Starbucks illustrates, it has reached a saturation-point: it has brought Starbucks-outlets to every corner in the US, as well as spawned a whole army of competitors, and its brand has become diluted. It has become a commodity.

Back to their roots?
The re-enstatement of Howard Schultz as CEO is a signal, that the business has lost some of its original spirit and is in need of a guiding light. A letter that is rumoured (!) to be written by Schultz confirms that Starbucks will be focussing on re-introducing that original spirit, as hard as that will prove to be. There's only so much that you can change, after your company has reached a certain size. It would, at this point, be like saying that McDonalds is planning to become your corner-restaurant where everybody knows your name and favourite food.

The innovative angle
A friend of mine made me aware of a new coffee-brewing machine on the market, called Clover, which promises to deliver a higher quality coffee to consumers, though also at a higher price. According to Bruce Milletto, a retail consultant to the coffee industry, "a typical American café spends around $50,000 on equipment, about one-quarter of which goes on an espresso machine. At $11,000, a Clover costs the same again." Thus the investment-proposition is not an attractive one to the average cash-strapped café, who would have to spend that kind of money and charge an expected $6 per cup to recuperate that cost.

Following the rules of mass-production, Starbucks + Clover makes for a match made in heaven, and so it is: Starbucks has in fact acquired Coffee Equipment Company, the four-year-old Seattle-based maker of the Clover coffee brewing machine, for an undisclosed sum.

Considering that Starbucks has long been threatened by the commoditisation of coffee in the US, through the birth of literarily 1000s of new franchisers who, on the surface, provide the same value-proposal, though perhaps at a lower quality and price, it makes sense to acquire one piece of machinery that makes a bit of difference in the eyes of certain consumers. Considering the recent partnership with Apple, I believe that these consumers share a similar taste and price-insensitivity, and since that segment appears to be growing, I believe that Starbucks made the right call. They appeal to the type of customer that will pay $6 for a cup, and with their economies of scale, that price is sure to drop to a slightly more acceptable level of (I guess) ca. $5.

The cultural angle
There is another side to this. The USA is not the world, and while Starbucks has been thriving over there, the Europeans (I can't speak for other continents) have enjoyed a coffee-culture for quite some time. For people like my parents, who are respectively citizens from Southern- and Western-Europe, and avid café-visitors, they would not even consider going to the Starbucks in the centre of their German hometown, because there are plenty of alternatives with more atmosphere, more identity. To them, Starbucks is like a McDonalds, a franchise that in fact shares many cultural values—bringing a good to the masses—and does so by building ecosystems of services—from music-retail to the happy-meal—to deepen the (commercial) relationships with its customers.

Consciously and subconsciously, I'm a sympathiser of "unique" café-outlets. I like spending time in them, sometimes hours at a time, read my newspaper in peace, and enjoy a reasonably good coffee at slightly less than $2 a cup. I don't actually care about spending twice that for a coffee, but all the Starbucks's I've been too (exclusively in Germany and the UK, I must admit), have been so devoid of atmosphere that I don't really spend more than a few minutes there, 30 max. The only thing that does attract me about them and similar stores, is that I can grab a cup-to-go, mostly in the summer, and enjoy it out in the sun.

As a citizen of Europe, I think I am a fan of the heritage of the traditional café and don't really want it to go. If that makes me "backwards" or conservative, I am sorry. I want the chance to enjoy a Turkish coffee in Brussels, an Italian coffee in Cologne, or simply a Dutch one here in Rotterdam. I enjoy knowing the history of a pub that has existed for over a 100 years in Antwerp, and the same in Maastricht, or Amsterdam. I want there to be a diversity, and most important, I want that choice to be mine. I don't want there to be a cloned coffeeshop on every corner.

One of the saddest things I heard, while I was in Belgrade last year, was the exactly such a historical café was replaced by a chain (and the coffee stunk too); and I was equally sad to see that nearly all of the traditional retailers I remember from before the war had been replaced by a cloned shopping-centre that would've made any Western city proud: from H&M to Footlocker.

