BrandToBeDetermined

Variable Pay and the Tournament Theory of Economics

Differentiation is something we talk about a lot. Yet there are subtleties that as a leader are very hard for me to wrap my brain around. On Differentiation Welch says:

“I just don’t like quotas in the boardroom or in the office.  Winning companies are meritocracies.  They practice differentiation, making a clear distinction between top, middle and bottom performers.  This system is candid and fair, and it’s the most effective way for an organization to field the best team.” – Jack Welch, Winning, Pg 346

I tend to agree with that statement. Yet the word "meritocracies" even with the given Rand overtones leads us to believe people are paid fairly for the work they do. That just sounds right, doesn't it? Pay people fairly for the work they do. ?

But economics suggests otherwise. Specifically the tournament theory of economics. In the Forbes article Why Your Boss is Overpaid Tim Harford explains:

The ugly truth is that your boss is probably overpaid--and it's for your benefit, not his. Why? It might be because he isn't being paid for the work he does but, rather, to inspire you. In other words, we work our socks off in underpaying jobs in the hope that one day we'll win the rat race and become overpaid fat cats ourselves. Economists call this "tournament theory."

Or to have it explained by an economist, because that always clears things up, we have:

This explanation of wage differences in terms of relative performance is often called tournament theory. One place where this explanation should work is in contests with winners and losers. For example, consider two almost equally able gladiators fighting in the arena of ancient Rome. Small differences in ability (or luck) could result in a huge difference in reward--one could die and the other live.

Though gladiators are no longer part of our world, there are still cases in which winners matters a lot, and as a result, small differences in ability (or luck) can cause large differences in reward. The sports world has many examples.

Having started the company on 7k, for years I made sure I demonstrated the "boot strap" nature of business. I lived in a small house. Drove a civic. I am not of the personality to discuss my latest golf vacation to big sur (I don't golf and I am not sure where big sur is, or if they have a golf course.) This works against me as a leader.

The theory goes that if you have a motivated employee. They believe in the company. They like what they are doing. And they look at the managers and the CEO and see them living below their means, driving sensible cars, that in fact this hurts the company. Good people will leave because they do not see the just rewards of the tournament.

The Time It Takes to Build a Brand

Newer brands are more newsworthy. This is great for PR.

But conflictingly it takes “10 years to build a brand”. This comes from two sources. And of course there is a creative tension between these objectives.

1. News is by definition bringing you NEW information. Hence news. So it is more likely the paper will write a story about the somewhat controversial Dr. Sketchy’s than it is the Art and Social establishment that hosts it and has been around for 10 years! New is just cooler in America. Young is better than old. Etc.
   
   1. “While a new brand name is a liability in an advertising program, it’s an asset in a PR program. A new brand name tells the media that the product or service is new and different. Exactly what the media wants to write and talk about.”- pg 257 Ries and Rise in The Fall of Advertising and the Rise of PR
2. Brands on the other hand take “10 years” to form in the mind of the consumer (Positioning, but these quotes are from “Rise of PR”)
   
   1. “The real barrier is the human mind. It normally takes decades to build a brand because it takes decades to penetrate the gray matter in between your ears.” - Pg 224
   2. “Successful brands get into the mind slowly. A blurb in a magazine. A mention in a newspaper. A comment from a friend. A display in a retail store. After a slow publicity buildup, people become convinced that they have known about the brand forever. – pg 228

The way I phrase it is an amalgamation of sources and comes out as

"it takes 10 years to form a brand in the mind of the consumer."

This is a depressing statistics for a marketer. But for every Google, there is a Wal-Mart that took decades to get off the ground, or Nike that took decades to get off the ground. Or the slow moving Red Bull that took forever to enter the US market but everyone thinks just appeared.

Wal-Mart,  Nike and Red Bull are the tortoises. It is helpful to remember that when building your brand strategy.

