The Washington Post published an article today about President Obama’s staff walking in to their new workplace and finding themselves in a “technological dark age.” The article is getting a lot of attention due to the level of technology deployed throughout the Obama campaign.
I’m of two minds here - On one hand I can COMPLETELY understand why the Secret Service and those responsible for securing the White House’s communications would be extremely wary of lifting security regulations on outside email accounts, instant messaging, social networking applications - all communications vehicles that make the Executive Branch more vulnerable to an e-attack (and yes, I just made that word up).
On the other hand the American people have been subjected to our government operating in an inefficient manner for much too long, and its about time the White House was introduced to the 21st Century. These communication channels help the administration immensely by allowing them to communicate with each other, their supporters and the general electorate - something the public yearns for. After decrying the lack of transparency during the Bush years, the administration is supposed to retreat in to the turtle shell that is 1600 Pennsylvania Avenue, just like their predecessors? As a wise man once said - that’s not change, that’s more of the same.
What’s needed is a bridge between secure and open communications on the Internet. The brilliant folks in the Secret Service and the Obama administration can surely work together to figure out a way to allow Executive Branch staff to creatively and constructively communicate with the outside world while ensuring a secure system. Yes, they can!
The 5th annual State of the Net Conference, the largest information technology policy conference in the U.S., is taking place in Washington today. With a new administration and new Congress in town, a healthy, productive discussion about the direction of our nation’s technology policy has never been more important to our country’s future. The conference, created by the Congressional Internet Caucus Advisory Committee, will bring policymakers, public-interest groups, and business leaders in the technology arena together to discuss wide-ranging issues such as broadband infrastructure, Internet governance, privacy issues, healthcare technology, and digital copyright policy.
Many of these areas are ones that the new administration, and the entire country, is looking to invest in to (hopefully) turn our economy around, specifically broadband deployment and healthcare technology. Large pieces of legislation addressing these issues are expected to be introduced in the coming months (some will even be included in the upcoming economic stimulus), and their champions will be here explaining and recruiting support for their positions. So while this policy conference is definitely not the most prominent in town, it is doubtlessly one of the most important.
Mr. Charlie Gibson was nice enough to highlight our Presidential Inauguration mobile app on the World News Webcast. He said: ”If you’re headed to Washington next week for Inauguration festivities, don’t forget your iPhone or your BlackBerry. It could be your key to finding your way around town.” We completely agree. Be sure to check out Version 2.0, which features a new polling function that will allow you to answer Inauguration-related questions and see the results from others all over the country.
Qorvis is honored to be able to cap off another great year with today’s news that PRWeek has named us a finalist for the category of Midsize PR Agency of the Year 2009! We’re all clearly thrilled about this recognition.
What helped driving our nomination were several achievements, including the launch of Clarus Research Group, a full-service, in-house polling and research firm; a number of new clients, including an advertising campaign for the Society for Human Resource Management (SHRM); the hiring of some top-tier talent, such as Karen Hanretty, former Communications Director for the National Republican Congressional Committee, and Lisa Bushey, a public relations veteran; and the expansion of the company’s headquarters in Washington, DC.
Qorvis is starting the year with the launch of the 2009 Presidential Inauguration Mobile App. The new, free mobile application, named “Phone App of the Week” by the New York Times, will provide visitors to Washington in January the ability to easily navigate the city with a glance at their iPhone or BlackBerry.
The PRWeek awards are among the industry’s highest accolades. Qorvis was nominated for the category for agencies whose annual revenues range from $15 million-$65 million.
IF THE FALL IN THE PRICE OF HOMES IS THE ROOT OF THE ECONOMIC MELTDOWN, WHAT IS THE ROOT OF THE FALL IN THE PRICE OF HOMES?
By my age, habits have become pretty well etched into the pattern of my life.However, I have to admit that I am joining that crush of people who are getting more of their news online.I have grabbed The Washington Post at my front door every day for the past five decades or so.For years, my day hasn’t really begun until I have a cup of coffee and The Post.But more frequently these days, I find myself early in the morning moving seamlessly from emails to news on my own schedule without worrying about whether The Post has been delivered yet.Now, I get my news most frequently by watching one or more cable TV news networks while balancing a laptop on my lap. Usually, on my computer screen is an email from Seeking Alpha, which suits my needs for news and opinion better than anything else I’ve discovered.They assemble articles from people with very high credentials who publish on the web, often on their own blogs or news services.The people from Seeking Alpha bring their own substantial and credible editing to the process.They allow their reader to specify the topics that interest them and send them a daily morning email with links to articles grouped by each area of interest specified.One of the areas I monitor is Housing.This morning (12/23/08), I was especially impressed by an article entitled “The Housing Blame Game, Redux.”It was written by Paul Jackson, who is the publisher of “Housing Wire,” which is a respected source of news and interpretation of the residential real estate market.In his article, Jackson makes a well-reasoned case that the Bush Administration’s “Ownership Society” policies, coming on the heels of similar goals of every Administration since Carter, must assume much of the blame for the crash of home prices.That prompted me to leave a reply to Jackson’s article that articulated my view that blaming the crash on political policies still isn’t enough.It’s a much deeper issue, in my opinion. Below, I am reiterating the comments I posted at his article, in an extended and edited form.
The Crash Of Home Prices, Like The Crash Of The Stock Market, Was Not An Isolated Episodic Event.It Happened In A Much Broader Context.
Although I think Paul Jackson’s article was enlightening, I also think his discussion misses the major point: new and ill-conceived financial instruments and political policies certainly exerted major influence on the housing bubble, but they existed within the context of a cultural phenomenon.
From mid-1986 until the very end of 1990, I was VP at NVR, which grew from a small IPO of a Greater Washington regional homebuilding company called NVHomes to become the nation’s largest homebuilder when, in a classic minnow-swallowing-the-whale case history, NVHomes acquired Ryan Homes.I worked closely with founder and then Chairman/CEO Dwight Schar, a brilliant businessperson who (at least from what I could observe) had an intuitive genius for real estate, how to market new homes, and how to operate a homebuilding business. (As an aside, he also has become a close friend of George W. Bush, and he has been one of the major fund raisers for the Republican Party for a number of years.) While working with (and learning much from) him, I attended four years worth of conferences where we and other public homebuilders made presentations to analysts and institutional investors.In fact, I sometimes took his place making the company presentations at those conferences.
In the process, I got to see all the other publicly owned builders make their presentations over a very dynamic four year period of boom-to-bust for the real estate business.This combination of having a close-up view of the homebuilding industry as a part of the senior management team of the nation’s largest homebuilder and as an observer in the audience listening on a regular basis to CEOs of other homebuilders gave me the opportunity to see a fundamental change happening in the residential real estate market.
Product Product Product.
The fundamental rule of real estate had always been: location location location. In the mid-80s, that rule changed to: product product product. Location did not become totally irrelevant in the marketing effort and it certainly influenced the price of the home, but if you take a look at the advertising and marketing of new homes at the time you will see that they were promoting product over location. They stressed bigness, open and big volume space, tubs so big that the water got cold by the time the tub was filled, over-size kitchens with islands, master bedrooms with sitting rooms, extensive upgrades, customizing, etc.In short, how the rich lived became the expectation of the non-rich.More, in fact, than mere expectation.Maybe closer to some weird sense of entitlement.