Opponent: Starbucks?
Globalisation is a situation we must all deal with. Its oldest proponents are the FMCG-companies, who are focussed on producing the same good for millions of people. The question is whether coffeeshops should embrace the FMCG-principles like McDonalds and Starbucks clearly have.

Starbucks is a formidable opponent: it is both a roaster, a retailer, and an FMCG-producer. It is strong in the US, and has a significant presence in the rest of the world. It will not go away, And not all believe that their presence is all that disruptive. I don't either, as long as Starbucks knows its limits. There are parts of the world that do not share the same qualities as US-towns. Some cities have long histories and places of heritage that should perhaps not be housing a McDonalds or Starbucks.

In a way cafés are stuck. They need the kind of innovation that Clover brings, but they are not in a position to buy their way in. If they did, they too would have to become mass-marketeers, in order to recuperate that cost. Instead they need to focus on what they do best, and coffee-machine makers to do the same and just license their technology. And whether the latter is able or willing to do that is the question.

I'm not sure how much Clover was acquired for, no one is. And I'm not sure how far Starbucks is willing to go to ensure their qualitative and quantitative dominance of the market. Will they grab every new piece of technology that promises to introduce a higher quality of coffee to consumers, keep it for themselves, and leave the traditional cafés to differentiate themselves simply by their "culture"? Sheer business-principles dictate that they will.

Howard Schultz made me believe, in his book, that it was Starbucks' mission to bring better coffee to the world. Let's hope that a richer coffee does not come at the price of a blander world.

This piece is in fact incomplete. Optimally I should write up a list of actions for coffeeshops to take. However, I am not yet that familiar with all the business-issues facing these organisations and all of my suggestions would be targeted at growing in size and battling on similar terms as a national or global player. And I'm pretty sure that many would not be willing to do that. So I think I'll wait until I have a more objective grasp—from all angles—on the situation, before giving practical advice. Feel free to provide me with that objectivity through your comments.

Just read an interview with Ford's ex-CEO Jacques Nasser on the training programs that were prevalent at that time (2000). He justified their need, by outlining the history of the car-industry between 1905 and now.

• 1905-1920s - colonisation of car-companies: smaller replicas of car-factories in the US were being built abroad. Hardly any competition.
• 1920s-1950s - nationalism: lots of countries were building their own national vehicles. Competition mostly on a regional level.
• 1960s-1980s - regionalism: the rise of trading-blocks (NAFTA, EU, etc.) and as a response the functional/regional division of companies.
• 1980+ - globalisation: global competitors, more markets, more divergence of consumers, more need for people/ideas/growth.

The situation at Ford
The result of the last period is that there are more Ford-people around the globe to manage, that more markets need to be served with different needs, and that the company that can generate economies of scale & scope, while being most consumer-orientated wins.

Two strategic priorities are at play here: consumers only see a part of the car, which means that the hidden qualities can be mass-produced; and consumers value those qualities most matched with their environment—e.g. in Brazil, so I read, roads are abysmal (if any Brazilian reads this, correct me), and good suspension is highly valued. In China, luxury models are mostly driven by chauffeurs, while the consumer sits in the back, hence he/she values luxury in that part of the car.

In this scenario, two types of qualities are valued with people: to understand the corporate qualities of Ford and make decisions that favour its mass-market strategies; and those that understand the local environment and can design car-offerings tailored to local needs.

Social operating mechanisms at Ford
Ford, at the time of the interview, had about 12 programs aimed at promoting these skills. The ones mentioned, included: Capstone, which is aimed at (24) executives; Executive partnering, aimed at (12) promising managers; Business leadership initiative, aimed at the whole organisation; and a weekly email-newsletter, called "Let's chat about business," also aimed at the whole organisation.

