Blogging is not going away. It may be changing, but it is not going away. I came across the statistics below via Converstations, whose RSS Feed I subscribe to, awhile ago and am only now getting around to sharing it with you.

The reality is that business is only just beginning to understand the value and power of the conversation created with their customers through blogging. This is an honest dialog, and one that customers are increasingly demanding in order to determine the authenticity of the products and services they consider. I don’t know about you, but I subscribe to dozens of blogs that cover a range of topics… from art to marketing, from cooking to parenting. I also read tons of magazines, but that is more of a luxury. I engage with blogs daily, and try to work on my own blog daily. For me, this is of tremendous value, and after reviewing the stats below I think it is safe to say that I am very much not alone in this thinking:

• - Over 12 million American adults currently maintain a blog.
• - More than 147 million Americans use the Internet.
• - Over 57 million Americans read blogs.
• - 1.7 million American adults list making money as one of the reasons they blog.
• - 89% of companies surveyed think blogs will be more important in the next five years.
• - 9% of internet users say they have created blogs .
• - 6% of the entire US adult population has created a blog .
• - Technorati is currently tracking over 70 million blogs .
• - over 120 thousand blogs are created every day .
• - There are over 1.4 million new blog posts every day .
• - 22 of the 100 most popular websites in the world are blogs .
• - 37% of blog readers began reading blogs in 2005 or 2006 .
• - 51% of blog readers shop online .
• - Blog readers average 23 hours online each week .

This list of blogging statistics is at BlogWorld Expo.

Ed Wilms, this one’s for you.

In line with the proliferation of talk around execution, there is also much going on as it relates to strategy. Strategy and execution are inextricably linked, they are useless without each other. Without a focus on execution and performance, strategy is a purely academic pursuit. Without a strategic foundation, execution is a “car without a steering wheel” (or any number of fitting clichés). Strategy is one of those things that seemingly everyone talks about, but few actually practice. It is something that is typically top-of-mind as companies think about the imminent new year, but once that new year commences it is quickly forgotten about, and rarely followed through. This plays out everywhere. We have all seen it in one form or another. The same can be said for execution. At the heart of this is determining how an organization is going to get where it needs to go, how it is going to navigate the range of strategic risks before it.

The linking of strategy with execution, and understanding the importance of the relationship between the two, has been gaining important attention. The Harvard Business Review just published an article discussing the rise and importance of the Chief Strategy Officer. There are a number of reasons that companies are creating and assigning this position, the most common of which is most likely that CEO’s now find their attention diverted to an increasing range of priority issues, and the nurturing and development of strategy suffers. The CSO’s entire purpose is around developing and executing on a range of strategies, and ensuring that decision making supports these strategies and aligns with the company vision.

The HBR article does a nice job discussing the importance of linking strategy to execution and lists three critical strategy implementation tasks:

• - Engendering commitment to strategic plans. Articulate a clear definition of your company’s strategy and explain how each person’s work relates to it. This clarity enables the building of the federation necessary to put strategic plans into action.

• - Drive immediate change. Facilitate the change initiatives required to execute the strategy.

• - Promote decision making that sustains change. Ensure that strategic decisions don’t get watered down or ignored as they’re translated throughout the organization. Communicate with managers at all levels to determine whether decisions being made over time continue to be aligned with the strategy.

Now, the role of the CFO is most likely not a reality for many organizations, but the value of this approach is inherent. What this article effectively describes is the role and importance of strategy and implementation for organizations of all types and sizes. This is serious stuff, and with the complexity and speed with which markets change is also potentially the only way to effectively navigate this complexity, stay on track, and begin to anticipate risk.

The mantra of execution is heavy on the minds of everybody these days. Actually, that would be accountability AND execution. Seems that we all need a little primer in business 101 as without a culture based on both… all is lost. Or, at least all is at risk. It turns out that execution is also a top concern with CEO’s around the world. Actually, according to a Conference Board global survey, execution is their number one concern, ranking above profit and top-line growth.