Consistent and concurrent with this trend, the market began to be segmented so that there was no longer just a “move-up” market but there was a “first time move-up,” a “second move-up,” and then the McMansion market. In other words, there was always a reason to sell your existing house and buy the next level up. By creating a “next step up,” homebuilders increased the size of their market. The consumer was lured to another sale. Each segment of the market was defined not so much by location but by the features and look of the house itself.Product became king. So what if the house was located in the far suburbs requiring an awful commute? Look what you could live in once you got home! How great you would feel!How impressed your friends will be when they see the house!Worth the commute.
The real estate crash of the early to mid-1990s popped the market bubble for about seven years or so until people who bought at the market high saw their homes’ value recover to the price they originally paid. When the market came back, it came back with a vengence, fueled by homebuilders who built and fed into the consumer’s appetite for more-and-better as defined by product. The marketing that was used to turn-on the market could not have succeeded unless the market itself was susceptible to that pitch. And that is my point: the market itself (our culture) also must assume a major burden for what has happened to home values. And, because the crash in home values is a major reason for the crash of the equity and debt markets, you could say by a simple extension of logic that it was our culture that gave rise to our current financial condition.
The evidence of wealth became a priority to Americans, and the house became the most important evidence of wealth.Even if you didn’t actually have wealth, you could still look like you had it. Remember the TV commercial that showed the guy with all the props of wealth who admitted that he was “in debt up to my eyeballs”? That was a perfect summary of the American Culture:The appearance of wealth not only became more important than actual wealth, it became so important that debt would be assumed to the degree that it actually undermined the reality of (or prospect of building) wealth just for the sake of giving the appearance of wealth. How perverse was that logic?So perverse that it could be attributed to only one thing: a bandwagon mentality gone horribly off-track.
Although the consumer’s ability to get themselves into that fix was helped by new financial instruments and government policies, as Paul Jackson’s article suggests, the consumer’s decisions and priorities were fueled less by financial instruments and more by the culture that dominated our society and nation at the time.
To dismiss the cultural issue when trying to identify the causes of the current financial crisis is a major mistake because if we are not sensitive to it as a cause, we will not observe cultural shifts as they occur as a necessary component of the solution.I think those cultural changes will exert at least as much influence in how and when the residential real estate market is reshaped as any new mortgage instruments that may be appear on the scene.
What Cultural Changes Might We Expect?
If my premise is correct, then the question becomes: What sort of cultural changes might we expect?I think that will be very difficult to predict correctly, but here’s my current guess as to attitudinal shifts in the American Public’s view of their homes:
Resurrection of the importance of a home’s location.
Acceptance of the concept that having a house that can be afforded is more important than having a house that is a financial stretch but gives you a certain image.
Rejection of the importance of the appearance of success and wealth as a priority in life.
Willingness to at least consider the proposition that in some cases renting a home might be wiser than buying a home.
If …
If those cultural changes are made as part of the revitalization of the residential real estate market, there will probably be similar and related cultural changes in society as a whole.As that occurs, the current American Dream of “Buy more … Buy bigger … Buy more expensive … Buy on credit even if you can’t afford it” will be transformed.Perhaps the transformation will include a reversal, at least in part, to the traditional American values of liberty, freedom, and individual responsibility and opportunism.We’d also be likely to see increased savings rates and decreased levels of debt.But I think the cultural change on the horizon will be much more than an updated restatement of former ideals.I believe new standards, priorities, ways of doing things and the basic definition of what makes for a “good life” will emerge.
I do not think this will happen overnight, and I think many of the changes will begin to emerge in very small and maybe unnoticeable increments (which would increase the need for being sensitive to the issue so that we can observe changes as they evolve).In the meantime, given the destroyed wealth that formerly existed in peoples’ homes, the ongoing southward direction of the equities and debt markets globally, increasing unemployment, and more dramatic stories of the Madoff ilk, it’s going to be very easy in 2009 for people to count their blessings.But the blessings they count will be less of the materialistic variety – less tied to money (or even the lack of it).And if “blessings” morph FROM things like the latest flat screen television in the media room with theater chairs TO things like reveling in family and non-capital-related assets, then the cultural change will be significant indeed.After all, there won’t be another catastrophe in sub-prime mortgages if there is no market for sub-prime mortgages in the first place.
To cap off a great week, Gadgetwise, the New York Times tech blog, has named the Qorvis / Patton Boggs 2009 Presidential Inauguration App the App of the Week.
Qorvis, Patton Boggs and PointAbout are really excited about the potential this app has to help people navigate Washington (which is the elegant metaphor for what we as companies do for our clients). The next iteration for BlackBerry should be out in the middle of next week, and new functionality for iPhone will be up soon too.
To experience the app, check out this video. Or to download it, go here. Enjoy!
SOME RANDOM THOUGHTS ABOUT THE ECONOMY FROM AN INVESTOR RELATIONS PERSPECTIVE
I spent ten years, beginning in 1981, heading the corporate communications efforts of three publicly owned businesses. In each instance, my highest priority was investor relations. In 1991, after leaving the third company, NVR, the large homebuilding company where I was Vice President, I started my own investor relations consultancy as a one-person business. For about the next ten years, until co-founding Qorvis in late 2000, I stayed focused almost exclusively on investor relations. That amounts to a total of about 20 years concentrating on investor relations, during which I worked with scores of companies, all of which were public or going public. During that time, I got an up-close-and-personal view of the investment community, and the way I look at the world was changed as a result. Much of what I learned rushes back into my thoughts as I watch and read about the current financial crisis. Here are some random thoughts:
JUST WAIT UNTIL NEXT YEAR.
There is a really unique feeling only an IR person can relate to. It’s that feeling you get when you wake up on the morning that you know your stock is going to get killed because you have to issue very bad news – and there is hardly anything worse than issuing disappointing earnings.
The IR person feels the heartbeat of a stock more intensely than anyone else. That’s not to say that the stock isn’t a priority concern of others, especially the CEO, but the IR person thinks about it constantly. It is the focus of their life. You speak to the investors and the analysts on a frequent and sometimes lengthy basis. You know what they think. You know their expectations. You know what will make them sellers and what will make them buyers. And you do that in a very real-time world. Issue a release. Look as it crosses a screen and becomes public news. Watch the reaction.
So you know what will happen when the news hits. You may be off by some increment, but you know when it is going to get killed.
There is also a unique feeling the IR person has when they go to bed the night of the day of bad news. It isn’t as overwhelming as what you felt in the morning – it’s more like a sigh of relief: “Well, I get to compare against this 365 days from now.”
The economic news has been so bad since the October market meltdown that the statistics next year have to show an improvement. There’s some good news there somewhere. You might have to look real close.
ITS ALL ABOUT EXPECTATIONS
A basic rule that IR people live with is: “Investors can take good news; they can take bad news; they can’t take surprises.”
Reporting a quarter that compares favorably against the same quarter in the prior year is positive, but if those results are under expectations, the benefit of reporting good period-over-period results is more than wiped out. Thus, a general rule of investor relations is: “Create expectations so that you can at least meet them, and preferably beat them.” I’d use that rule if I could set expectations for the national economy. I’d set expectations as low as possible now and by so doing set the stage for good news by beating those expectations in the future. It looks to me as if the Obama people understand this rule and are doing their best to keep expectations down.
But setting expectations isn’t as simple as it looks. Set expectations too low and you have the chance of creating a self-fulfilling prophecy; set them too high and you put yourself in the position of issuing disappointing results in the future.
