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Diane Mermigas is an award-winning business writer and analyst, consultant, speaker and adjunct professor specializing in digital media content, advertising, marketing, commerce and consumer behavior-related issues and trends. She excels in developing digital strategies for media content and... More
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  • Steve Jobs Tribute: Go Forth and Innovate
    The most fitting tribute a grieving world can make to the late Steve Jobs is to assure and secure a business environment committed to the standard of innovation embodied by Apple's founding chairman.

    The global accolades following his untimely death from cancer Oct. 5 at age 56 speculate it could be generations before another genius inventor singularly transforms our rigid existence and expectations.  That implies innovation is a fluke rather than a guided force for making change more constructive than disruptive. And that is an urgent reason to reexamine our personal and business priorities.

    Designing three new products (the iPod, iPhone and iPad) that radically transformed culture, economics and consumer behavior, and redesigning two companies-Apple and Pixar-for  the digital age was all about the way things worked-not just looked.

    Jobs spawned a consumer-centric tech revolution and created wealth for many beyond himself and his companies. Apple's market cap ballooned from $1.7 billion in 1997 to $351 billion today, becoming the world's most valuable company; but most of Jobs' $6 billion in personal wealth has been generated from Pixar.

    None of it would have been possible without the innovation precedence Jobs instilled at every level of his organizations. While he created an international corporation, neither Apple nor Pixar have been bound by typical institutional inhibitions and limitations.

    Empowering employees to think, act and create in an innovative, unconventional manner requires more than a mandate. It demands a protected dynamic that permeates a corporate infrastructure, strategy and conduct, which recognizes and respects innovation as the means to a much better end.

    That is how Jobs reconstructed and redirected Apple when he returned to the fold in 1979 after an involuntary 12-year absence. Tolerance, respect and support for innovation are how Jobs toppled IBM and Microsoft as computer forces back then.  He made innovation priority one at every level, compared to what it is at most companies: an afterthought, or an adjunct of research and development, heavily shaped by budgetary considerations.

    The caliber of innovation Jobs' exemplified and put into motion emanated from inside the soul of a driven, visionary leader who took his cues from no one (except, maybe, consumers) and made no excuses. He defied the executive leadership gurus like Peter Drucker who insist that innovation is the result of methodical analysis of opportunity within particular companies or industries, and beyond in broader social and demographic trends.

    Jobs relied more on his gut instincts for focus and simplicity, and less on consumer research. "You have to trust in something," Jobs told a Stanford commencement audience in June 2005, "your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."

    That cornerstone of Jobs' innovative fire has made all the difference in all our lives.  In the three years that the U.S. economy and much of the global economy have been on the skids, Jobs and Apple introduced the first iterations of iPhones and the first and second generation iPad, igniting a global tablet market of 60 million units this year, surging to 275 million units by 2015, according to research firm HIS iSuppli.

    In that same time, The U.S. Department of Commerce established an advisory committee and guidelines for improving the measurement and levels of domestic innovation in government (right down to communities), the public and the private sectors.  The objective: the design, invention, development and implementation of new or altered products, services, processes, systems, organization structures, or business models anywhere in the universe. The results so far: let's just say the US government has been preoccupied with more pressing matters.

    Since then, mostly Silicon Valley players, including Apple, Amazon, Google Twitter, Facebook and Groupon, have led consumer behavior-changing innovation, partly because it is in their DNA and are agile enough to set and respond to market forces. They are established companies that remain wired as start-ups.

    And, yes, there is even some evidence among them of the rare spark of an adopted kid from Cupertino, CA, who drops out of college to build his first $1,000 computer in his parent's garage in 1976. But even Google executives have conceded there is no guarantee of innovation trickling down or up any organization.

    So while economics, politics and society in general wrestle with their many demons, innovation generally has been left to the whims and wishes of a relative few companies ,compared to the whole sprinkled throughout nearly every industry. The problem: there just aren't enough players keeping the innovation light as bright as the iconic Jobs.