“This year’s overall top challenge shows that CEOs from around the world are realizing that strong execution is a critical factor in driving profits and revenues. These executives are also becoming increasingly aware of the crucial role that people play in growing their companies.”

Jonathan Spector, President and CEO of The Conference Board

As a part of this survey, 769 CEOs from 40 nations were asked to rate their greatest concerns from among 121 challenges. “Excellence of execution” was selected as the top concern with “keeping consistent execution of strategy by top management” the third-greatest concern. Of particular note is that “sustained and steady top-line growth”, which led the list last year, now ranks second, with profit growth fourth, and finding qualified managerial talent fifth. I believe that this indicates a shift in the concept of performance within many organizations, and that the inception of performance is execution. This is being driven by the myriad of strategic risks we face in our industries, and by the ethereal nature of success that is today’s reality.

Of note is that the survey uncovers some interesting regional differences. The European CEOs surveyed expressed greater concern with speed, flexibility and adaptability to change as it relates to getting new, more responsive ideas out sooner. This was a dominant theme in Europe (third place), while in Asia it tied for eighth and the U.S. was back in 10th place.

I do not think that anybody can question or doubt the realities that most creative businesses face. The business environment for creative organizations is changing rapidly and presenting unique challenges to those charged with leading successfully. Specifically, our firms face issues of technology use and integration, team organization, process development, leadership and leadership transition, intense competitive realities (and increasingly global), and the commoditization and devaluing of our work. Many of these specific challenges have been discussed on Schneiderism already. I speak the obvious when I say that determination of success in the future is dependent not on navigating one or two of these challenges successfully, but all of them.

I had the opportunity to recently attend a presentation by Adrian Slywotzky, the author of “The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs“, at an event for YPO. It was especially good, and prescient regarding the challenges that many organizations face, but it seemed especially relevant to creative businesses (design, marketing, advertising, architecture). At a high level everything comes down to innovation, being innovative, and how you innovate. Easy to say, hard to do. But beyond those relative truisms, there was one all encompassing concept that I loved hearing about:

STRATEGIC RISK MANAGEMENT

The presentation began with the concept of business model design and that business models that remain static are destined for failure. The environments in which we all operate are changing and evolving in ways that were not possible 10, 15 and 20 years ago. This demands reinvestigation, in an ongoing manner, of a company’s business model and introduces the opportunity for business design innovation. Most industries have seen dramatic change, and those of us who anticipate change and evolve our companies as our markets change will be around to talk about. Adrian Slywotzky not only aligns with this thinking, he takes it much, much further.

“Our greatest growth opportunities are our greatest risks - reversed.”

Adrian Slywotzky

The strategic risk management piece is important in several ways. Obviously, this is hugely informative as we investigate the threats and opportunities of a given business model, and the proper identification and understanding of strategic risk is what ultimately determines a course of action. Elements of this is knowing the reality of where your center of gravity resides with respect to your customers and clients. To ensure prolonged success, that center of gravity needs to reside at the heart of your company, at the core of what you do and the value you create. Inevitably, though, it resides with the customers who have a range of relatively equal options from which to choose. The challenge is in retaking that center of gravity and subsequently reversing or inverting the value chain. A traditional value chain begins with assets and ends with a customer, inverting it creates a business model around the customer that results in assets. Think about that for a second and get back to me.