So, looking forward, the actual numbers that are released will be less significant than the actual numbers relative to the expected numbers.
EXPECTATIONS MUST EXIST WITHIN THE CONTEXT OF A VISION OF THE FUTURE
I’ve written previously about how investors are driven less by the present as they are by the future (if you follow the link, scroll down to the section that is headed: “An Investor Relations Pitch That Failed Taught Me About How To Create Ideas That Can Really Exist”). Facts and past performance are important and I would never denigrate that importance. However, people are turned on by visions of the future: “The Story.”
Thinking about the nation’s economic situation makes me realize that the news and analytical coverage that dominates the nation’s consciousness is all about what has happened and what is happening right now. Although President-elect Obama has defined some important priorities and a broad approach, he has not yet painted a very clear picture of what the future will look like. In fact, that picture could be exciting: a new national infrastructure … new healthcare system … closer to energy independence … a more viable Middle Class, etc.
The sooner we start envisioning a more encouraging future, the sooner we can see start building the more upbeat view of the future that will, in turn, translate into an increase in the confidence necessary to get the economy growing again.
Perhaps Obama will take the occasion of his Inaugural speech to focus less on topical events and much more on his vision for the future. He could take the opportunity to paint a bold, opportunistic and empowering vision of what the nation can become. That vision could then become the “story” of the Obama Administration so that all individual achievements can be cast in the context of how the achievement, regardless of how little it might seem today, moves us closer to the ultimate vision. But to do that, you need the clear vision in the first place.
THERE IS ONE ESSENTIAL INGREDIENT FOR BUYING-INTO THE FUTURE VISION:
CREDIBILITY
As vital as it is, a vision for the future isn’t enough. It has to be a vision in which people can believe. However, what if the economic situation has come on so steeply that we cannot yet believe in anything other than some wishful thinking that it won’t take much longer to find a bottom? What sort of vision can you create with any degree of credibility at all if that were the case?
The irony is that in the case when things are so uncertain that you can’t even get your bearings, the vision that is bold and far off is often more credible than the less exciting vision that would be realized sooner. That is because people expect a long series of modest achievements for the bold vision to come true while they expect to see less frequent but more significant achievements sooner to believe that the nearer-term vision will come true. It’s relatively easy to report numerous small achievements and explain how they move the story forward; it’s relatively risky to place spotlights on less frequent but more significant events that have greater impact, especially when neither their timing nor consequences are highly predictable.
THE TREND IS YOUR FRIEND
Another maxim of the investment community is that things move in trends. If you believe that (as I do), then you will also believe that the trend of the past will continue into the future. The trend will continue until the trend flattens out. Once it flattens out, it will continue to flatten out until the trend changes direction again. Pretty obvious stuff. One major problem: when will a trend change?
It is clear to see when a trend changes. Plot it on a graph. You can usually see it. But inflection points become known for sure only when you are looking at the past. When the inflection point hasn’t yet happened you can only guess when they will come.
That means if you want to get in early on the wave of a new trend, if you act on the basis of what you see when looking into the past, you are likely to act with greater certainty than if you are betting on some leading indicators of the future. So, the best case scenario is to be able to read the trends accurately as soon as they have occurred and follow the trend from its very early stages. If you do that, the trend will truly be your friend.
Right now, I think there are two disparate trends in our nation. Economically, the vast majority of people believe things are very bad and going to get even worse. On the other hand, politically, the vast majority of people (about two-thirds of the nation) express very strong confidence in President-Elect Obama. I think it’s going to be difficult for both these trends to continue in their current directions for long. One of them will have to hit some inflection point. Either people are going to start getting more confident about the economy and maintain or even increase their support of Obama, or Obama will lose support and views about the economy will become even more depressed. Which trend will change when? We can make guesses now, but we’ll know for certain only when we look back.
THOUGHTS ON THE RISE OF “SUPPORTERISM” AND ITS IMPACT ON WASHINGTON – THE VIDEO
At the December 2, 2008, “New Washington” conference held at The National Press Club , I gave a brief presentation on how I believe the convergence of the economic downturn and the new political environment will give rise to a decline in “buy this” messages and a surge in “support this” messages. This is a video of that presentation. For videos of each of the other speakers, including David Rubenstein of Carlyle, Gov. Tom Ridge, and Joe Robert (real estate investor), plus Steven Fuller’s presentation of his most recent projections for the region,
To all of you who read the Qorvis blog I want to invite you to take another look. I’ll be including here an increasing number of updates about the events and goings-on at the Q.
Please note: I won’t be doing this to fill space; rather, it will be more of an exercise in telling the Qorvis story. There is a lot happening at Qorvis, and in my estimation it is worth sharing.
So to begin, I want to thank everyone who joined Qorvis and Beam Global Spirits & Wine for our Election Night party (see pics), which featured an appearance by now President-elect Barack Obama (courtesy of Madame Tussauds, of course). We welcomed more than 500 friends and colleagues to Qorvis’ new office space.
And, it seems many from the party stayed on for the Qorvis Morning-After Webinar with Patton Boggs. More than 300 attendees chose Qorvis for the first word on the impact of the elections. We look forward to holding another one soon to discuss policy issues during the First 100 Days of the Obama Administration.
In other Qorvis/election news, at about 5:30 p.m. on Election Night the Qorvis-led Wireless Innovation Alliance of tech innovators and public advocacy groups secured government approval of a revolutionary broadband technology called “white spaces.” This victory, the latest public affairs success for Qorvis, represents one of the biggest breakthroughs ever for wireless communications in the U.S.
On an additional note, we have a some new clients to announce, including the Society for Human Resource Management, YMCA, and Vitol, plus, a new hire: Karen Hanretty, Communications Director for the National Republican Congressional Committee, to strengthen our bipartisan team.
As I am watching the coverage today on CNN of the terrorist attack on Mumbai, the coverage goes to the anchorperson who says “We just want to talk about the other major news story that is happening now ….” And he gave a brief report on a commercial airplane that has gone down in the Atlantic. As unfortunate as the event was, at least at first report, it had less than ten passengers on board. It merited national - for all practical purposes, international - coverage.
It reminded me of the “plane crash” that the news media misses everyday. Consider the lead from an April 8, 2008 article from Science magazine entitled “Medical Errors Cost US $8.8 Billion”: “Patient safety incidents cost the federal Medicare program $8.8 billion and resulted in 238,337 potentially preventable deaths during 2004 through 2006, according to HealthGrades’ fifth annual Patient Safety in American Hospitals Study.” Let’s do some math. 238,337 deaths over three years averages 79,445 annually. And that equals about 217 deaths a day. In the United States. From medical mistakes. And that counts only Medicare patients.
A search for other articles about the same subject actually is more depressing. An August 9, 2004, article in Medical News Today, pegged the number of in-hospital deaths in the US at 195,000 daily (based on a study conducted in 2000 - 2002. That equates to 534 deaths daily due to medical mistakes in hospitals in our nation.
A 747 super jet, in its configuration for the most number of passengers in a two-class flight holds about 525 people. Now consider the news coverage that you will see next time there a 747 goes down. It will probably be a multi-day story that will be either the lead story or near that status in news coverage globally. But if everyone of that plane dies, it still will not total the number of people who die from medical mistakes in hospitals in the U.S. every day of the year. That’s a “plane crash” that happens every day that gets no news coverage at all. Perhaps if it did get appropriate coverage, it would be easier to get true health care reform in this nation.
