Tuesday, August 31, 2010

The Sports Hub vs. WEEI

We have a fascinating competitive battle continuing to unfold on the radio airwaves here in Boston. For many years, WEEI ruled sports radio, driving a number of competitors out of town (including ESPN radio's local station). However, The Sports Hub (98.5) has now presented a major challenge to WEEI. Here's what Boston Radio Watch has reported about recent ratings:

WEEI averaged 497,000 weekly listeners to WBZ's 397,000. However, WBZ 98.5 scored some major victories in both drivetime commute dayparts among its target male demographics. "Toucher and Rich" on 98.5 won the 18-49 male listeners demographic over "Dennis and Callahan" on 850. And, "Felger and Massaroti" bested the "Big Show" in both key male demos - 18-49 and 25-54.

What I find so interesting is HOW The Sports Hub 98.5 has chosen to compete. Michael Felger, a popular and outspoken host on The Sports Hub, has talked about openly about his strategy for targeting these various under-served niches in the sports radio market. During the winter months, The Sports Hub chose to talk hockey extensively. Over at WEEI, hockey had been a very minor topic on the radio for years. Hockey fans often complained about the lack of talk about their sport, but WEEI hosts always claimed that they didn't have any bias against hockey; they simply talked about what listeners wanted to talk about. They cited the lack of hockey calls to the station and the strong ratings associated with lots of football and baseball talk. However, The Sports Hub really focused on this hockey niche, and they brought many fans to the radio. They showed that a dedication to the sport can bring listeners, particularly if you have knowledgeable hosts and guests on the station. They seemed to have attracted those hockey fans who were frustrated with their rival.

Similarly, the Sports Hub - particularly the Felger and Massaroti show in the afternoon - talked a great deal of World Cup Soccer this summer. Again, most sports radio stations have believed that this was the kiss of death, given that baseball and football are so much more popular than soccer in the US. Yet, Felger and Massaroti took quite a few soccer calls in July, and they had strong ratings. Some of these fans may have been taken from WEEI, or perhaps they are bringing new listeners to the sports radio market. Now, just this week, I heard Felger and Massaroti talking extensively about Mixed Martial Arts, given the recent event in Boston. I've never heard discussion of this topic on sports radio in Boston until now, and sure enough, they attracted quite a few callers.

In the past, most sports radio stations trying to compete with WEEI just pursued me-too strategies. The Sports Hub seems to have taken a different path, mixing in a focus on these under-served niches with the usual talk about popular sports such as football and baseball. This novel mix seems to have found a nice audience. Now, how will WEEI respond?

Monday, August 30, 2010

HP, 3PAR, and Finding a new CEO

We have all watched with some fascination as HP and Dell fight it out in an all-out bidding war for 3PAR, the young data storage company. Many writers, including this article from the CNN Money website, have speculated as to whether the winner of this bidding war will ever be able to earn an attractive return on investment, given the high price premium being offered. However, I find another aspect of this bidding war perhaps even more intriguing. HP does not have a successor to Mark Hurd at this point (Cathie Lesjak is serving as interim CEO). If HP wins the bidding war, how will that outcome affect the search for a new permanent CEO? Will potential candidates be at all reluctant to take the job, given that they will be on the hook for making this very pricey acquisition pay off? I think that issue will be an interesting one to watch in the coming months, if HP ends up acquiring 3PAR. Of course, the 3PAR deal does not represent a large fraction of the market value of HP, but still, this highly visible deal will attract attention. If HP pays a very high premium for the firm, investors will be watching to see if the deal pays off. A new CEO may also have questions about the integration process. What promises will be made, if any, to the 3PAR managers and employees as the deal is made? Will the potential new CEO be willing to live with any commitments made prior to their arrival? To me, these questions will be fascinating ones to consider in the days and months ahead.

Friday, August 27, 2010

Selling Out? People Question Groupon's Strategy

Groupon runs a wildly popular promotion for national retailer The Gap, and suddenly, people begin to question whether the firm is "selling out." Wow. We have always seen these types of questions emerge as young firms grow and expand beyond their original core customer base, but it seems that these types of questions are cropping earlier and more often in the social media age.

I think an important distinction has to be made when we observe young firms beginning to expand their horizons. The critical question should be: Does attempting to expand in this way somehow compromise the experience/service/value for the company's core customers? If so, then we can rightfully question the growth strategy. However, there may be many situations where attempts to expand do not compromise the value and experience for the original consumers. In those cases, I think it's unfair to argue that a firm is "selling out" in any way.

Another important point should be made here. Firms can and should experiment as they try to formulate their growth strategy. As noted in the article cited above, Groupon has viewed the Gap promotion, and a subsequent Fandango promotion, as experiments. That's good solid management. Firms should test out various growth options, rather than diving headfirst into an expansion program. As customers, we need to scrutinize our favorite company's moves, but we also have to willing to tolerate some level of healthy experimentation.

Thursday, August 26, 2010

NFL: Ignoring a Very Real Threat?

Roger Goodell, commissioner of the National Football League, has indicated that he would like to see the league move to an 18 game regular season schedule(up from 16 games). The NFL has talked about this for some time. What's interesting though is the timing of the announcement. Just this week, we have read news reports, and seen an HBO special, which document new medical research indicating a potential link between head injuries and ALS or ALS-type illnesses. This work has been done by researchers at Boston University and Veterans Administration Hospital in Bedford, MA. Has the NFL made a serious mistake by moving ahead with this discussion of the 18 game schedule just at the time when this new research suggests very harmful effects from head injuries? It seems that they may have miscalculated here. We could be seeing the start of a major public relations challenge for the NFL. Will various constituencies begin examining this research in more detail and challenging the NFL? Might we see lawsuits, or even the potential for government getting involved from a regulatory standpoint? It seems that the NFL needs to be careful at this point in time, despite the massive popularity of their sport.