Getting into more detail about strategic risk management… it is the perpetual survey of your landscape for those things which will make you irrelevant, those things which can damage your business design. Things like:

• Misreading your customers
• Damaged reputation
• Commoditization of your product or service
• Technology
• Ownership/leadership transitions
• Global politics
• Currency fluctuations
• Supplier changes
• Factor of costs
• Talent deficits
• Changing customer demographics

Now, that list is by no means comprehensive and is pretty high level. So, stop for a second and reflect on your own business. What would your list look like? Can any of these strategic risks be turned into opportunities? To be successful, the answer needs to be a committed “Yes.” We live in an age of volatility and our lives, our businesses, are subjected to a diverse and evolving range of generators and catalysts of this volatility. What we do about this is also evolve our businesses in advance of these risks and in answer to the volatility. When these risks are unmanaged they will affect even the very best teams and the very best business models. No one is immune, and we are seeing this play out seemingly everywhere. There are innumerable case studies of companies not managing this risk:

• Contrast the S&P High-to-Low Quality ratio of A-ranked stocks to C-ranked stocks over the last 25 years. The A-ranked stocks have decreased from 31% to 14% of total value while C-ranked stocks have increased from 12% to 30%
• Why has Procter & Gamble taken 5 years to recover from the 2000 market value drop? Why did they suffer the drop in the first place?
• Other blue chips face the same fate… look at McDonald’s, Siemens, Merck and Deutsche Bank. Their performance lines are nearly identical.
• More specifically, why has Coca Cola lost market value while Pepsi has gained market value over the same time?
• Sony has lost while Samsung has won, Johnson & Johnson is winning while Merck is losing, and Maytag tanks while Whirlpool takes off. Each example, two companies in the same industry. One wins, the other is losing.

What is going on here? The winners sited properly assessed risk and realized that the time of maximum value is the time of maximum risk. This is really tough for most companies, but especially difficult for historically successful companies to address. Legacy thinking persists. This can be scary, and sometimes is not something anybody really wants to talk about or bring up in a meeting. Even worse, it just is not what management wants to hear… they can’t handle the truth. The reality is that strategic risk is the killer of business models. It is killing the US automotive industry, it is working its way through consumer electronics, and (getting back to the beginning) it is challenging creative enterprise.

Knowing this, and anticipating risk at this level begins to tell you how to protect and grow your business. For creative enterprise it entails a concerted effort to identify what the true value is in the work we do. Really, do our clients VALUE the work that we provide on their behalf? Do we create value at all? Who in our space is being successful and why? What are they doing differently and what is setting them apart from the rest of the firms around them? This starts with shrewd competitive analysis, but it cannot stop there. What are the technology risks that we face and what are the event horizons for these risks? Where are we allocating capital to activities that give us no differentiation? Ultimately, after answering all of these questions (and many, many more) what are the business designs that take advantage of the fact that all of our competitors face the same questions, challenges and realities?

How do we turn our problems into our competitor’s problems?

A summary of the risks we face, and that successfully navigated will inform your business model design:

• Technology shift
• Industry economic squeeze
• Brand investment mix (advertising, design, PR, training, information…)
• Project risk
• Customer shift
• Stagnation risk

Weeks ago I posted about the first deployment of armed robots into urban combat in Iraq with the goal of actually replacing their human counterparts in the worst of situations. These modularly armed robots, dubbed SWORDS, represent both a tactical and technological paradigmatic shift for the US military. Tactical in that the Pentagon did not seem so keen on robot warriors not so long ago, and technological insofar as once the Pentagon, with the foresight of DARPA, suddenly discovered the value of robotic soldiers they began assigning generous budgets, contracts, and programs to move things along expeditiously. SWORDS was deployed around three months ago, maybe as long as six, and we are already seeing the platform “improved” upon. Naturally, with robotics technology the Pentagon would be remiss to not employ continuous improvement… and so we already have the next generation (pictured above and below) of semi-autonomous, modularly armed robotic soldiers ready for deployment.

Improvements on this military platform, from Foster-Miller, include enhanced friendly fire avoidance and more powerful weaponry. From the video, it also seems to have more fluid and precise motion coupled with improved speed. All of this to say, as we continue to discuss the state of robotics here on Schneiderism, we are consistently seeing the gravity of innovation move from research institutions and industry to the military. This compresses the improvement and advancement cycle for robotics technology, as the Pentagon controls significant budgets and resources to maximize any given technology. The upside is that we will see exponential developments in robotics, especially as it relates to autonomy, over the next few years. The downside is that these developments will be biased toward military aims for the foreseeable future. Honestly, it would be irresponsible to predict how this shift in innovation focus will play out, but I think it is safe to say that five years from now we will be looking at a dramatically different range of tactical options for the US military than we would have thought to be such an imminent reality seven years ago.