Methods + Aims were:

• Team-building - to get people to work more closely together / develop a corporate culture
• Teaching - to get people to understand the priorities at a corporate level, rather then just at a divisional/functional level
• Projects - to get people to come up with problems plaguing their organisations at that time and develop creative solutions to them.
• Shadowing - to develop leaders

Thoughts
Several thoughts going through my head at the moment. I am both uncertain how relevant this is to the SME-environment, and at the same time I do a lot of "social engineering" and can certainly think of a few cases in my past where a certain structure would have benefited the small teams I worked in. I'll probably write a third post about the SME-perspective at some point in the future.

My favourite way to picture "social engineering" however, is through designing processes that bring elements of the organisation together with customers and "raw-inputs" (new technologies, future employees, and partners, etc.). Maybe, I'll write about that at some point too.

Of course, I always appreciate the reader's perspective on this. Social programs at an SME-level, good for team-building or bad because it distracts from survival-priorities?

The picture is courtesy of articlescaravan.com

Ran Charan, who I wrote about a few days ago, made another excellent contribution to my thinking (and hopefully yours), the concept of "social operating mechanisms." He defines them as mechanisms that synchronise individual contributors' efforts.

A step back
Individualism vs. collectivism represent two personality-types. There are the managers, who are integrators and bring both groups together and (are supposed to) identify with the greater purpose of the organisation: maximisation of profit, etc. And there are individual contributors, who through their own efforts bring forth new data and growth, etc. These types are not always suited for management, as they need that freedom to be creative.

Social operating mechanisms fit within the framework of execution, in the sense that that is one of the last stages in a multi-stage process. As the leader/problem-solver of an organisation, you start by identifying a problem; you come up with a set number of fundamental priorities to solve the problem; and you (design social operating mechanisms to) spread that solution throughout your organisation.

An example
Mr. Charan mentions a number of examples, but (for obvious reasons perhaps), I like the Wal-Mart one the best.

• In the early 90s, every Monday to Wednesday, ca. 30 regional managers visited 9 Wal-Mart stores and 6 competitor-ones, to check if Wal-Mart's strategy of offering lower prices than the competition was being implemented correctly.
• Every Thursday-morning, Sam Walton conducted a 4-hour session with a group of 50 people, including those regional managers, buyers, logistics- and advertising people to discuss the status quo, what was going right and wrong, and the future.

The results of these managers visiting the "real world" and the immediate discussion of that data enabled Wal-Mart to stay in touch with what was happening and respond quickly to problems.

Making it relevant?
If this seems like a big-company problem, maybe so. But even on a smaller scale, you could see a similar process happening in the week of a franchise-owner, I discussed a few weeks ago.

As soon as an organisation grows beyond a few people, the barriers between your customers and the leadership of an organisation increase. The politics can be frustrating and are one of the main reasons why original founders leave. The Amazon-story, which I wrote about a while ago, and which also discusses of how Jeff Bezos, founder and CEO of Amazon tries to keep in touch with the core-principles of Amazon, is also an example of a social operating mechanism.

Naturally, today's reality is somewhat different from the time (2000) that the book was published. We have "the internet" now, which should make creating social mechanisms a much easier to solve. I say 'should' as opposed to 'will,' because it still requires the necessary cohesion, which many technological solutions (in my opinion) are still lacking.

It still comes down to designing people-processes which help you implement core-priorities, and having the tolerance for, let's call them, idiotic decisions that sometimes come from the type of group-think often prevalent in organisations.

The picture is courtesy of infed.org

These next few weeks, my posting-rhythm will slow down due to personal issues, sorry about that. It does however feed into this topic here.

Premise: A couple of things happened these last few days, which I think are noteworthy. The Zuckerberg-interview on SXSW got slaughtered by the twitter-crowd (though there's a human behind every trigger), and which is an example of a BAD interview. There's Steve Balmer, who came across as both human (sympathetic) and capable, an example of a GOOD interview. And there's John Battelle, who wrote two good posts on that every business is a media-business and every business should find a way to engage with its customers.