Friedman's NYT Op-Ed - worth a read

A must-read. From Friedman's Who Will Tell the People:

Our president’s latest energy initiative was to go to Saudi Arabia and beg King Abdullah to give us a little relief on gasoline prices. I guess there was some justice in that. When you, the president, after 9/11, tell the country to go shopping instead of buckling down to break our addiction to oil, it ends with you, the president, shopping the world for discount gasoline.

and continues

We need a president who is tough enough to tell the truth to the American people. Any one of the candidates can answer the Red Phone at 3 a.m. in the White House bedroom. I’m voting for the one who can talk straight to the American people on national TV — at 8 p.m. — from the White House East Room.

Who will tell the people? We are not who we think we are. We are living on borrowed time and borrowed dimes. We still have all the potential for greatness, but only if we get back to work on our country.

Completely worth your time to read it. Regardless of you politics, we can, likely, agree that the current situation is unacceptable.

Emergency Simulation - learning from exercises

  VIEW-MASTER: EMERGENCY 
  Originally uploaded by HoldThatTiger

Currently as I type this we are in the last few hours of our emergency simulation exercise for the second quarter. I do know that I have already learned a HUGE amount. Good and bad.

What is interesting about running exercises is how your adrenaline actually rises. And how obstacles you ignore for years become OBVIOUS. Which is the point of running an exercise I guess.

So will they complete by 5? Not sure yet.

I'll post a write up in a few days. It will  have great commentary on emergency simulations like

"telemarketers who call on unknown numbers keep beeping in and you can't tell if they are part of the simulation or not. So you have to answer. And it is very hard to keep your cool. This is compounded by the fact that they were calling on an IP phone from India and had no idea what I meant when I said "I am in an emergency simulation and can't talk right now!" (they called back three (3) times)

Guy Kawasaki at the Houston Technology Center

Guy and Walter
Originally uploaded by eschipul

Kudos to the team at the HTC!

Guy Kawasaki and Walter Ulrich enjoy the opening remarks before Guy's presentation at the Houston Technology Center in April 2008.

View the full album of Guy Kawasaki at the Houston Technology Center here.

Social Media Optimization presentation from PRSA SW District

From my talk on Friday at the Public Relations Society of America's SW District conference in Little Rock Arkansas.

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I did enjoy meeting a few folks in particular, although the whole group was awesome. But a definite twitter shoutout to some new public relations pros on twitter:

1. http://twitter.com/bonnieann
2. http://twitter.com/samsims/
3. http://twitter.com/margieJ11

and of course I am on twitter here causing the usual amounts of trouble time permitting.

People Imitate Their Leaders

Ah leadership, so much a balance. While reading Execution, the Discipline of Getting Things Done by Bossidy and Charan, I came across this excerpt about Dick Brown and EDS that explains a conversation I sometimes have with managers on our team.

Starting at the highest levels, Brown [Dick Brown, EDS CEO] created new ways to drive accountability and collaboration. In the monthly “performance call,” ….

The talk isn’t always about numbers. At one of the first meetings, Brown recalls, “one of the executives made the statement that he was worried about growing anxiety and unrest in his organization, worried about rapid and dramatic change. His people were asking, ‘Are we moving too fast, are we on the threshold of being reckless? Maybe we should slow down, take it easy, reflect a bit.’”

Brown turned the issue around – not incidentally, creating a forceful coaching lesson. “I jumped all over that. ‘This is a test of leadership,’ I said. ‘I would like anybody on this call who is really worried about where we are going and worried about the fact that we will probably fail, tell me so right now. Don’t be afraid to say you are. If you think we’re making a big mistake and heading for the reef, speak up now.’

“No one did. So I said, “If you’re not worried, where’s the worry coming from? I’m not worried, and you’re not worried. Here’s where it is: some of you say one thing, and your body language says another. You show me an organization that’s wringing its hands, listening to rumors, anxious about the future, and I will show you leadership that behaves the same way. People imitate their leaders.”

- Execution, pg 49

Of course the counter point is that Mr. Brown was ousted in 2003. But his words still ring true for me as a leader. And I added the emphasis.

PS - No, this is NOT aimed at anyone in particular, just an observation that YOU are the leader and are frequently the source of limitations.

