Todd Sattersten :: Astronaut Projects

SXSW - James Surowiecki

I am listening to James Surowiecki's talk on The Wisdom of Crowds.

Who Wants To Be A Millionaire?
Experts correct 66% of the time
Crowd correct 91% of the time.

Examples of tapping into collective intelligence:
Iowa Electronic Markets
Sports Trading.com - predicted all 50 state and 33 of 34 senate races
HP - sales forecast
E Lilly - drug trials
Siemens - predict software development cycles

Needs for collective intelligence to work:

• Method to Aggregate People's Judgement (all people equal, capture collective)
• Diversity - more diversity means smarter crowds (all people bring different perspectives)....investment clubs--male/female clubs did better single sex clubs...experts can't see their blind spots...exceptions bridge players and weatherman...
• Independence - you want to people to use their own knowledge and experience...when we work hard to reach consensus, you sacrifice the best decision...this is hard---humans by nature are imitators....reputation is important to all of us...if we do what others do, it is lower risk

Tags: sxsw2006

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What's In a Name?

Chipotle Mexican Grill had their IPO last week and the WSJ ran a short piece on the titles that company leaders use.

The customer service manager goes by "Manager of Duct Tape and Plungers". The guy who runs creative-services is the head of "Special Weapons and Tactics". Finally, the company's spokeman goes by "Director of Hoopla, Hype, and Ballyhoo".

That probably gives some indication of the kind of place it is to work. :)

Texas Tech in Cotton Bowl Today

I should have gotten this up a little sooner, but if you read the Michael Lewis piece from New York Times Magazine about Texas Tech, you have a chance see them in action today.

Texas Tech (9-2) is playing Alabama (9-2) in the Cotton Bowl. Game starts at 11:00ET and will be televised on FOX.

Milwaukee looks good in the Fortune 500

OnMilwaukee.com looked through the recent Fortune 500 issue and found the Milwaukee and Wisconsin fared pretty well.

• Wisconsin has 25 Fortune 1000 companies
• The big names are Northwestern Mutual, Johnson Controls, Manpower, Kohl's, Harley-Davison, Rockwell, and Wisconsin Energy Corporation.
• Johnson Controls is the top ranked Wisconsin company at #71
• In looking at metro Milwaukee, the area ranked #5 when you consider population and number of ranked companies.

Milwaukee Companies Taking a Beating

It has been a rough couple of weeks for Milwaukee-based companies.

Things started with Harley-Davidson. On April 13th, the motorcycle maker announced earnings were up 11% but that sales were flat. They lower 2005 earnings expectations and said they would cut production. The stock has dropped 22% since the announcement.

Yesterday, the highly recognized Midwest Airlines announced losses of 91 cents per share for the first quarter. They said fuel prices are up 36% over last year. On a positive note, they saw revenues grow almost 11%. Midwest's stock is down almost 10% since the announcement.

Harley got hit because people didn't expect the flat sales. They'll be fine.

Midwest on the other hand I am worried about. They lost $15.9 million dollars this quarter. The company is only worth $31 million at this point. I am not sure how they can survive in this environment of high fuel costs and no ability to raise prices. I am flying with them in both June and July to do my little bit. There is improved quality of life here by having a local airline that flies direct to big cities. There is nothing that beats their Signature service. I wish them luck in the months ahead.

The GE Whole is Greater the the Sum of the Parts

When Jack Welch was running GE, there were weekly rumors that NBC was going to be sold to [insert entertainment company]. I never understood the intrigue around GE owning NBC. Jack did the deal to get NBC back, and he liked the business. He wasn't going to sell it.

He also understood that having the network(s) created something bigger when you combined it with the industrial businesses and financial services. Last night's episode of ER is a perfect example. The soccer mom played by Cynthia Dixon was diagnosed on a GE Lightspeed VCT and the blood clot was able to be removed with the help of a Innov 4100 system. It is not unusual for their to be GE Healthcare equipment all over the ER, but this episode was partially written to highlight the technology.

The whole is sometimes greater than the parts.