    Sadly, a cover story on "The Failed Promise of Innovation in the U.S." published in BusinessWeek (now Bloomberg) in June 2009 still holds true: An undeniable innovation shortfall of more than a decade continues to prevail, contributing to-rather than helping to solve-the current economic crisis.

    Unlike Apple's designed disruption, any unpredictable technological breakthroughs have been "positive black swans," the result of unexpected events with huge positive consequences that look inevitable but aren't, according to economic author Nassim Nicholas Taleb.

    Jobs' legacy is that he didn't wait to be told, or funded or fumble into transformation. He integrated his inventive spirit into the fabric of Apple and made it the standard against which everything the company did would be measured. Jobs demonstrated how innovation can be a productive, lucrative change agent if completely incorporated and embraced within a company for the long-term.

    The biggest challenge other companies face understands that this objective is within their grasp.

    Bruce Nussbaum, a member of the Council on Foreign Relations and professor of innovation and design, recently wrote in the Harvard Business Review that for innovation to save us, we must first understand why it has so far failed us. A mere 9% of public and private companies engaged in generating growth and new value (in the form of taxes, revenues, income or jobs)  from innovation prior to the start of the Great Recession in 2008, he says.

    "By not investing in traditional Made in America, the U.S. appears to have given up much of the economic benefits of high technology. The making part of the economy is essential to the innovation part of the economy," Nussbaum argues. He points to stubbornly high unemployment, low wages for college graduates, crushing household debt and falling personal income as evidence of the lingering innovation shortfall.

    Acknowledging it will take a generation for the U.S. to regain its innovation footing and reverse its innovation decline, Nussbaum calls for federal policy mandates: invest in the making of things, encourage venture capital models, and shifting focus to start-ups and entrepreneurship away from big corporations. Good luck with that or accomplishing anything in Washington until well after the 2012 election!

    I've got a better idea.  Leverage all the well-deserved adulation for Jobs into creating simple templates, campaigns and argument for making innovation a prerequisite for any company fixed on value creation. Keep it simple: Start with the fundamental advice Jobs offered in his oft-quoted Stanford commencement address that seems eerily prophetic now and far from stereotypic corporate sturm und drang.

    "...Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary. ... stay hungry, stay foolish," he said.