In my last post (“The Message Is The Medium”), I suggested that it is possible to employ a wide variety of distribution channels to communicate messages so potently in terms of packaging, targeting and frequency that the messages become virtually ubiquitous to the people receiving them. I consider such messages to be “organic.” In this first in a series of posts, I suggest a way to understand what that is all about and what I think is necessary for making a message “organic.” I expect to devote more posts to this concept, including my thoughts on how the Obama campaign for President is a great case history. It showed how various distribution channels were used to communicate an extraordinarily controlled and simple message. It is a precursor to what is emerging as a new cultural phenomenon: a never-ending political campaign where the goal is not so much to get votes on election day as to gain support when and in the fashion needed to defend and promote special interests in the new environment of economic and political change.
TO UNDERSTAND WHAT I MEAN BY AN “ORGANIC MESSAGE,” LOOK AT A COFFEE CUP.
As I write this, as usual, I have a cup of coffee within easy reach. There is no question about whether this coffee cup exists – of course it exists. Pick it up; use it to sip coffee; there is no doubt as to its existence. That cup was made by a corporation. The corporation also exists; there is no question about that either. But in fact I can’t prove its existence. I can’t hold the corporation as I can hold its products. I can observe the corporation’s headquarters, but that is just the building, not the corporation. So how does it exist? It exists as an idea.
The American Philosopher George Santayana, whom I studied in college, would explain that the coffee cup’s existence is open to an empirical test of truth or falsity, and it therefore has a “scientific” existence. On the other hand, the existence of a corporation is not open to an empirical test of truth or falsity. It is an idea. It has what Santayana called a “poetic” existence – not open to a test of truth or falsity, but it exists nevertheless. Poetic existences rely on a leap of faith on the part of the individual(s) who believe in it.
Early in my career, I concluded that, in the final analysis, communications campaigns are all about creating ideas: the idea of a corporation, the idea of a political philosophy, the idea of needing to buy a flat screen television, the idea of buying fast food because I can get it fast and cheap and it meets my expectations.
So, I began to ask a core question: How can you create an idea so strong that the existence of that idea motivates people to think or act consistent with specific goals? How can you make that idea actually come alive – make it “organic”?
AN INVESTOR RELATIONS PITCH THAT FAILED TAUGHT ME ABOUT HOW TO CREATE IDEAS THAT CAN REALLY EXIST.
In 1981, I joined Flow General Corporation to head its corporate communications and especially its investor relations program. It was an NYSE multinational company headquartered in McLean, VA, involved in technology research for the Federal government (mostly the Department of Defense) and what was initially defined as “biomedicine” but was repositioned to “biotech” when the company won the first contract awarded by the NIH to produce human interferon. At the time, interferon was not only considered a cure for cancer, but it was considered by many (especially the irrationally exuberant investors of the time) to be “the” cure for “all” cancers. Needless to say, for some period of time, Flow General was a hot stock.
After a long effort, I finally persuaded a highly respected analyst from Hambrecht & Quist to visit our company. This analyst was very bullish on Genentech, which at the time had no revenues and was reporting major losses as it was in the early stages of producing its then hoped-for first product: human growth hormone. By contrast, Flow General had an international presence, was the global leader in cell cultures and related products, and generated significant revenues and a profit (before things started falling apart for the company for a wide variety of reasons, ultimately ending with the company being sold-off piece-by-piece).
The analyst traveled to the Washington area not simply to meet with me, but for other meetings. I was a courtesy stop along the way. Our meeting was at my office late one day. The hum that usually exists in an office setting had abated, and as he sat down, his body language made clear that I wasn’t going to have a lot of time to make my points. So I went right into it:
“Why would you invest in Genentech, which has no revenues, no product, and no sales and marketing capability, and not buy Flow General? After all, we have an international presence, big line of products, well-known brand, no need to raise capital, we’re involved with a significant R&D project, and we have a much lower enterprise valuation.” Pow! I gave him my best shot.
His answer wasn’t about Flow General but about Genentech: “I’ll pay $50.00 for a $200.00 stock any day,” he said. He said that Genentech Management outlined their vision early in their history. They identified their benchmarks, and what the results would ultimately be if they hit those benchmarks. The projected results were manifested in a P&L that would be realized if they produced their products, if they got the share of the market they projected, if they sold it at the price they projected, and if they incurred no more than the expenses they projected. The P&L showed that revenues would start being generated years out, and a black bottom line would be even further off. “All I need to do is determine the likelihood of them hitting this P&L, then apply some time cost of money factors, and come up with what I am willing to pay today. Every time I meet with Management they review where they are on the schedule of hitting their benchmarks, they re-establish credibility with me that they will in fact achieve their goals, and I maintain my view that if they do that the share price will go to $200.00. At $50.00, it’s a buy.”
It dawned on me that he was less concerned with the company’s current situation and more concerned with the way the current situation related to the prospective future. But today was real. The future was an idea. A vision. It was a story he was willing to invest in because he believed it would be real. The story – nothing more than an idea – existed. And not only did that story drive the analyst to support the stock, but the story drove the growth of the corporation itself.
SO THEN THE QUESTION BECAME: WHAT ARE THE COMPONENTS OF THE STORY THAT ARE CRUCIAL TO MAKE THE STORY TRULY EXIST – TO MAKE IT “ORGANIC”?
Over the course of my career, I have identified that to “exist” a story has to have four critical components:
1) It has to confront the audience (one or millions) frequently and with a powerful presentation through a variety of distribution channels;
2) It has to be relevant and relate to the audience;
3) It has to exist within a context; and
4) It has to be credible.
The “more” the story has of each of these four factors, the stronger the story’s “existence” and the more powerful its impact. .In my next post, I will discuss these four factors in more detail. Use the appropriate link to subscribe to an alert when it is posted.
The following article is long by current blog standards. I try to tie together a few thoughts that are of concern to anyone with an interest in how policy changes may impact their industry, interests or personal lives. I try to make a case that the current global economic and political environment will lead to a fight for message control and how issues are defined. This activity, combined with a dramatic change in the capabilities of (and access to) a new communications infrastructure, requires a new way of thinking about communications campaigns.
CONSIDER JUST HOW FUNDAMENTALLY THE WORLD IS CHANGING:
A new global financial environment that is highly volatile and still too risky to predict. A new White House, all new cabinet, and new Congress about to be swept into office by a highly energized and engaged electorate, including four million new voters. A populist mandate, not necessarily for any specific action, but for long-lasting, fundamental and as yet undefined change itself. A new regulatory environment with new laws, new regulations and new standards about to become new realities. A new role for governments as bankers and investors in a truly global economy. Constant communications. Constant news. Constant action and reaction. Never-ending political campaigns - not appeals for votes but for support for (or opposition to) proposed changes.
NOW CONSIDER THE FIGHT THAT IS ABOUT TO EMERGE
AS THE POLITICAL MOOD AND GLOBAL EVENTS GIVE WAY TO THE NEXT STAGE:
SPECIFIC PROPOSALS FOR CHANGE.
The nation’s anxieties are so intense that serious consideration is being given to holding a lame duck session of Congress even before the Inauguration and the new Congress convenes in January. The economy, the war in Iraq, the global war on terrorism, education and healthcare will be at the top of Congress’ agenda, but the agenda will not end there. And, even if there is a lame duck session, the momentum for action will be far from vented by the time of the Inauguration. By then the flurry of proposals for change that exists now will become a tsunami of proposals, not limited to any particular issue.