Thoughts from Boeing on A380

Randy Baseler is the Vice President of Marketing for Boeing's Commercial Planes division.

Baseler has started what he calls a web journal. Later in the entries, he refers to having done research into web logs. I think his "web journal" needs permalinks and an RSS feed, but it is a start. I sent him an email about it. We'll see if her responds.

Now for the thoughts. Baseler starts with this:

Along with the A380 being an engineering marvel it also represents a very large misjudgment about how most passengers want to travel and how most airlines operate.

It's quotes like these which can come back to haunt, but I think he backs it up to a certain extent:

Airbus is calling for a significant shift in recent trends. It believes we will all fly from hub to hub, with one or more connecting flights to complete our journey. Boeing believes airlines will continue to give passengers what they want -- more frequency choices and more non-stop, point-to-point flights.

Consider that Airbus says London's Heathrow will use the most A380s during the next two decades. Yet, the 747's share of departures at Heathrow hasn't changed during the past twenty years. Airbus lists Tokyo's two airports and Hong Kong's as major A380 hubs. But at those three airports, the 747 as a percentage of departures is about half of what it was in the 1990s. If large airplanes solve congestion, the 747 departures would have been going up.

I am fascinated to see how the rivalry progresses and it is great to hear comments direct from Boeing.

[via commoncraft]

Defining Victory

There is an outstanding article in the WSJ today about how the U.S. Army is rethinking its strategy. The idea of taking down a country by capturing its leaders doesn't work. Iraq has shown that clearly. What I find amazing about the article is how soon the Army is reconsidering its thinking.

They are changing measurements:

A recent directive, prepared by Mr. Rumsfeld's office and still in draft form, now yields to that view. It mandates that in the future, units' readiness for war should be judged not only by traditional standards, such as how well they fire their tanks, but by the number of foreign speakers in their ranks, their awareness of the local culture where they will fight, and their ability to train and equip local security forces. It orders the military's four-star regional commanders to "develop and maintain" new plans for battle, hoping to prevent the sort of postwar chaos that engulfed Iraq.

They are changing their capital investments:

The Army is discarding or delaying big parts of its longstanding plans. It recently announced it has pushed back introduction of its new lightweight fighting vehicle for several years, to 2014, freeing up $9 billion. Earlier plans had called for all of the service's combat units to be built around the light, quick, armored vehicle.

The Army now thinks it will need a mix of slower-to-deploy, heavy tanks as well as light fighting vehicles. This will allow commanders to swing quickly between tasks, the Army says, from handing out emergency rations on one block to conducting an all-out battle with insurgents on another. Commanders in Iraq have found that 70-ton tanks, which literally shake the ground as they move, can help ward off guerrilla attacks simply through intimidation.

"The answer to complexity, volatility and uncertainty is always diversity," says Brig. Gen. David Fastabend, a senior officer in the Army's Futures Center, which does long-range planning.

The service recently canceled its $12.9 billion program for Comanche helicopters. Instead of spending the money on 121 stealthy Comanches -- designed to evade high-tech enemy radar -- the Army is spending the money to buy 825 attack and cargo helicopters and planes of the sort being used daily in Iraq.

They are changing their training:

In addition to putting them through months of mock raids, the colonel also gave each officer about a dozen books on Iraqi culture and counter-insurgency operations that he expects them to read in their spare time. The Army doesn't have a standard reading list for troops to read before deploying to Iraq, so Col. McMaster, who has a doctorate in history from the University of North Carolina-Chapel Hill, prepared his own.

The article also talks about how they are bringing experts from city planners to anthropologists to help with wargaming.

Critics will say the Army should have know this for a long time. I want to applaud the speed at which the leadership is adjusting the changing environment.

I think there is also a lesson about for business: Is your competition is same as it use to be? Are you using the same-old tactics and not getting the expected results?

LEGO gets customers involved

I absolutely love this story from Think by Peter Davidson. LEGO is allowing customers to download software, design their own building set, and then upload the design for competition against others. LEGO is going to put the winning designs into production. Winners will be awarded with design credit on the box, free sets of their design, and royalties.

