The Week in Geek™ – Oct. 25, 2009
Note: The Week in Geek (WiG) will post less regularly as I work toward meeting book deadlines. Thanks for your patience.
Community Relations 2.0
Jerry Kane, Rob Fichman, and I, along with Partners Healthcare CIO John Glaser, have an article in the Nov. 2009 Harvard Business Review offering examples and advice for firms seeking to develop a strategic competency in social media. Sorry we can’t post a free version online, but follow the above URL and the kind folks from HBR provide a way to purchase the article. It’s also on p.45 of the issue that should be on newsstands now. The work grew out of consulting that Jerry, Rob, and I did for Partners, and later expanded to include in-depth research beyond healthcare. More ideas on developing a Social Media Awareness and Response Team (a.k.a. SMART) capability are detailed in the last lecture I gave this semester, which is available via podcast and PowerPoint slides (we were crunched for time, so topics in these last lectures fly past fast, sorry). An additional primer on social media and peer production is available in an online chapter in my open source Information Systems textbook. Let me know what you think!
Steve Ballmer at the Boston College CEO Club (Video)
It was great to see the head of the world’s largest tech firm speaking at a Boston College podium! Fortune’s “Microsoft Reboots” provides a recap of Redmond’s recent history and predicted trajectory. While last year the firm missed earnings by $1 billion, and Vista has been widely panned, a tough year from Microsoft still has the firm in a stunningly strong position. Various versions of Windows run on 95% of the world’s PCs. While the firm needs multi-billion dollar markets to push its stock needle north, Ballmer will spend more coin than anyone to reach that goal. Microsoft $9 billion+ in R&D spending represents about 3% of the U.S. total. Windows 7 kicks off ‘a year of product launches unlike any in Microsoft’s history’. Microsoft may spend 10% of operating income over the next four years on Bing. And while Microsoft is frank about Vista’s shortcomings (MS-sponsored Win 7 launch party that I was invited to came with the e-mail tag “Microsoft Gets it Right”), the new OS has been widely praised. Tech earnings are already way up (Microsoft, Intel, Google, EMC, Neflix, and Apple are among those crushing expectations), and Win 7 should ignite sales of super-slim notebooks and other products as users who’ve waited buying during the recession seem finally ready to open their wallets. All signs point to Microsoft having a great year.
Apple: All Systems Go
Of course, Microsoft will have to contend with Apple, which posted another killer quarter and introduced a new iMac, a new Macbook, and a new Mac Mini, among others. In the teeth of a recession, Apple announced it’s second highest quarterly revenue ever, and a 46% jump in profit over last year. And Apple clearly senses opportunity with the Windows 7 introduction. New Mac promotions strike at the heart of the Windows 7 migration – the message – hey, if you’re going to have to make a big switch, why not move to the firm that’s #1 in customer satisfaction?
University of iTunes
I’m in my fourth year of podcasting my biz-tech courses (slides and readings from my open textbook project are also online), and it seems many other b-schools are also capturing their courses and bottling them as bits. CNN highlights the University of Cambridge Judge Business School, Fuqua School of Business, and Yale School of Management content all available within iTunes U. BC is still evaluating options on making publicly accessible content available within iTunes U, so folks looking for my courseware will need to visit my podcast page for now, but we do have some great content from FrontRow and other sources online.
New Approaches to New Markets: Prahalad’s Bottom of the Pyramid is Paying Off
The U. of Michigan prof’s book on big, profitable markets among the world’s 4 billion poorest is now in a revised, fifth year edition. Students recognize these concepts from our Moore’s Law chapter, which covers the empowering role of the mobile phone among the world’s most economically disadvantaged. In this Knowledge@Wharton interview, Prahalad highlights mobile use in emerging markets “All the companies in every one of these areas [sub-Saharan Africa, South Africa, Latin America, India, Southeast Asia, and China] — Celtel, Safaricom, MTN, Airtel, Reliance, Globe — all of them are making money. So the first lesson here is if you can find the right sweet spot in terms of business models, there is a really huge and very profitable opportunity.” India alone is seeing 12 million new mobile subscribers a month. Millions worldwide are transferring funds using mobile phones, bypassing banks (for more, see The Economist’s recent report on Mobile Money). It’s likely only a generation or two of Moore’s law advances until most of these folks tote phones that can tap into the kinds of educational content mentioned in the prior story on iTunes U. The Prahalad interview is chock full of great examples, like how GE took a BOP (bottom of pyramid) $800 EKG machine and used it to replace a $10,000 product used in the US. We used to talk how special it was when firms had 50% of revenue outside the US. Now firms like Unilever, Nestle, and P&G are seeing 50% of revenue from emerging markets.