Wednesday, August 25, 2010

Myopic Experts

Over at Business Week's website, G. Michael Maddock and Raphael Louis Vitón make the case that innovation is often "beginner's luck." They argue that industry experts often prove quite myopic. They become trapped by the conventional wisdom within a particular industry, and it takes someone from the outside to totally rethink the business model. Of course, many people have put forth this basic argument over the years - nothing new here in a sense. However, I do like some of the suggestions the authors make about trying to overcome expert myopia within your company. For instance, they argue that you can send employees to conferences for other industries, and tap into these outsiders' expertise to try to solve your firm's problems. You also can tap into the ideas and perspectives of new hires much more often, as they are not tainted yet by established mindsets.

Are there other techniques one can use to overcome expert myopia? I'm sure we can come up with many ideas. Let me put forth one overarching skill that I think is essential for leveraging outside ideas to drive innovation in your industry. I believe that you need people to refine their ability to reason by analogy. They need to be able to see situations, ideas, and business models in other industries and then translate and adapt those to your particular circumstance. To do that, they need to be able to draw lessons from analogous situations, without oversimplifying. One risk is that people often focus too much on the similarities between two analogous situations, and they ignore crucial differences. To bring innovation from the outside to your industry, you need creative people who can identify analogies, and see both the similarities and differences. Then, the key is to take ideas from the outside and NOT simply try to apply them as is in your firm. They need to be able to translate and adapt those ideas to fit your situation.

Tuesday, August 24, 2010

Nordstrom: Courting the Multi-Channel Shopper

We've heard so much about brick-and-mortar retailers needing to find ways to integrate online and store shopping. Retailers refer to the great promise associated with cultivating the "multi-channel" shopper. However, few retailers have come up with breakthroughs in how to do so. Nordstrom seems to have taken a bold step. The New York Times reports on their efforts:

"The change works this way: Say that a shopper was looking at a blue Marc Jacobs handbag at Nordstrom.com. She could see where it was available at nearby stores, and reserve it for pickup the same day. More significant, if the Web warehouse was out of that bag, it did not matter. Inventory from Nordstrom’s 115 regular stores is also included. Maybe there was just one handbag left in the entire company, sitting forlornly in the back of the Roosevelt Field store — it would be displayed online and store employees would ship it to the Web customer. What Nordstrom did on its Web site — displaying stock from both the Web warehouse and its stores all at once, was unusual. And that, said Jamie Nordstrom, president of Nordstrom Direct, drove 'some pretty meaningful results.'"

Most retailers do not show detailed store inventory information to the online shopper. By doing so, Nordstrom hopes to avoid lost sales, and also invite online shoppers who are browsing via the web to come to the local store to try on an item if they feel that it is necessary before purchasing. They will ship from the stores if needed, essentially converting their stores into warehouses in support of online sales as well. The results have been promising. Same store sales have been strong lately, while other retailers have lagged. Moreover, inventory turns have risen. Of course, this strategy requires great accuracy in a firm's inventory management system. The premium pricing strategy of Nordstorm probably helps make this economically feasible, because there are clearly added costs. It will be interesting to see if other retailers follow, particularly higher end retailers who compete against Nordstrom.

Monday, August 23, 2010

Does B-School Create Narcissists?

Business Week reports on two interesting new studies presented at the Academy of Management Annual Conference in Montreal earlier this month. The first study examines the extent to which business school students are more or less narcissistic than other folks. Scholars Jim Westerman, Jacqueline Bergman, Shawn Bergman, and Joseph Daly used an instrument called the Narcissistic Personality Inventory to evaluate a group of business school students and to compare them to a group of psychology students. The business school students had an average score of 17.67 as compared to 15.19 for the psychology students. The scholars also found that the students today scored higher on the narcissism scale than students in the past (when studies were conducted in 1987 and 1992). Of course, the study does not determine whether business schools are simply attracting narcissists, creating narcissists, or perhaps doing a bit of both. Westerman and his colleagues worry about high levels of narcissism, as it may lead to riskier decision-making, among other dangers.

A second study, however, suggests that narcissism might not be all bad. Several Stanford faculty members confirm that a narcissist can undermine team performance. However, they find that a team with two narcissists may actually benefit from the fact that competition between these two individuals may lead to the uncovering of multiple new alternatives.

I'm quite intrigued by the studies. I'm particularly interested in the question of whether business schools are actually enhancing the narcissistic tendencies of their students. I actually think we might be, and that is worrisome. In what ways do you think business schools may be creating narcissists? Please share your views by leaving a comment!

Monday, August 02, 2010

Corporate Cash Hoarding

Fortune has a good article on the issue of whether 'corporate cash hoarding' is sustainable. The article refers to the fact that many companies have chosen to build up large piles of cash on their balance sheet. President Obama and many others have been arguing that these firms should be investing this capital instead of "hoarding" the cash. This Fortune article suggests that firms may be sitting on the cash for now due to the uncertainty surrounding the economy and government policy, but that this situation cannot last forever. Eventually, firms will be forced by their shareholders to either issue large dividends, or invest the cash in new equipment, employees, and the like. I think that's generally right, though I would offer one very important caveat. Many firms may be revisiting their views regarding their optimal capital structure after this financial crisis. That may mean that they choose to permanently hold more cash and maintain less debt than they had in the pre-2007 world. That means cash levels may fall as firms finally begin to invest, but they may not dwindle to pre-2007 levels. Moreover, that choice may not represent hoarding at all, but instead, a sound decision regarding capital structure.