Although partisanship-as-usual was ultimately overwhelmed to the degree necessary to address the debt crisis and enact a “bailout” bill, it happened neither quickly nor well and it took a panic to force it. It would be naïve to believe that a new era of bipartisanship has been born. As theories start being translated into action, both honest ideological differences and parochial political interests will become much more in evidence.
A debate will emerge over each aspect of each call for change. The intensity of the debate will be unprecedented because of what will be at risk: fundamental rules of the game in matters as wide ranging as how the global financial markets are structured, how industries are regulated, who pays how much for healthcare, and how entitlement programs continue to be funded. In this environment, every enterprise in the nation, along with many throughout the world, will have vested interests they will want (need) to protect and promote.
This will not be a quiet process. Enterprises from the left and right, for profit and not-for-profit, public and private, local, regional, national and international will focus on the issues that concern them. They will come to an understanding of what the potential impact may be, and they will come to the brutal realization that they have a mission critical need to communicate to their members, customers, investors, vendors and the public at large to build support as powerful as possible for their agenda. They will want to take control of the critical messages that define their issues. They will need to develop ways to mobilize their supporters. They will fight to expand their base.
And it will all happen in a new era of digital communications. In real time. Largely uncontrolled. A platform for every message. Non-stop. Global.
THE NOISE LEVEL WILL GROW AND THE VERY NATURE OF THE NOISE WILL CHANGE.
Although global banking action may have put the brakes to what looked like an inevitable crash of the debt and equity markets, it seems clear that a worldwide recession is emerging and that it will be significant both in terms of length and depth. The strong economy we enjoyed for so long was largely fueled (and enjoyed) by consumers – and consumers will be hit very hard as the crisis in the capital markets moves to “the real economy.” Billions of dollars of equity the consumer had in their homes has evaporated, and with it so has the buying power they had when they were able to tap that equity to buy another flat screen TV, fund a vacation, or send a kid to college. They now find themselves with debt obligations higher than they thought they’d face just at the same time as crucial expenses such as gas and food have increased in price. Without the ability to draw on their home equity or credit cards, they have less ability to meet their expenses. This is about to be exacerbated as headlines about esoteric debt instruments convert into headlines about layoffs and higher unemployment.
The consumer market won’t die, but it is likely to be in a coma of some degree for a substantial period of time. What will that mean for all those advertising dollars that have traditionally been spent to get at the consumer’s wallet? Why would that money be spent now when the wallet is depleted or the consumer is not ready to open it out of fear from uncertainty?
So here is a certainty: advertising budgets of those who market to the consumer will be slashed. This doesn’t mean advertising will stop, but much higher efficiency will be sought. We will see traditional appeals for the wallet move to the web and other new media, where buying decisions can be made quickly, impulsively and at lower overhead to the seller.
This will leave TV and radio stations with major inventories of unsold time and it will leave newspapers and other print media with unsold space. The print media will reduce their unsold inventory of space by reducing the number of pages they print and we will continue to see print media shrink in size (and continue to devolve as a business). But TV and radio stations cannot expand or contract time. They’ve got it for sale and they’ll keep dropping the price until it becomes so compelling that buyers will step forward. And that will lead to a change in the “noise” that hits people in their everyday life: the lower priced advertising will attract those who have the critical vested interest to appeal to hearts and brains for support, supplanting those who have historically appealed to wallets for sales.
Imagine a pie chart of advertising messages that reach people. The chart has two slices: one represents advertisers going for their target’s wallet and brand loyalty for their product or service, and the other represents those going for the target’s emotional and intellectual buy-in for their support in one form or another. Although the latter has grown in size over the past few years, for decades the former has been the bigger slice of that pie by far. We have lived in - and been shaped by - an environment that has been inundated with messages that in most basic terms have said: “Buy Me.” That is about to change to an inundation of messages that say: “Support This Position.”
Just as the constant barrage of “Buy Me” messages created a consumer-driven culture, the “Support Me” messages will also create a culture. That new culture, which will emerge and evolve over time, will be different than the culture that grew with the Post World War II period of expansion and the Baby Boom. It is probably too soon in the process to predict exactly what that culture might look like as it becomes real.
However, it’s not too early to come to a conclusion about what’s at risk. Just look at how the global capital system has changed in the past few weeks: a change in ownership and control of the world’s most important financial institutions, a substantial negative change in the value of virtually every publicly traded enterprise in the world, and a change in the geographic centers of power in our nation’s financial industry, with the equity market still in New York, but the center of gravity for the debt market now in Washington. Those are pretty momentous and game changing events. But the list of such significant change has already grown longer since the debt crisis, and it would be a mistake to think it won’t grow even longer.
And in every instance of proposed change - each carrying its own dramatic, fundamental and debatable set of possible consequences - proponents and opponents will arise and vie to control the message and frame the debate.
A chorus of diverse voices will emerge, each arguing for their point of view: employers and unions; those who want to focus on the critical issues associated with whether and how we exploit resources and conserve our environment; those with more “family room” issues such as whether money goes to fund school lunch programs or school music programs; and those who just want to use a time of turbulence as an opportunity to advance their own political or social agendas.
As more enterprises realize the risks inherent in how proposed changes could touch them, they will join the public debate. Then, as the time for debate ends and the time for voting or adoption of administrative action nears, they will raise the volume of their messages even more. This will create a cacophony of messages that will become increasingly louder - and more difficult to break through. And to achieve that will require a radically different view of how to think about communications campaigns.
“ADVERTISING” WILL BECOME OBSOLETE.
SO WILL “P.R.”
The communications industry and communications campaigns have distinct sub-segments that are often defined by virtue of the distribution channel used to communicate a message. For example, ”advertising” is defined by virtue of the fact that the message is communicated using distribution channels that are bought. “P.R.” refers to using ”free” space or time that is “earned” on a distribution channel. “Interactive” refers to using a digital distribution channel. Because distribution channels have defined the communications industry, they have also defined the borders and scopes of communications campaigns. As a consequence, communications efforts are too often approached with thinking that is neither robust nor bold enough. It would be a serious mistake to continue that type of thinking under any circumstances. In the current and emerging environment, the mistake could be fatal.
After all, what advertising has in common with P.R. or social media or event marketing or any other communications specialty is one thing: the effort is undertaken to get specific messages to specific audiences to achieve specific results. So why define a communications effort by virtue of the distribution channel? Why not define the communications effort by virtue of its goal rather than its process?
Enterprises that reject a distribution-centric definition of communications in favor of a goal-driven approach are achieving a new level of effectiveness and efficiency through truly integrated campaigns. The successes of these campaigns will be emulated. Over time, the silos of communications “practice groups” will fall. Eventually, neither the communications industry itself nor communications efforts will be defined by virtue of a distribution channel. The message will become paramount.
THE MEDIUM IS THE MESSAGE.
I was graduated from George Washington University in 1967. I majored in philosophy. I thought then (and still believe now) that I and my friends were studying philosophy at the same time that a major new idea was emerging. I confess that I cannot summarize it better than this Wikipedia entry (http://en.wikipedia.org/wiki/The_medium_is_the_message):
“The medium is the message” is a phrase coined by Marshall McLuhan meaning that the form of a medium embeds itself in the message, creating a symbiotic relationship by which the medium influences how the message is perceived, creating subtle change over time. The phrase was introduced in his most widely known book, Understanding Media: The Extensions of Man, published in 1964.[1] McLuhan proposes that media themselves, not the content they carry, should be the focus of study; he said that a medium affects the society in which it plays a role not only by the content delivered over the medium, but by the characteristics of the medium itself.