Talk about getting your customers involved!

Love it!
Love it!
Love it!

It is all about speed.

I really like this post from Concrete Covina called Slow Down to Speed Up.

Fast Company has explored this topic a couple of times. Check out Time to Slow Down? (May 2000) and Slow Down, You Move Too Fast (Feb. 2001). It seems to me it was a cover story too. Hmmm...

Collins on Mergers

Jim Collins on the Sears/Kmart merger - "you cannot buy your way to greatness."

[via Tom Peters]

Gamesmanship in the Air

I think the commercial aviation space is an interesting one to watch. It is interesting to see Boeing and Airbus joust with each other. Boeing has chosen the route of speed and efficiency with its new 7E7 development. Airbus has gone with making really big planes with its A380.

The latest is reported today in the WSJ [sub. needed]. Airbus unveiled a revised plan to develop a plane to compete with the 7E7. The A350 will supposedly have more capacity and a longer range. The design for the A350 has already needed to be updated once, after fleet managers didn't see any real advantage to it over the A330. The A350 is basically a A330 with new wings. Any pilot certified on the A330 will be able to fly the A350.

Both companies are bickering back and forth about whose plane will be better, but the importance of the story is in the broad strokes. Boeing wanted to have 200 planes sold by the end of the year. At this point they have only sold about 50. Merely announcing a potentially new plane, Airbus slows down any traction Boeing was getting. They probably threw some engineers at the A350, but they essential spent no money to create a huge story - one that matches nicely with being the leader in aircraft sales last year and most likely this year.

I think this a brilliant move on Airbus' part. They have market leadership and they make announcements to cement in people's minds that they are the market leader.

P.S. Stuck right next to the A350 story on A10 is an American Airline story stating they are going to defer delivery of 54 Boeing jets. Rough PR day for Boeing.

Some agreement

Tom Peters agrees with me on the Sears-K-Mart mega-super-gaga-merger.

I am going to be hanging out with TP in a few of weeks. Vermont, dinner at the farm; me and thirty other high-powered executives.

Expect blogging, moblogging, and podcasting.

Disaster

This has disaster written all over it.

What you could learn

I like what Forbes is doing. I think they have great reporting with alot of original stories.

Here is what you could learn by reading the current issue of Forbes:

• Did you know all of the big planes used to fight fires have been grounded since May? There have been three fatal crashes in two years. The wings snapped off two planes in mid-air. One contractor has taken the next step and modified a 747. [Splooosh!, p66]
• 800,000 people will take Alaskan cruises this year (that's 25% more than the state's population). The summer popularity of the region lets the cruise lines will redeploy ships from winter destinations such as the Caribbean, Mexico, Hawaii, the Panama Canal, and Europe. Carnival sends 16 ships and over 1/3 of their passengers now department from Seattle. [Cruise Control, p98]
• The cover story is about XM radio. What is amazing is about the article is what the National Association of Broadcasters has done over the years to squash innovation. Their latest maneuver is equally amazing. In 1995, Congress enacted a law that requires all digital radio to pay royalities to performers. The exemption for traditional radio was maintained and as well as the NAB's version of digital, HD radio. The law also made it illegal to broadcast local content, such as traffic reports and sports. The NAB argued that local stations would be hurt by competition from satellite ignorant of local tastes. "Never mind that the radio titans were knitting together nationwide networks to let hundreds of their own stations carry identical programming." [Broadcast Bullies, p140]
• Rexam is helping beverage upstarts with more than just packaging. To help build the market for both, they are helping companies with retailers, inventory, and distribution of the finished product. [Thirsting for Growth, p174]
• Finally, read about ADV Films. They are the leading distributor of anime in the U.S. There are starting their own cable channel and have started producing their own anime. [Why Grow Up?, p178]

Expectations

So much of life is expectations. Shannon at shannonsays.com has a great post about Jetstar, the new budget airline in Australia. The no-frills approach means no seat assignments, no food service, and no refunds if you show up late. This seems to be upsetting Aussies who expect more from an airline.