We’ll have more inspiring examples from the empowering force of entrepreneurship when the CEO of the Grameen Foundation, Alex Counts, speaks at BC as part of the Clough Colloqium on Nov. 16. BC students – spend a summer or semester in an emerging market. Having studied (then latter worked & researched) in Russian and China in 80s and 90s, I can tell you first-hand these experiences will highlight your time in college and shape your insight as a global citizen. And thanks to the BC alums behind the McGillycuddy-Logue grants for helping this happen for more of our students!
PS: I Love You. Get Your Free Email at Hotmail
The headline facts in the YouTube video promo for Adam Penenberg’s new book read like a snapshot of slides from my lectures! I haven’t read the book yet, but it’s been receiving great buzz. TechCrunch excerpts a chapter (and of course, Kindle apps that you can now find for iPhone & soon, PC, offer up the first chapter of Kindle books for free).
Those interested in the topic might also find this Network Effects chapter a useful read, with concrete strategies for competing in markets when viral loops are present. I was delighted when a member of the economics faculty at the highly-regarded U.C. Berkley recently sent a shout-out on using the chapter in his course. Thanks!
Can Amazon Become the Wal-Mart of the Web?
That’s the question posed by the NY Times, but it looks to me like they’re already there. And with blowout earnings (sales surged 69% – in a recession!), they’re positioned to keep their scale, tech, data fueled assets humming defensibly along. Amazon is no longer ‘that big online bookstore’. N. American sales media (books, music, videos) have been eclipsed by non-media sales, and if trends continue, the firm’s global sales will follow this milestone later this year. Amazon’s worldwide media biz grew only 1% in the June quarter, but electronics & general merchandise were up over 35%. The firm has created separate hubs for sporting goods, cellphones and wireless plans, and purchased Zappos for leadership in footwear (all while taking out a highly-regarded firm that was emerging as a competitive threat). And sales of third-party product listed on Amazon now account for 30 percent of all Amazon’s sales (Amazon takes about a 15% cut on these transactions). That long tail of product listings makes Amazon a first-stop to search for products, prompting Wal-Mart and others to introduce their own third-party listing services. And Amazon has begun private labeling its own line of products, that now include kitchen items, cables, blank media discs, and outdoor furniture. The firm’s operations are a marvel. The data-rich business is able to predict demand months out, keeping stocks low and inventory turns high. This lets Amazon sell most products way before it has to pay suppliers for them, creating negative working capital, or float, so efficient that the firm’s inventory accounting looks closer to what you’d find in a grocery store loaded with perishables rather than a big-box retailer. And those warehouses are stocked in non-traditional ways. Walk around one of Amazon’s 25 worldwide shipping centers and you’ll see diapers next to TVs, bagel chips next to Beatles Rock Band video games. This minimizes the chances that a warehouse worker will choose the wrong item. And warehouse workers tool around with software-generated maps telling them the fastest path to get items from stock shelves to shipping. The model is so radically different than what a traditional big box firm has, that many firms have outsourced to Amazon rather than straddle the market with two parellel yet incompatible inventory facilities (shipping many products to one is very different than shipping pallets of products from warehouse to store). Yet, Amazon’s growth is now seen as such a threat that Target has announced it will stop using Amazon fulfillment by 2011, continuing an exodus that includes Toys R Us and Borders. This might not matter – it’s doubtful that any late mover can eat into Amazon’s huge scale, data, brand, and technical advantages in the very different business of online fulfillment. Perhaps these rivals need to see what BC students learn about strategy and technology!
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A quick thanks to all those who have written to me about this year’s Boston College PSA. The great folks in BC’s Public Affairs office did a tremendous job (it takes a lot of makeup and camera work to stop my big, bald head from shining too much). While I’m hugely honored to be in the BC ‘commercial’ running during this year’s sporting events, I’m humbled when I look around and see so many great stories in our IS department. alone. With Prof. Gips’ continued pioneering work with Eagle Eyes (and with Marketing Prof. Brasel, on tech’s impact on marketing), Prof. Fichman’s national ranking in IS research leadership, Prof. Ransbothamn’s Google grant, and Prof. Kane’s emergence as a social media rock star and one of the nation’s strongest young IS researchers, we’ve got a lot of great stories for us to share.
But a PSA highlighting the field study courses is a chance to share thanks with the BC alumni, parents, and so many others that have helped create world-class programs and opportunities for our students. And the work continues on The Heights. This semester alone we’ve had campus visitors from alums who manage search quality for Google, security for Facebook, and who have led investment in Twitter, plus the CEO of the largest social media site in the Northeast (wildly highly profitable TripAdvisor). The week before Windows 7’s launch some of our MBAs and I spent time at a round-table with Microsoft CEO Steve Ballmer. Steve was in town as part of BC’s top-ranked Boston College Chief Executives Club (see above). BC’s ascendancy as a biz tech powerhouse owes a great deal of debt to the contributions of so many who care about our University, and we all remain grateful for the opportunities that you provide for our students. Thanks, again!