McLuhan made a legitimate point that is still relevant. But today, there is a collateral statement that may be even more important:
THE MESSAGE IS THE MEDIUM.
When engaged in truly integrated communications campaigns (as opposed to “an ad campaign” or “an interactive campaign,” etc.) the message is launched to targeted audiences through any distribution channel that makes sense for the effort, limited neither by geography, deadline, nor language. The message reaches its desired audiences when they watch TV, when they work at their desks, and wherever they go, with unprecedented power, specificity and immediacy. For example, iPhone and its forthcoming clones will deliver messages with compelling impact tailored to the individual’s interests at the spot they are standing at the moment they are standing there. The fully executed integrated campaign results in messages becoming virtually ubiquitous with their intended audience, based on the person’s individual’s interests and their prospects for taking an action such as supporting a bill or buying a product.
McLuhan was right in that the medium can deliver a message with an impact that influences or even becomes more potent than the message itself. But, today (and increasingly so in the future) messages can be so relevant to the target’s interests, so constant, so powerfully presented, and coming at them in so many ways that the specific distribution channels employed to take the message to the target will become irrelevant and largely unidentifiable. In that case, the message becomes ubiquitous and more powerful than ever because, for all practical purposes, the message itself becomes the medium.
Yesterday I began to use my new kindle, which is an entirely new device available from Amazon. If you haven’t seen it in person, you can find out more on the web atwww.amazon.com/kindle Imagine a device that looks sort of like a frame that is about 8″ high and less than 6″ wide, maybe half an inch thick and weighs a few ounces. Now imagine that the glass part of the frame only takes up the top two-thirds, with the bottom third devoted to an easy-to-use keyboard and a few special keys. Under the “glass” is a new type of “page” using a new type of “ink.” You can see the contents easily in any light, indoors or out, and if you are reading type, you can increase the font and put away your reading glasses. What you see is what you access wirelessly and virtually instantaneously from Amazon, including books at less than $10.00, subscriptions to newspapers and other news sources from several nations, blogs, and a lot more that I haven’t discovered yet. One nice thing is that you can (as I am doing currently) read a book or two (or more) and some newspapers, put them “down” whenever you feel like it, and when you come back to it, you come back to exactly where you left off.
The kindle is far from perfect. As is iPhone. As are lots of other devices and services that are being introduced to the market. Whether these new innovations are perfect or not is irrelevant. Taken together, they are indicative of a trend that I believe can be defined as the Death of the Internet.
To explain what I mean by the Death of the Internet, I want to reflect on two other comparable deaths: the death of the caller ID box and the death of transistors. Remember when caller ID first emerged? What a great device! For the first time, you knew who was calling before you picked up the phone. The benefits are obvious. But caller ID was not without controversy. In fact, California at first banned caller ID technology from being used in the state, and was the last state to allow it — in about 1993 or so if I remember correctly. Caller ID was first offered as a “peripheral” — that is, a box that you attached to your phone. But fairly soon after its introduction as a stand-alone device, responding to rapid and broad acceptance by the marketplace, manufacturers of telephone units began to integrate the caller ID box into the phone itself. Today, all phones, wired or wireless, for the home or office, incorporate caller ID. It became ubiquitous, and when it became ubiquitous it was no longer “there” as something unique or even identifiable. The peripheral itself died as it became part of the thing into which it was integrated.
I remember the year 1955, because of a few reasons. My family moved from New York to the Greater Washington area (Alexandria, VA). And the Brooklyn Dodgers beat the New York Yankees in the World Series. And there was also my first transistor radio. It was not “a portable radio.” It was not even always “a transistor radio.” Often it was simply “the transistor.” It was remarkable. Radios shrunk from those pieces of furniture you gathered around to listen to Dragnet to something you could hold up to your ear with one hand and carry with you everywhere. No plug; one special battery.
Transistor radios, we all knew, were made possible by transistors themselves. The hype about transistors, and what they could do, and how they would change our lives was at least as great as the hype that exists for the Internet now. Transistors would be everywhere. They would be part of everything. They would change the way we live. The predictions actually came true! Transistors ARE everywhere today, from your wrist, where they are used to keep time, to the device on which you are reading this, to your car, your kitchen. It is hard to think of a device where transistors are not integral components. They are ubiquitous. They are no longer peripheral to anything; they are a vital part of our lives and the way we live. So vital and so integrated into our lives that we no longer think of them. Transistors have basically “died.”
Just as transistors have died from ubiquity, so too will the network that today makes possible my new kindle and the iPhone, Blackberry, cell phone, text messaging, GPS devices, streaming video, Internet Radio. This network operates through wires and wirelessly, within a house and throughout the world. I no longer go to a special place, such as my desk, to access this network. Remember the phrase “I’m going to log on”? When did that phrase emerge? Ever hear it anymore? We no longer need to use the phrase because we no longer need to “log on.” We are connected all the time. And as these devices — plus devices we aren’t even aware of yet — do move beyond their initial flaws and get closer to perfection, they will be integrated into our lives even more. Our connection to a network we currently refer to as the Internet will no longer be peripheral to us. It will be part of us. Wherever we are. In one form or another, obvious and totally hidden.
As this is happening with accelerating speed, the Internet is dying as certainly as caller ID boxes died and as transistors died. I think this will have enormous implications on the way we communicate and the communications industry. I expect to write about that some more in the future. But in the meantime, if you want a hint of how the communications industry is going to change, take a look at what The Washington Post is doing with the iPhone — I am very excited about the fact that Qorvis has been part of that effort. This is a prelude to a new era in communications. Here is the release that announced the first in a series of applications for the iPhone:
washingtonpost.com Launches First iPhone Native Application
City Guide App Provides On-the-Go Info for D.C.-Area Hot Spots
GPS-Enabled Search Plus Reviews on Restaurants, Bars & Clubs
WASHINGTON–(BUSINESS WIRE)–Today washingtonpost.com launches the site’s first downloadable application for the iPhone and iPod touch, providing an on-the-go, personal entertainment guide for over 2,000 Washington, D.C.-area restaurants, bars and clubs.The City Guide app uses a GPS feature to find and map all nearby locations within blocks of where a user is standing. With an easy-to-navigate design, the application lets users search by name, neighborhood and cuisine. Users can quickly look up an address, phone number, hours, price range, directions and more.Popular Washington Post food critic Tom Sietsema’s restaurant reviews and top picks from washingtonpost.com’s Going Out Gurus guide users to the city’s best destinations. Users can make a list of their personal favorites to reference regularly or create a list of hot spots they want to try.We are continuing to explore opportunities to translate features on washingtonpost.com for mobile audiences and the City Guide application was a natural fit,†said Jim Brady, Executive Editor of washingtonpost.com. With this application, we are giving mobile users all of the information they need to conveniently navigate the entertainment scene in and around D.C.The City Guide iPhone application is available for free from Apple’s App Store on iPhone and iPod touch under the Lifestyle category. Users can download City Guide using the following link: http://phobos.apple.com/WebObjects/MZStore.woa/wa/ viewSoftware?id=285887422&mt=8(Due to its length, this URL may need to be copied/pasted into your Internet browser’s address field. Remove the extra space if one exists.)The new iPhone City Guide app is an expansion of washingtonpost.com’s mobile entertainment offerings. Anyone with a Web-enabled mobile phone can look up information on D.C. area restaurants, bars and clubs or movie show times by visiting: http://twp.com/cityguide. Users without that capability can text a search term plus a location to WPOST (97678). For more information on City Guide mobile offerings visit: http://www.washingtonpost.com/wp-srv/cityguide/mobile/. washingtonpost.com worked with Qorvis Communications to develop and design the City Guide iPhone application.