More information at Wired, story via Engadget

While automobile companies on this side of the Atlantic determine how best to disassemble enterprise, elsewhere things are somewhat more positive. In contrast to the hard times seen by GM, Ford and Chrysler, Porsche has had a remarkable few years. So much so, that with the strong increase in sales, and the commensurate increase in profits, the employees of Porsche will be getting a significant bonus, and one larger than their bonus last year. I posted about the changes that went down at Porsche in the mid-1990’s, and as a result of those changes the successful strategy that has transpired. It would seem that Porsche is on the right track, and continuing to expand into new markets with new products. This will not last forever, as luxury automotive products can reach saturation in a market very quickly, but for the time it is a reality to be savored. Not fifteen years ago Porsche was on the brink of insolvency.

Porsche is, and has been, the world’s most profitable car company as of late. As a result, its 8,000 workers will receive a bonus of $7,350. Their bonus last year was $4,900. The increase is due to the fact that they sold nearly 98,000 cars and as a result profits rose by 3.4 percent to $10.5 Billion. Fifteen years ago Porsche’s sales numbers were decreasing towards 10,000 units.

That’s quite a turnaround, and I applaud the success. Porsche is an amazing case study in the value of decisive leadership, clear vision, knowing how to expand the value of a recognized and iconic brand, innovation across the board, and a belief in reinvention.

via Winding Road

I picked up that phrase in conversation the other day and it made me curious. I assumed that “retrograde” has its roots in the observable physical behavior of a planet or star as seen from Earth. Beyond that assumption, I did not really know what that meant. Doing a little research, it turns out that the planet Mercury will be entering retrograde on October 11th/12th (depending on your source). The word retrograde applies, in astrology, to the apparent backward motion through the zodiac of a planet. This is an observable phenomenon from Earth, and dates back to the third millennium BCE when the Sumerians made astrological observations of celestial bodies appearing to move backwards. In reality, they were moving more slowly due to the relationship in their rotational axis to that of the Earth and the other observable celestial bodies, but appeared to be moving backwards. The result of these visual relationships is retrograde motion. The 1947 “Encyclopedia of Astrology” by Nicolas DeVore describes this retrograde motion as:

“like the effect of a slow-moving train as viewed from another train traveling parallel to it but at a more rapid rate, wherein the slower train appears to be moving backwards. However, in the case of the celestial bodies it is not a matter of their actual speed of travel, but of the rate at which they change their angular relationship.”

I do not subscribe to astrology, but I do believe that most of what drives astrological definition is based on the actual physical observations of the relationship between celestial bodies in the sky. All of that to say, the physics of the stars and planets could not initially be explained by humans in scientific terms, so we were left to describe this phenomena in ways that we could understand.

It turns out that all of the planets exhibit retrograde motion as seen from Earth. The Sun and the Moon do not, but this is due to the rotational relationship of each to the Earth (the Earth revolving around the Sun and the Moon around the Earth). This motion be distinctly different from what is normally observed, it has been ascribed dramatic significance as it relates to our existence on Earth. Mercury has been of particular astrological significance when entering a retrograde period, as the mythology assigns the messenger of the gods influence over our terrestrial communications and commerce. Entering this retrograde period, Mercury has the potential to wreak havoc on our Earthly interactions with each other. Those who believe in astrology portend chaos for us during these periods.