    And go forth and innovate to celebrate the life of Jobs.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Oct 08 8:34 AM | Link | Comment!
  • Kindle Strategy Fires Amazon's Future
    Opportunity abounds for marketers and content providers who get this: Amazon is leveraging the Kindle Fire and its treasure trove of media offerings as a means to a much greater end than competing with Apple’s iPad. Amazon is willing to sell its core tablet device at a loss (of about one quarter its list price) and at painfully low margins because it is an efficient point-of-sale storefront in its expansive connected e-retail ecosystem. Its inventory of 18 million songs, books, movies and television programs—as well as a healthy dose of Android apps—are hook offerings that lead to everything else. That overriding dynamic makes Amazon’s entry into the e-tablet wars a very different value proposition than all of its competitors, including Apple. The surprisingly low $199 price point will especially undercut smaller competitors and force more affordable hardware and software economics—even at Apple. (Best Buy immediately discounted Research in Motion’s PlayBook by $200 last week.) Pre-orders for Kindle Fire are already topping Amazon’s online electronics offerings. But that’s not the only or smartest way to assess what’s going on. Amazon founding CEO Jeff Bezos, one of the most understated visionaries of our time, said it best in an interview. The Kindle Fire is “a service” that provides “seamless integration” to all things Amazon for the world’s largest online retailer. That all-encompassing connection is secured by Silk, Amazon’s new proprietary Web browser that delivers instant EC2 cloud computing Internet access to all media and communications on its tablet devices. That represents a unique pipeline for marketers, as well as content providers, wanting to connect with consumers on very specific fronts, or any interest, subject or location that can be parsed by the magic of algorithms. Some of these connections are also being facilitated by Amazon’s rollout of diverse new “revenue growth runways” such as verticals in consumer staples as well as footwear and apparel; international expansion, Amazon Web Services, and digital media offerings. Marketers and content providers can follow consumers from their point of entry into the Amazon ecosystem and deep to individual products, services, recommendation chains and social networks where valuable viral connections do all the heavy lifting. The marketers and content providers who create a new interactive presence and level of participation in that richly assimilated setting can take advantage of Amazon’s intricate support web. Amazon’s Kindle Fire strategy is designed to bring consumers closer to the bigger, most important play, which is everything that Amazon sells and everything it does to support those sales. So, pre-loading the Kindle Fire and its other devices with its new AmazonLocal daily deals and other of its services is a way to permeate and stimulate connections between consumers, marketers, content providers, goods and services in all corners of its $65 billion annual sales marketplace. That massive proposition dwarfs Apple on many fronts including the ROI for consumers and merchants. While Apple’s commanding lead is secure, Amazon’s options eventually will prompt some consumers and content providers to question whether they want to pay a 30% premium just to use its closed iTunes service on iPad and other brand hardware. To be sure, the Kindle Fire strategy clearly helps to protect the media-related sales that generate more than 30% of Amazon’s revenue. That, in turn, helps to bolster Amazon revenues against recessionary hits, although Amazon’s online e-tailing is on a growth trajectory that appears more insulated from economic pressure than traditional brick and motor retailers.  Amazon’s accelerated partnerships with NBC Universal, Twentieth Century Fox, CBS and others position it to become a de facto Netflix. If it acquired Hulu, it could easily bundle it with other content services and leave it under the capable administration of Jason Kilar, Hulu CEO and former Amazon executive. Kindle Fire’s alignment with the Android operating system also puts Amazon in line to do more with Google and its YouTube video service to become a dominant video streaming player. But, unlike Apple, that is hardly Amazon’s only game.  Amazon’s latest push across interactive silos and conventions with a core tablet that covers all of the most important functions—web surfing, e-reading and video streaming—will make venturing into its sticky interactive consumer vortex a much more lucrative endeavor. That global growth proposition is what keeps investor support strong for Amazon despite its narrow margins. CitiGroup analyst Mark Mahaney forecasts 75 million in global tablet shipments in 2012, up 50% from 2011. Taking 10% market share would generate about $2 billion or only about 3% of overall revenues for Amazon, which underscores the other more lucrative business considerations at stake. For starters, the Online Publishers Assn. recently reported half of all tablet users respond to relevant advertising, more than one quarter pay for the apps they download, and more than one-third seek bundled deals. Barclays Capital analyst Anthony DiClemente expects Amazon’s ubiquitous cross-platform, cross-device strategy with the Kindle (which accounts for $4.3 billion in sales, or 9% of total revenues this year) eventually will be applied to its new tablet to transition its focus from physical to digital media products. He expects digital media sales to eventually contribute a larger percentage of revenues than the actual Amazon tablet sales.  That is good news for any company seeking to use media sales as a springboard to connecting and transacting with consumers on other fronts. For instance, Kindle’s share of dedicated e-reader market will grow to 70% in 2013 from a current 68%. Kindle unit e-book sales will grow to 1.5 billion in 2013 from376 million in 2011, according to DiClemente. That will boost total Kindle book revenues  across all platforms and devices to $6.8 billion in 2013 from $1.9 billion this year. That only takes into account the media portion of revenue. For every book, song, movie or TV show sold, there is a multiplicity of subject, product, location and social connections to consumers that can be creatively exploited by marketers and content providers willing to step out of their comfort zone and take a not-so-risky chance on the interactive future. A post script to all the brouhaha: initial focus on the long-term impact of Amazon’s tablet strategy, both for the company and multiple industries, has been wildly oversimplified and misunderstood. The press and some analysts are still gnashing teeth over the absence of a camera, microphone and cellular connections on the Kindle Fire. So what?! The Kindle Fire delivers the key Web surfing, e-reading and video streaming activities consumers most want. Still, there is speculation Amazon is in acquisition talks with Palm in pursuit of the patents that will give heft to what is sure to be an expanding stable of mobile devices.  Intellectual property spurred Google to pay $12.5 billion for Motorola Mobility and for Apple and Microsoft to pay $4.5 billion for patents from Nortel Networks.  There is plenty of room for diversity of product and service offerings to meet the consumers’ varied interests and needs. The days of one-size-fits all or even most are gone. That is indicative of the myopic thinking could be a huge impediment to grasping and monetizing the new dynamics and opportunities presented by Amazon’s Kind Fire strategy.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Oct 02 9:00 AM | Link | Comment!
  • Falco Returns to TV Roots as Univision COO to Mine Hispanic Growth
    Following a contentious stint at the helm of AOL, Randy Falco is back to doing what he knows and does best: overseeing the TV stations, ad sales and marketing for leading Spanish-language media company Univision.

