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Friday, January 17, 2014

Making Business More Interesting: Beyond the Jargon and Figures

From a historical perspective, I suspect that what “counts,” or is recognized, as discourse on business has consecutively narrowed. An enterprising scholar in the field of business and society, which itself has narrowed to managerial tools and ideological demands (under the subterfuge of knowledge), might compare the media’s coverage of business firms beginning to sell electricity, the telephone, and the auto-carriage (i.e., automobile) in the early decades of the twentieth century with reports a century later on firms bringing out life-changing products like smartphones and other applications of computer technology. Not having been around when electricity was making houses brighter and telephones as well as cars were fundamentally changing human interaction and mobility, people following the business news on Facebook, Twitter, Apple, Google, and Microsoft do not have the historical perspective necessary to assess how broad or narrow the coverage is. 

I contend that what is considered business news (and discourse) is artificially constrained, in that coverage is biased toward the companies themselves (most particularly in CEO antics and financial numbers) at the expense, or opportunity cost, of attention on exciting new products. Put another way, the public discourse on business need not be so reductionist. The trajectory is not good for business or society. I contend that broadening (i.e., rather than replacing one media obsession with another) the coverage in business news to include, and, indeed, emphasize, substantive information on, as well as discussion of, the exciting new uses and wider implications of the companies’ respective technologically advanced products would render business news as well as business itself much more interesting, especially to people in the wider society. In this essay, I sketch how a product-centric approach would look in the business media; hopefully, the sheer difference between this alternative and the status quo reporting will provide a sense of how much journalistic discretion is involved in what we watch and read in business news.

CNBC and Fox Business News provide much material for analyzing the business media, and can be taken as illustrative of the default that had taken hold by the 2010s. The devil is in the details, so I want to concentrate on a particular example and reason inductively to generalize to the business media overall.

An interview taking place on CNBC. The choice of questions may be more important than the answers. (Image Source: Inside Cable News)

On “Squawk on the Street,” a program on CNBC, the anchors interviewed Harvey Spevak, the CEO of Equinox (a company in the fitness industry), answered questions on January 17, 2014. I want to focus on the importance on the questions. One of the show’s anchors asked Spevak about his company’s plan to offer genome analysis as a service to customers who would like to know how they respond generally to exercise. Rather than follow up with a question to illicit what customers would learn about the way they react to exercise, the journalist asked if the service was “just a marketing gimmick.” I submit that probing the service if only to assess its staying power with consumers would have been more useful to not only investors and stock analysts, but also people who would not be interested in watching and hearing a cacophony of numbers presumptuously assuming the high ground as “king of the hill” of business news.

One implication from the interviewer’s choice of follow-up question is that investor interests, assumed to be exclusively bottom-line financial, trump consumer and entrepreneur (or even competitor) interests. Such reductionism is unnecessary, and the numbers orientation may not actually be in the interests of the investors and financial analysts, not to mention CNBC’s ratings.

The interview then turned to company’s foray into wearable fitness technology. Here, the interviewer had little interest in making the products concrete for prospective customers and the wider public; he was satisfied with the Spevak’s vague description, which ended with, “It’s science.” The journalist made the choice to follow-up instead by asking what profits the CEO expected the company would make on the wearables, and, moreover, whether an IPO might come anytime soon. Potential investors (and stock analysts) would be better equipped to evaluate a future IPO were the CEO to have discussed what how the wearables could benefit users (i.e., what the products can do) as well as how the products might change our daily lives and society itself. The anchor then turned his guest to the subject of online advertising, hence inadvertently feeding the obsessive mentality in the American media generally by treating advertising as an end in itself rather than a means of making potential and even existing customers aware of products and services.

All too often, information and public discourse on products a leap ahead technologically (and hence seemingly unfathomable) are relegated to “print” reports of product announcements, such as of Google’s new contact lens that measures glucose levels. People with diabetes would quite naturally be very interested in how the new product would likely impact their daily lives. A huge segment of potential viewers and readers could be drawn in by any media outlet willing to stay on the announcement rather than run to vague considerations of profitability and stock charts.