Now, more about Mercury. As mentioned above, Mercury has been observed in the sky as long ago as the third millennium BCE. It came to represent the messenger of the gods due to the speed with which it moves across the sky. Mercury has only been visited once by spacecraft when, in 1974 and 1975, NASA’s Mariner 10 did three flybys allowing the mapping of about 40-45% of its surface. We do not know a tremendous amount about the planet closest to the sun, but here is a brief survey of what we do know:

• - It is one of four terrestrial planets in our solar system, meaning it has a rocky surface
• - Mercury has a higher iron content than any other planet in the solar system
• - There is an unstable atmosphere made from helium, hydrogen, oxygen, sodium, potassium and calcium
• - The surface has the greatest temperature difference in the solar system, due to its proximity to the Sun
• - That difference varies at its extremes by as much as 600° Kelvin
• - Mercury takes 88 days to orbit the Sun, and has the most extreme orbit of the planets
• - In its orbit, it will get as close as 46,000,000km and as far as 70,000,000km from the Sun
• - A rotation of Mercury takes about 58 days
• - Mercury is the second densest planet, after Earth, but would be first if not for gravitational compression on Earth
• - It has a large iron core that generates a magnetic field roughly 1.1% the strength of Earth’s
• - Sunlight on its surface is about 6.5 times that on Earth
• - Despite the high surface temperatures, there is believed to be ice on Mercury
• - It is believed this ice is in the deep craters and at the poles, as these are not exposed to direct sunlight.

An ongoing area of interest for me is how we can innovate in the guidance and leadership of a creative enterprise, and thus sustain successful operations. This is centered around the challenges facing most professional services in the creative arena, something that it would seem all are struggling with, at least at some level. The core of this is the commodification of creative work, whether that be advertising, architecture or graphic design. Many firms have allowed themselves to become factories, to become production houses. In some ways, this is the result of our own devaluing of our efforts. In others, it is born out of an entirely different decision-making process that has been progressively gaining ground with the clients for creative services… the prevalence of value assignment based on time worked and not on value created.

I came across an article that was very insightful in relation to these realities by Avi Dan in Advertising Age. It succinctly lays it all out. His article is leveled squarely at advertising agencies, and why so many are facing the music as their business model is yanked out from under them. As I read his article I could not help but see strong similarities to the realities we face in architecture, and those I experienced in other creative businesses. Avi outlines five key areas that agencies, and by extension most creative enterprise, need to investigate:

• COMPENSATION
  Should be tied to value creation and not based solely on labor. Clients and creative firms need to work out a fairer compensation scheme recognizing the value of intellectual capital.
• OUTSOURCING
  Smart creative organizations should evolve into creative portals, outsourcing external creative talent in areas such as production, as well as in logistical operations.
• REVENUE STREAMS
  Firms need to explore ways to monetize new areas of involvement such as licensing, e-commerce applications and even the work itself.
• SPEED
  Creative enterprise must recognize that in a web-based world that moves at warp speed, speed itself is a strategic asset and those that can help their clients with speed-to-market executions will have an advantage.
• SOCIAL RESPONSIBILITY
  The firm model should recognize that social responsibility is at the core of the modern firm, hand in hand with its financial accountability to shareholders, and is essential for recruiting top talent.

Of special note are the ideas around outsourcing and revenue streams. There is a controlling mindset in most creative firms that they must own all waypoints in the project process. I cannot help but ask “why?” Outsourcing is a tremendous opportunity to not only diversify your talent, but to allow you to focus on what you are truly good at… and seek support from partners who are better at the other project roles than your team may be. Additionally, seeking complimentary and supplemental revenue streams is enormous. As creative businesses we are perpetually innovating with respect to our client’s businesses. Why is it that we cannot bring this same approach, this innovation, to benefit our own businesses? Over the course of a year there will be any number of revenue opportunities available to a firm that are outside of their traditional business model, but because of that model these ideas will make it scarcely farther than the whiteboard.

All of this to say, many companies face an environment of intense change and competition. Those that get it are focused on changing with the environment in which they operate. Some are changing fast, with a cultural premium on innovation and knowledge in the value created by their own people. Those that do not are not going to last. I feel it is that simple.