    His appointment as Univision's COO comes nearly two years after his departure as CEO at AOL, where he eliminated $2.5 billion in costs, $1.6 billion in strategic acquisitions and advertising business development necessary for the Internet giant to be publicly spun off from Time Warner.

    Falco was succeeded by former Googler Tim Armstrong, who still struggles with ways to turnaround AOL's fortunes.

    "I have tried everything and taken a lot of chances here, which is the only way you can manage through change. I have been willing to make the changes and the tough decisions amid all the criticism," Falco said at the time. "No one appreciates how profound a change it is to take a company and completely re-pivot this way, from a subscription business into an ad-supported Web business."

    Falco joined AOL in November 2006 after a long career at General Electric's NBC, where he rose to president and COO at NBC Universal Television Group, overseeing affiliate relations, business development, broadcast and cable television distribution and Telemundo, a secondary rival to Univision.

    Under a five-year contract at Univision, Falco will have similar responsibilities in the newly created position of COO. He will heighten Univision's outreach to advertisers and agencies, which have underestimates the strength of Spanish-language television and the 46 million Hispanic Americans who comprise 15% of the country's population. Hispanic Americans are expected to comprise twice that, or 30% of the US population by 2050.

    "The explosive growth of mobile devises provides enormous opportunity for Univision to expand its offerings in news, sports and entertainment," Falco said in an interview.

    "The opportunity for advertisers is to turn Hispanic viewers into interactive consumers using e-commerce," he said. Univision merged its online and mobile operations into the newly formed Univision Interactive Media in 2009, when it also launched Univision Studios. Much of that progress will ride on Univision's rights to World Cup Soccer and other popular sports. Falco said he intends to make the most of integrating Univision cable, online and broadcast TV and radio presence.

    Falco said his priorities are to increase Univision's ad sales and support, launch new partnerships, new interactive media and mobile revenues streams and leverage Univision's underplayed strength as the fifth most-popular broadcaster behind the four traditional networks.

    Univision also dominates the much sought-after 18-34 prime time viewers throughout the calendar year, he said. That can lead lucrative news, sports and entertainment partnerships with major media players such as CNN and ESPN also seeking to capitalize on Spanish-language growth.

    "With the economic recovery underway and Hispanic population growing, Univision's future is incredibly bright. Broadcast TV is here to stay as the place where core content brands and advertising relationships ate built out to mobile, online and other interactive media," Falco said.

    He will report to Univision president and CEO Joe Uva, formerly president and CEO of OMD Worldwide. Univision was taken private in 2007 by Broadcasting Media Partners, an investor group that includes Thomas H. Lee Partners, Madison Dearborn Partners, Providence Equity Partners and Saban Capital Group, despite shareholder lawsuits.

    At the time of his unceremonious departure from AOL, Falco said, "I don't think there are too many traditional media guys who really understood what the new digital media is about. Having spent two years at AOL, I would love to be able to go back to that industry knowing what I know, and I think I would be able to help the traditional media side to better understand what is coming at them, how to deal with it. There are a lot of misconceptions about what to do about digital media."

    Jan 18 12:16 PM | Link | Comment!
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