Does not the true value (and significance, not to mention the excitement) of products coming out of leaps in technology or hitherto unrealized applications of existing technology lie in the stuff we can do with the new toys? As a writer, I get excited when I come up with a novel point or perspective to share with others because I have experienced what it feels like to have my perspective “opened up” from reading a unique piece. I am not thrilled in reading about grammar or composition tips, on the other hand; I do such “mechanical” reading as a means of improving my ability to communicate to readers. 

Public discourse on business too often obsesses on the means—even taking them to be ends in themselves­. Consequently, interest is typically confined to a narrow segment (i.e., the financial wonks). Ironically, Wall Street would be better served with the media giving more attention to the new products and their societal implications, with the expected financial consequences being secondary rather than excluded in yet another manifestation of tunnel vision. Reports and commentary on novel products themselves (as well as innovative ways of business) do indeed fall within the domain of business discourse. In fact, I would say the reorientation is more in line with the true significance of business (i.e., making and providing products that consumers want to use). Tapping into this core of business, while still attending to the financials, would, I suspect, attract a broader array of viewers and readers in the wider society beyond the business world. As an added bonus, business practitioners, investors, and even stock analysts might find their own interest piqued. A stock analyst excited as much (or more) about a novel product as charts and figures may do a better job in assessing a company’s value, and thus likely stock trend.

Of course, in order for more of the general population to realize that the true significance of business is actually more interesting, the business journalists would have to wean themselves and their interviewees off the snazzy jargon, nearly devoid of any real meaning and yet ubiquitous in the business world. The artificial excitement over such words or phrases as “champion,” “coach,” “growing leaders,” “driving” (not as in driving a car), “drivers,” and “leveraging” (beyond its oversold application to debt) is misguided in that the obsession and related excitement (out of vacuous boredom?) distract everyone from the true font of excitement in business. Additionally, the weirdness in both the sheer obsessiveness on particular words—flavors of the month—and the misuses themselves, and the artificial narrowing of what counts as business that enables knowing and enjoying the “language” to function as the passkey keep people outside the business world from becoming excited about business rather than laughing at its inhabitants’ discourse. Perhaps the practitioners and journalists who play in the business world figure, quite unconsciously of course, that business as they understand it is not really very exciting, and, therefore, that few if any people in the wider society would be likely to get excited about business anyway.

Thursday, January 16, 2014

Dissecting Best Buy’s Ethic: Where There's Smoke, There's Fire

In 2010, Best Buy’s management adopted executive compensation principles that included a provision that “pay is clearly tied to . . . performance.” Frank Trestman, then chairman of the company’s compensation and human resources committee, made this statement with rose-colored glasses. After just two years, Target's board and upper management abandoned the provision amid poor numbers. Even as the management laid off 2,400 employees (1.4% of the total), the board's compensation committee approved cash bonuses of $500,000 and $2 million in restricted stock for four executives. The interim CEO, Mike Mikan, was at the time hauling in $3.3 million in annual total compensation. In the analysis that follows, I subject this "dual strategy" to two criteria: institutional conflicts-of-interest and distributive justice.

The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.

Wednesday, January 15, 2014

The Processes of Innovation at Google and Apple: Clash of the Titans

How exactly innovation reaches the surface of human consciousness, and how widespread this process is or could be, elude our finite grasp even if particular managers assume the potion can be applied in our bewindowed linear towers. It is all too easy to willow the question down to a matter of which floor is best suited—the top or the lower ones. We can contrast the approaches at Google and Apple (under Steve Jobs) to understand just how little we know about innovation, which is ironic as we are living in an age in which change is the only constant.