It's all about PR of course, and somehow some people got it into their head that social media—blogs, social networks, web-sms (my term for Twitter, Pounce, Jaiku,etc.)—is a good way to relate to the public. The problem, if I may call it that, is that these are two-way conversations between people that are essentially observers: users + media. And that, as the Zuckerberg-interview shows, when users + media get angry, they get ANGRY. Now, you could argue, bad publicity is still publicity, I just consider it disruptive.

Business, in my opinion, is two things: a machine that produces output, and engineers that seek to optimise the machine and increase its output. Arguably, user-feedback is useful for tweaking the machine to perform better, and optimally get more users to purchase its output. And outward PR (marketing) also means that more people are aware of your great machine and want the output. Ah, machine-analogies, gotta love them.

Just like the life-cycle-model of a product, which evolves from slow to strong growth, to maturity, and ultimately decline, our machine is very susceptible to tweaking at the early stages, can produce extra output, etc., but ultimately reaches a saturation-point. The same, I believe applies to user-feedback and marketing. The return on investment levels off after a while.

You have the PR, which is the interviews and other kinds of marketing, and there's the user-feedback, which should be restricted to the product-level. And, aside from the life-cycle-model, there is general a limit to the value of both. You don't want a mob disrupting your interviews, no matter how bad they go. You don't want a mob disrupting your business, period, unless you're developing something like a nuclear weapon.

What I'm essentially arguing against is that companies should be 100% social. They should be social enough in order to improve their products and let the people know about them. Should they engage in a two-way conversation? Only if it's directly product-related or your business is bad for the environment (arguably a government-issue), should you engage and customers should vote with their wallets. Note that I'm referring to business-PR here; individuals can blog about whatever they want, if you ask me.

There will always be the "backroom-talk," the social-media people who have opinions on anything, from using Plaxo-scripts to milk Facebook-data, to 17+ ways on how you should (not) run your start-up. And there will always be "Skynet"—the realm of the machines—which have to keep running because social media will not put that food on your table, the farmer will.

This somewhat-cynical article will NOT be mirror-posted on Tech IT Easy tomorrow

When I started this blog as an experiment, I purposefully kept it vague, while maintaining a fairly clear industry-focus. However, taking a value-chain view of food & retail only gives you so much. It allows you to identify tensions and possible opportunities, but unless you want to be a consultant regarding value-chain issues or are the strategist within a business, it doesn't really bring you all that much.

Where the imagination really kicks in—and you need that to think of new business ideas—is when you start matching you— the individual or groups of individuals with a particular skill- and experience-set—with a particular opportunity that you can feel both passionate about, and confident that your skills & resources are sufficient to add value to it.

Blogging about FnR allowed me to look at segments in the industry, such as:

• farming
• supermarkets
• franchises
• online-retailers
• electronics retailers
• coffee-shops
• restaurants
• cinemas
• furniture-stores
• and fitness-studios

As well as product-areas, like:

• fast-moving consumer-goods
• coffee
• beer
• private labels
• organic food
• and media

And of course a lot of business-issues around it.

However, starting or working in a business is of course more than writing about it. It's the process of building up a vision, gathering up resources to execute it, and executing it. I was reminded of how powerful such a vision can be just last night when I was evaluating a business-idea and what it would take to execute it (I ended up dismissing it for now).

And of course, starting a business is not the same as running a business, the latter of which can be defined as a sustainable* process of making money (*: not in the environmentally-friendly sense of the word). So many stages to go still.

Will this have consequences for this blog? In the short-term, the next few months, probably not much. I'll still be looking at more industry-segments, product-areas, and business-issues. Ultimately though, I will have to focus on one particular industry-segment and one or a set of related product-areas. Of course, when that happens, I'll continue to share my thoughts here, as that is my not-so-secret way to build mindshare (insert: evil laugh).

Take care,
V.