About washingtonpost.com: washingtonpost.com is an award-winning news and information destination that delivers world-class reporting and innovative multimedia content, creating a truly interactive news experience. Using the latest technology and tools, washingtonpost.com encourages participation and content customization across all platforms, allowing readers to engage with washingtonpost.com anytime, anywhere. Winner of four consecutive Edward R. Murrow Awards for Overall Excellence for Non-Broadcast Affiliated Web site, washingtonpost.com is owned by Washington Post.Newsweek Interactive, the online publishing subsidiary of The Washington Post Company. (NYSE:WPO)
THIS “RECESSION” MAY BE SOMETHING OTHER THAN A RECESSION
The official definition of a “Recession” is that it is two quarters in a row of negative growth. By virtue of that definition, we are not currently in a “Recession” albeit there are many who would argue that we are about to enter one.
I think the debate of whether we are or are not either in or about to enter a “Recession” is a very misguided discussion. Here’s why:
Let’s start with an over-simplified example to make a point: Alzheimer’s Disease used to be known as “senility.” It became redefined as Alzheimer’s when the illness could be more accurately described. When that happened, the treatment also changed. The point of this example: When there is a change in the way something is defined there is also a related change in the appropriate response to it. If a patient with Alzheimer’s was labeled as “senile,” not only would the patient’s characterization be wrong, but the likely treatment of the problem would be wrong.
That’s what concerns me about whether the current economic situation is called a “Recession” or not. I think that if we try to define the current (and likely emerging) economic situation by virtue of whether the exact economic statistics have been achieved is comparable to defining Alzheimer’s as senility.
I’m far from an economist, but I think of recessions as topical events that occur in irregular cycles, often as corrections from periods of over-exuberance. The symptoms of one recession versus another are also very similar: people lose their jobs, spending and investment goes down, valuations go down, mistakes are washed through the system, etc. There are variations on the theme, often colored by the fact that a select number of industries (such as home-building or financial services or autos) are particularly hard hit and whether other trends (inflation, for example) are associated with the recession. But that is it in broad terms. We know what a “Recession” is and we know (more or less) how to treat it and what to look for to determine how and when the treatment is working. Exactly the way we knew how to identify and treat senility, until it was redefined.
I think that although we may well experience the two sequential down quarters of growth that would put us officially into a “Recession,” it will mask the reality that we are in (not “entering”) something different.
The commodity of oil is hitting extremely high prices as there is a dramatic surge in demand from developing nations, especially China and India, and that is leading to the formation of new international political alliances. Food shortages and the associated increase in the price of food are global problems. New economic centers of gravity are rising (Dubai) as well as new currencies (the Euro) while the US dollar has lost buying power (and respect). Jobs move not simply from a union market to a non-union market, but from one nation to another. Quickly. The gap between rich and poor is widening. Information is an industry and it operates non-stop real time globally. There really is a global economy so that econmic conditions are also global. Want to build a business? Leverage your brain instead of capital-intensive property, plant and equipment (soft vs. hard assets). The list goes on. It isn’t hard to observe all sorts of fundamental changes that I think point to a conclusion that the Knowledge Economy is real and growing and fundamentally different than the Hard Asset Economy from which we are moving.
Consider this recent item from the Bureau of Labor Statistics: ”The number of manufacturing jobs in NYC, which once exceeded 850,000, fell below 100,000 in recent months… Manufacturing now accounts for about one of every 40 jobs in the city, down from almost a quarter of all jobs in the mid-1960s.
If we are indeed shifting from a Manufacturing to a Knowledge economy, wouldn’t it be fair to say that the characteristics of one (such as an economic downturn defined as a “recession”) would not be characteristics of the other? Didn’t the characteristics of agrarian economies largely become irrelevant to enterprises involved in manufacturing?
If we begin to think about the current economic (and social/cultural/political) realities as early examples of conditions of the new global Knowledge Economy, we have a chance of developing ways to coping with them and maybe even remedying them. But if we continue to think of these new realities in terms of parochial Manufacturing Economies, we are in for a long, difficult road.
It may have taken a few years, but I finally have some respect for Scott McClellan, the former Bush White House Press Secretary. His new book (What Happened?), to be released in the next few days (some stores have them already - just ask Mike Allen of Politico), is a scathing insiders look from one of the closest men on the inner circle of the Bush White House. Allen was the first to break the story yesterday on politico.com. From the excerpts, it basically appears as if McClellan is confirming the worst fears that many Americans have come to suspect: White House insiders plotted to smear an undercover CIA operative and lied about it. Security officials used unsubstantiated claims of weapons of mass destruction to propagandize the nation into war in Iraq. A lax and intellectually lazy President ignored the disaster on the ground in New Orleans in the wake of Hurricane Katrina. The book’s revelations would be NOT be as startling had they come from my friend Bill Press or others on the Left, but they come from a man who has been close to the Bush family and came to Washington, DC on the coattails of George W. Bush.The predictable outcry from the Bushies is that somehow McClellan has lost his mind and is not the ’same’ guy they knew, or that he is a disgruntled former employee and is settling old scores. Dana Perino, the current occupant of McClellan’s old job, just labeled him as ’sad.’ What is sad is the Bush attack machine trying to slime a guy who really just wanted to tell the truth, and it’s also sad that it took so long for some of these truths to come to light. McClellan may be a little late but he won’t be a dollar short. His book, book tour and lectures fees are now all in the stratosphere to be sure. But that is not why he did this. Once the novelty of this wears off and the media scrambles off to their next story (the Democratic Rules Committee this weekend), McClellan will be left as a man without a country here in Washington. Surely McClellan knew this but did it anyway. I imagine it was because he hasn’t slept much since he began discovering that what he was told to say from the White House daily briefing room was mainly fiction. He may have some trouble landing a job, but at least he’ll finally get a good night’s rest.
THE BIGGEST LESSON I’VE LEARNED FROM THE QORVIS MODEL
It took a while, but I have come to appreciate what I believe to be the most important lesson to be learned when executing with a new business model. It’s this: new models have new mistakes.
The lesson doesn’t end there. The other, even more critical thing to know is that you can only identify new mistakes after they have happened. As new mistakes, they are unknown by definition. So you can’t see them coming. You can only identify new mistakes after they’ve bitten a hopefully-not-too-vital-part of your body. If you accept that as a fact of life then you also need to accept the identification of mistakes as a very high priority of the company. The higher the priority the identification of mistakes becomes, the sooner you will identify the mistakes so they will cause less damage and your definition of the mistake will be clearer, thereby allowing you to develop a more successful solution sooner and better.
There are at least two major consequences when mistake-identification becomes one of the company’s highest priorities.