PPS - In fact, with my concerns about the recession of 2008, you could even argue this behavior comes from me. So there is that to consider. But I don't think so much that is the case. Not so much.

Prediction: Ad Agencies will be Purchased by Web Marketing Firms

Ad agencies will be purchased by web marketing companies in the future.

Starting now. Position yourself for this.

Why? Well we know in a recession that advertising budgets and public relations budgets get slashed. Drastically reduced. From big ad budgets to nada asap.  Staples is one obvious example of cuts:

From the looks of things at Staples, the recession is upon us.

and

So, the Framingham retailer is trimming costs everywhere it can, reducing advertising, delaying new hires and renovations, curtailing employee travel, and saving gas with devices that limit the maximum speed of its delivery trucks.

See that first item on the list? Ya, that one? It is *advertising*.

Advertising is almost always the first thing to get slashed in a recession. You CAN live without advertising in hibernation mode. Should you cut your advertising budgets? Well, let's ask those in the business of advertising. The magic-eight-ball says about cutting advertising budgets in a recession.

Guy Kawasaki Coming to HTC April 24 2008

As seen on Chron.com  - Kawasaki is coming to Houston!

  guy kawasaki 
  Originally uploaded by eschipul

Guy Kawaski:  The Art of the Start
Guy Kawaski
Thu 24-Apr-08 6:30 PM to Thu 24-Apr-08 9:00 PM

Having seen Guy's panel at SXSW, he is an entertaining speaker with plenty of great content. I am looking forward to attending!

Note also this is an evening program. Hopefully we can walk over to a local restaurant after the talk.

Register to see Guy Kawasaki at HTC on the HoustonTech site (yes a Tendenci client - woot!)

Caroline Collective - The Early Days of CoWorking in Houston

  Caroline Collective Front Door 
  Originally uploaded by eschipul

I am super proud of @organ_printer and @kned for taking the plunge, and responsibility, of starting the Caroline Collective CoWorking Space. The CC is a coworking space being started in Houston. Right now Matt and Ned in the very early stages of signing the lease and working with the contractors. Currently the space is not inhabitable, yet already leaps to life.

Also a huge thanks to @Cosmopolitician for arranging a tour for @groovehouse, @imelda and me yesterday. And for doing the web site. And for promoting the Caroline Collective! I am pretty sure Monica doesn't sleep. So anyway, more on the CC:

From the Caroline Collective about page:

Combining the relaxed working environment of the home office with a dynamic
social atmosphere, Caroline Collective strives to positively impact the cultural landscape of Houston by fostering community, collaboration and creativity across all artistic and technological disciplines.

Coworking is both a global and unique to Houston phenomenon. As the global marketplace continues to free the worker from his/her physical location, more and more young professionals work as either “digital nomads” or as home-office based independents. Houston, as the preeminent global city is a the ideal location of the effect of market forces on the smallscale work-force. The coworking model encourages the free flow of projects and ideas and is founded on the belief that working together is working smarter.

This is exciting for the city of Houston!

It should also be mentioned that there is no doubt in my mind that Tara Hunt was instrumental in influencing the coworking movement both here and throughout the US. So thanks for the thought leadership Tara!

Regarding the economy of the United States on March 22, 2008

Regarding the economy of the United States on March 22, 2008.

I noticed that many people are reluctant, or "were" reluctant, to use the word recession as the economy spiraled down in 2007. Yet in my eyes the recession was late and it annoyed me when people denied it's arrival. Stockdale suggests we don't keep our head in the sand if we want to survive.

"Every good-to-great company embraced what we came to call the Stockdale Paradox: You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be."

- Good to Great, Jim Collins

The fact that the US economy is in a recession, and may go into a depression, isn't rocket science. It is common sense.

You have malaise at best in America. From that previous link ArabNews says:

The United States remains the sole superpower, but its dominance is challenged by an economic and cultural shift toward Asia and the impact of globalization, which Americans do not yet fully comprehend.