There is a lot of talk about exceeding your customers' expectations, but there is an edge (see free prize inside) by offer less than everyone else. You just need to make sure your customers have adjusted their expectations.

Low Carb Colas

I told you about my search for C2 (again there would be a link, if I could find one) last week. Since then, I found out that C2's official launch was Monday.

I was again in the grocery store yesterday for the weekly trip and saw no sign of the low carb cola. But what I did see what Pepsi Edge available in 20 oz. single bottles occupying a great location at the end of the aisle. I bought a couple of bottles and tried it last night. My wife and I thought it was pretty good. You get a little aftertaste of the artificial sweetener. I recommend going out and trying it. We will probably buy a 12-pack and see if it can replace the full carb version we drink now.

Business lessons;

1. Being first helps
2. Make it easy for people to sample
3. Don't be afraid to introduce one product that will cannibalize another

Food and Thought

We were out to dinner with friends last night. We ate at a local Asian chain called Chin's. They have a great menu that pulls from multiple regions. You order your food at the counter, it is cooked to order, and the staff deliver it to your table.

Their "Five Sustaining Truths" hang at the entrance:

1. Food energizes life.
2. Knowledge feeds the soul
3. True value lies in time well spent
4. Each generation creates opportunities
5. Passion - and a smile - transform the world

Online Music and Mixes

A week ago today, WSJ led the Marketplace Section with an article headlined, "Online Music Rings Up New Sales With Outtakes, Mixes" [sub. needed]. The piece talks about how songs that will never make it on a CD are ringing up huge sales online.

A day after singer Beyonce belted out her soulful interpretation of the anthem at this year's Super Bowl, the recording was up for sale for 99 cents on Apple Computer Inc.'s iTunes Music Store, where it became one of the top-selling tracks for the week.

and

Last month, Apple put a version of "I Fought the Law" by rockers Green Day up for sale on iTunes at 10 p.m., after the song aired earlier that day as the soundtrack to a Super Bowl commercial for Apple and PepsiCo Inc. For the next two weeks, "I Fought the Law" was the top-selling track on iTunes and, since then, has bounced around the top three or four slots.

Rob Schoeben, vice president of applications marketing at Apple, says the Green Day track is a "world-wide exclusive" on iTunes, meaning it won't appear on other Web sites or in stores. Apple believes Internet-only music may be an important way to coax first-time users into buying their music on the Internet. "We think if there are things you can only get online, you can get people who are laggards to try online" music buying, Mr. Schoeben says.

I think both of these illustrate the idea I was talking about last week. If people hear something they like, they want to be able to go buy it right away. By offer these tracks, iTunes are filling that need and creating a unique revenue source that didn't exist before.

BTW, I don't buy the laggards argument.

Nothing stays the same

The Wall Street Journal reports today that DeBeers is in talks with the Justice Department to reach a settlement in the long-standing case against the South African based firm. DeBeers is best known for their virtual monopoly of natural diamond. They are also a strong competitor in the industrial diamond market.

The case against Debeers stems from their industrial diamond business. It has been open since the 1940's and was reignited in 1994 when they and GE were both charged with price fixing. The case against GE was thrown out after only two days in trial. With no business operations in the U.S., the Justice Department was unable to prosecute DeBeers. Sources say DeBeers is going to plead guilty and pay a fine to settle the case.

Why settle? Times are changing. There are more sources for jewelry quality diamonds. Artifical diamonds are starting enter the market. DeBeers has decided they need to have a physical presence in the U.S. They have been developing retail stores in Paris and Tokyo with a French firm. Other plans may be in the making. Legal issues cloud their ability to establish a high quality brand.

My interest in the story is that I worked for GE Superabrasives for three years. I started about six months after the price-fixing case was thrown out. What I always found interesting was DeBeers' strategy to create stability in the marketplace. They wanted stable demand and stable prices. This held true in both their natural and industrial diamond business. That started to change in industrial diamond with new competition from Asia forcing prices lower.

It now seems DeBeers is dealing with the same problem on the other side of their business.