Though you may mistake the image above to be that of a bedpan of the future, it is in fact a telepresence robot from the consumer robotics company, iRobot. It is called the “ConnectR,” and described by iRobot as a “virtual visiting robot.” Not long ago we investigated the homegrown telepresence robot IvanAnywhere, and the potential for that technology in the workplace. IvanAnywhere was created in a garage, so to speak, by inspired and creative tinkerers. iRobot now takes the concept of telepresence to an entirely new level, by mass producing the technology, and making it incredibly accessible. This is completely in alignment with their mission of creating the “robot home,” but I think that is an incredibly limiting way to review this technology as a device such as ConnectR has potential in a diversity of non-home applications. ConnectR allows for a virtual presence by enabling control of the robot via WiFi. It utilizes live video and audio with the built in camera that can zoom into a high resolution mode for reading text. Remarkable. You can also communicate and speak to your audience through ConnectR, and even display your mood by controlling an LED light.

All of that may sound unimpressive, but it is actually quite amazing. You will be able to purchase a telepresence robot (it launches in 2008) off the shelf of your local robot store and then be in two places at once. I am excited to see creative uses of this technology in the workplace, and guarantee that we will see a proliferation of telecommuters now leveraging telepresence. When ConnectR launches next year it is expected to sell for $499. There are innumerable times that I have dreamed of this technology.

via Engadget

Contrasted against the typical wine bottle, it looks modern, functional, and ultimately pretty cool. I imagine that alone has been enough for this wine to meet with some success in the marketplace. Admittedly, I am a sucker for cool packaging… I think our entire culture is, but the question going through my mind is why more wineries are not experimenting with the packaging of their product. The shelves of your wine shop are essentially dominated by a form factor that has been largely unchanged for hundreds of years. This shape can be traced back to around 300CE. In 1867 earthenware bottle shaped wine containers were discovered in a Roman sarcophagus dating to 325CE. So, the wine bottles on our shelves today are marginally improved versions of packaging created nearly 2000 years ago. Now that’s some serious design longevity. Is it because the wine bottle is the perfect shape in which to store and ship wine? Is it simply an unchallenged convention? Is is a cost issue?

I imagine that at some level the answer to all three of those questions is believed to be “yes.” But is it really? There is a terrifically strong argument that as these bottles compete on the shelves for the attention of the wine buyer that anything they can do to stand out, to be different, is going to be an advantage. This strategy has played out almost comically on our grocery store and discount department store shelves. Look at ketchup or laundry detergent. Products packaged well, sell well. Products that are packaged expertly have the potential to lead their categories. Naturally, to sustain sales the product must also deliver on consumer expectations for quality and performance. Now, we love wine and are constantly shopping for new experiences. It is stunning to me that as we scan the bottles of Califonia Syrah, Burgundy Pinot Noir, Loire Valley Sancerre, and Italian Barrolo we are essentially looking at the same bottle. There may be minor variations in the color and tint of the glass. There may be subtle differences in the glass thickness, in the punt, or the neck length, but essentially… it’s the same damn bottle. Now, some of this is determined by the governing bodies of the regions in which the grapes are grown and these wines are made, like the Appelation d’origine contrôlée (AOC) in France. But plenty of winemakers in all governed regions defy convention and the laws of the governing bodies (and their arcane rules) to do things their own way, and they do that successfully. At least one winemaker understands the value of differentiation, and their packaging (incredibly similar to that used for Voss water) was enough to get us to buy a bottle and try it… and had it been in a typical Pinot Grigio bottle we would have kept on walking. As it turned out, the wine was not bad. It was a nice summer, good value, patio sitting, crisp white wine. For the money, and with the packaging figure in, it over-delivered on the experience.

I state the obvious when I say that wine bottle shape has much to do with tradition, but it is a package that is desperate for creative thinking and innovation. The storage issue alone demands that the bottle shape be revisited. Add to that opportunities for limiting packaging waste, shipping in smaller boxes, and improved durability and there are compelling reasons to think differently about the wine bottle.