The ways in which the folks at Google and Apple have sought to capture innovation can together be taken as illustrative of the “archetypical tension in the creative process.” So says John Kao, an innovation consultant to corporations as well as governments. Regarding Google, the company’s innovation method relies “on rapid experimentation and data. The company constantly refines its search, advertising marketplace, e-mail and other services, depending on how people use its online offerings. It takes a bottom-up approach: customers are participants, essentially becoming partners in product design.” To be sure, customers, or "users," are not “participants” in a company; neither, I suspect, are subordinates. As stakeholders to be appeased, neither customers (or "guests" at Target) nor employees (or "partners" at Starbucks) can be reckoned as "participants." 

The innovation method at Google is inductive, meaning that major product improvements come at least in part from going over the feedback of individual customers. According to the New York Times, “Google speaks to the power of data-driven decision-making, and of online experimentation and networked communication. The same Internet-era tools enable crowd-sourced collaboration as well as the rapid testing of product ideas — the essence of the lean start-up method so popular in Silicon Valley and elsewhere.” The emphasis here should be placed on a multitude of specific product ideas rather than on the collaboration, for “while networked communications and marketplace experiments add useful information, breakthrough ideas still come from individuals, not committees.” As Paul Saffo, a technology forecaster in Silicon Valley, observes, “There is nothing democratic about innovation. It is always an elite activity, whether by a recognized or unrecognized elite.” Therefore, we can dismiss the presumptuous use of "participant" to describe the inclusive involvement of customers. 

The Times goes on to describe the "Apple model" (under Jobs) as "more edited, intuitive and top-down. When asked what market research went into the company’s elegant product designs, Steve Jobs had a standard answer: none. ‘It’s not the consumers’ job to know what they want.'" Jobs strikes me here as an autocrat or aristocrat of sorts pointing out that the masses don’t really know what they want. The Dowager Countess of Grantham, a character in the PBS serial Downton Abbey, would doubtless readily agree. The assumption that transformative innovation can only come from an elite fits with Apple’s deductive approach wherein a few true visionaries, such as Jobs himself, at the top present the innovative product ideas (e.g., ipod, ipad, smartphone) to be implemented by subordinates. Clearly, neither employees nor customers are participants in this approach.

King Steve Jobs. Does transformative innovation depend on visionary leadership?  (Image Source: www.fakesteve.net)

The tension between the two approaches comes down to their respective assumptions concerning whether many people or just a few are innately creative in relating imagination back to "the real world" co-exist only in tension; each of the assumptions is antagonistic toward the other. In the political realm, the same tension manifests in terms of whether a democracy is likely to end in mob rule and aristocracy in plutocracy (the rule of wealth). 

As elitist as Job’s statement may be even with respect to employees, he may have had a point that virtually no customer could have anticipated the ipad even five years before it was designed inside Apple. Moreover, it is nearly impossible to project in the 2010s what daily life will be like for people living in 2050. Could anyone in 1914 have anticipated the movies and airplanes that were commonplace by 1950?  People alive just before World War I broke out on August 10, 2014 were still getting used to the electric light, the telephone, and the strange horseless, or auto, “carriage.” As the Dowager Countess remarks in an early episode of Downton Abbey, “First electricity, now telephones. Sometimes I feel as if I’m living in an H.G. Wells novel.” As for electricity in her house, she provides an explanation that might remind us a century later of the advent of cell phones amid concerns about brain cancer. “I couldn’t have electricity in the house,” the countess insists. “I couldn’t sleep a wink. All those vapours seeping about.”

A century later, only from retrospect can we say that the smart phone and ipad had been inevitable developments of computer technology. Anticipating innovation, let alone figuring out  how to institutionalize it, provides a glimpse of a wholesale deficiency in the human brain. The sheer distance between the respective assumptions at Apple (under Jobs) and Google demonstrates just how little we as a species know about the emergence of creativity. Should we concentrate on uncovering gems like Steve Jobs, or spread out our attention to a thousand points of light? Making matters worse, the human brain may be designed to be oriented predominantly backward (with the very significant exception of anticipating an upcoming danger, such as a predator), rather than to predicting even the next transformational innovation.  

Steve Lohr, “The Yin and the Yang of Corporate Innovation,” The New York Times, January 28, 2012.