First of all, as you proceed to solve the unique problems you bump into, you discover that your solutions are also unique. Over time, as they prove to be successful, you institutionalize your unique solutions and they become integral to your culture. As that process evolves, you imbue into your culture more and more unique attributes. And that makes you more different. At Qorvis I have seen that the internal awareness that we are different is often evidenced in a pride that is palpable. That’s a good thing.
But there is a price we pay. We look for mistakes all the time — a more positive way of saying that would be that we are looking for ways to do things better all the time. It is a part of our mind set. And that means we focus on what is wrong, and that does exert a negative influence on the culture. Fortunately, we’ve discovered that the potency of the mistakes we encounter has subsided over time — and so too does the impact of their negative force. Basically, the mistakes you encounter in the early stages of executing on a new model are more serious because they tend to be fundamental. Not only will the real basic mistakes be the first mistakes to arise, but they are likely to do so quickly, catching you by surprise, just at a time in the business’s life cycle when even little problems are difficult.
As Qorvis has grown up as a company, we have simply accepted that having a mistake-focus is a necessity and it has really become a part of who we are, good and bad, and we try to balance the bad by enjoying the benefits of being unique.
Another way of saying “we’re unique” is to say that “we’re different.” In the Knowledge Economy, service providers are increasingly selected based on how their differentiators translate into value for the customer. Some firms will want to say “we’re different because we can do your work quickly and ok and cheap.” There is often (justifiably) a big market for companies with such positioning, and some of them will become successful and some will even become dramatically successful. But we prefer to seek the differentiators: “we’re different because we are the best in the world.”
The fee you charge will be limited by and directly related to the extent you can make such a claim of providing uniquely high value. The most simple evidence of your success for being great will ultimately show up in your P&L, especially net margin as a percent of sales. The more you are valued, the more clients will be willing to pay a premium for your services. What that means is that both the service provider and the client share the same exact vested interest: achieve definable goals as quickly as possible as completely as possible. That is not the case when the service firm is selling time. In that case, success for the service provider is measured by the amount of time they take to achieve the goal, with the more time spent being better. That just doesn’t make sense to the client.
As more firms shun the concept of “time is money” and adopt the concept “value is more money,” and as they develop their own unique ways of doing business, they will merit respect for the value they provide, succeed and grow accordingly. More and more clients will learn about the option of doing business with firms who have such a business model and will want to work with those companies. Those who sell value will grow while those who sell the commodity of time will lose market share. Eventually, time will no longer dominate business as it does now.
Will this happen next Thursday? No. Neither will it happen in 2009 or 10 or whenever. The evolution may be slow, but the shift will occur. As it does, time will die.
A BRIEF INTRODUCTION TO THE CONCEPT OF VALUE VS. TIME
Imagine you were an international star. Imagine that the news media is going crazy over allegations that you just might be a pedophile. Now imagine that the District Attorney where you live initiates legal action based on that allegation.
Here’s what you would do: First you would ask “Who was Michael Jackson’s attorney?” Someone would tell you it was Thomas Mesereau. You would say: “Let’s see him right away.” When you see him, after the introductions, your first question will be: “Think you can get me off?” Let’s assume you are innocent etc., his answer will be: “Yes, I feel pretty confident I can.” Your next question is: “How much?” Your question was NOT: “How much time will you have to put into it and how much do you charge per hour?” You do not care how busy he is or isn’t going to be with your case. In fact, you prefer that he can solve it in the next ten minutes versus the next 100 hours. When the issue is time in jail versus no time in jail, you care much more about the value your attorney will provide than the time he takes to provide it.
If this example makes sense in the extreme (that is, a Michael Jackson scenario), why wouldn’t it make sense in the everyday (for example, when you hire an attorney to draw-up a contract)? If it makes sense when hiring an attorney, why wouldn’t it make sense when hiring an architect or a PR firm or an accountant or consultant? In fact, it does make sense to pay for value versus time, especially when you are buying the most important differentiators of the Knowledge Economy: expertise, experience, commitment to excellence, and focus on achieving goals rather than on the time to do that.
Given the title of my blog, The Death of Time, I think the first entry should answer the question: what does that mean? So, here goes.
First of all, I read Einstein when I was a philosophy major (George Washington University, BA 1967). I didn’t read much of Einstein, and probably even less than I was assigned. I remember understanding very little. But I was very struck by the thought that time and space weren’t separate from each other. I also thought that it would take generations until the human fully incorporated that understanding of time and space into the way they saw the world not unlike the way it took generations to shift the human world view from an earth-centric universe to one where the earth is just another big rock in an incredibly vast universe. I have tried but cannot really imagine how the world will look to people who have an Einsteinian view of the world. But I do buy the concept that ultimately the human will deal with time distinctly different from how we deal with time now. And that is the same as saying that as the new view of time and space emerges, our current concept of time will die.
But that is not the death of time that really concerns me. I am more intrigued by how time is dying in terms of its importance to business. Time became important when the world moved from an agrarian to a manufacturing economy. In the agrarian economy, ‘time’ was important as a repeating cyclical pattern of weather and lengths of days. But with the manufacturing economy, the workplace moving indoors and the creation of accurate clocks, time became the primary measure to determine cost. Efficiency became measured by the amount of total time it took to get something done and workers became remunerated by how much time they spent on the job and how productive they could be with their time. The time clock became ubiquitous in factories and time sheets became ubiquitous at professional services firms, such as lawyers, accountants and communications firms.
Just as sacrosanct concepts died and arose in the transition from the agrarian to manufacturing economy, so will current sacrosanct concepts die as we move from the manufacturing economy to the knowledge economy - a move that is happening now, at an increasingly rapid pace, and globally but not universally. I believe that among the current sacrosanct concepts that will die is: ‘Time is money.’ I also believe that concept will be replaced by a new sacrosanct concept: Time may be money, but value is more money. Qorvis has been built on the latter premise. Instead of selling the commodity of time, our clients pay us for the value we provide them by our thinking and our execution. So whereas we do use various ways to measure value, we do not use any way to measure how we spend our time. We do not care. We have tested this premise, rethought more and more details, based all important decisions on this core belief, and ended up creating a successful enterprise by any measure. And we have done that in a very short period of time compared to other companies.
I believe that both God and the devil are in the details. Ultimately, the success of Qorvis is attributable to all the small activities of each person at Qorvis every day of the week. But when asked to identify the single most important reason for our success, it is not difficult: we’ve eliminated the dominance of time. Not reduced it. We’ve killed it.
There are a number of other ideas and events that interest me, and I will be writing about them here as well, I imagine. But, as I am starting out with this effort, I think the theme that will drive much of what I write will be the idea of the death of time and what that means. I do not think the Qorvis success is an aberration. I think it is a case history of a new business model for the knowledge economy. I know it works for a communications firm. I think it would work just as well, maybe better, for other professional services firms. I also know that every attorney with whom I have ever discussed this business model loves it and, despite their intellectual buy-in, is afraid to try it. I think that those who adopt it will have the opportunity to emerge as new leaders in their space. The current Dows will be overtaken by new Bloombergs that seemingly come out of nowhere.
In 2000, the simple premise of eliminating time from the communications business was the shared idea that Michael Petruzzello and I shared with enough passion to want to build a business on it. We were joined then and subsequently, and continue to be joined by exceptional people. We now have about 8 years of experience with this model. Here in this blog, I’ll share much of that experience and what we’ve learned.
So to begin, I want to thank everyone who joined Qorvis and Beam Global Spirits & Wine for our Election Night party (