Add to that a few more items. Oh I don't know we can start with high energy prices. The debt and deficit growing. The irrational exuberance of the housing market dropping. Overdue. Baby boomers buying more meds on less money because they "spent their children's inheritance" (so sayeth bumber sticker wisdom). And bought condos in Florida they can't afford. A crazy unpopular war but no way out without breaking commitments to allies.

Happy St. Patrick's Day - so sayeth the muppets

Happy St. Patrick's Day y'all. And now from the muppets. Who knew Animal could be so sad.

Beware the Ides of March

"Beware the Ides of March" - the soothsayer said to Caesar

From Wikipedia on the Ides of March:

In the Roman calendar, the term ides was used for the 15th day of the months of March, May, July, and October, and the 13th day of the other 8 months.^[1].

In modern times, the term Ides of March (Latin Idus Martiae) is best known as the date that Julius Caesar was assassinated, in 44 BC, the story of which was famously retold in William Shakespeare's play Julius Caesar.^[2] The term has come to be used as a metaphor for impending doom.

photo from wikimedia commons - Vincenzo Camuccini (d. 1844), Mort de César, 1798

Erin, Rachel, Michaela and Beth - THANKS!

  Erin, Rachel, Michaela, Ed 
  Originally uploaded by eschipul

A huge thanks to our panelists from the SXSW "Pimp my non profit" panel.

A few other shout outs:

1. Thanks to the DC Netsquared chapter for the concept.
2. Thanks to Techsoup for starting Netsquared which is how I met these folks to begin with.
3. Thanks to Katie who's hard work made the panel possible.
4. Thanks to the approximately 300 people who attended our panel, asked questions and demonstrated the number of sxsw attendees interested in the topic!
5. Thanks to the people who voted and commented to help us get on the radar for non profits at SXSW!

Also - as noted on Beth's blog, here are a few other bloggers' take on the panel

Long Station
Patty in the Burbs
07G
Community Mobilization

SXSW Schedule Set - Pimp My Non Profit Panel Monday

  Senseable at Emerging Arts Fest 
  Originally uploaded by eschipul

Back late last night from ETech in San Diego. Just attending that one. Not big enough with the west coast glitterati to have a panel there. But yes yes, indeed we are rocking SXSW with the Pimp My Non Profit Panel!

Our panel is Monday from 5 to 6!

If you are attending SXSW and I am missing a great panel I should attend please DO let me know? This is my initial plan.

Association of Women in Communications Tulsa

  AWC Tulsa 
  Originally uploaded by eschipul

Enjoyed a fun social media presentation yesterday in Tulsa Oklahoma with the Association of Women in Communications.

Great hospitality in Oklahoma as always with a very fun and informed audience.

From the AWC Tulsa site:

The Tulsa Professional Chapter has a longstanding and strong presence in the community. The chapter is 150+ members strong, representing a variety of communications disciplines in Tulsa and surrounding areas.

Slideshares from the presentation follow.

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breaking the taboo on women smoking

  greta 
  Originally uploaded by eschipul

I love this photo from Dr. Sketchy's in Houston. And I realize this is a talented model playing a role. Yet it reminded me of a famous story from the history of public relations that few are aware of. Bernays was truly a double edged sword.

From the BBC article on Edward Bernays.

Bernays was one of the main architects of the modern techniques of mass-consumer persuasion, using every trick in the book, from celebrity endorsement and outrageous PR stunts, to eroticising the motorcar.

His most notorious coup was breaking the taboo on women smoking by persuading them that cigarettes were a symbol of independence and freedom. But Bernays was convinced that this was more than just a way of selling consumer goods. It was a new political idea of how to control the masses. By satisfying the inner irrational desires that his uncle had identified, people could be made happy and thus docile.

For more: http://en.wikipedia.org/wiki/Edward_Bernays

What Social Media Means for B2B Marketers

From my talk yesterday at the Business Marketing Association in Houston, here is the slide deck.

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Social Media for B2B Marketers Synopsis from the BMA site:

The buzz about "Social Media" in the marketing community is deafening, but what does the rapidly emerging trend mean for B2B marketers? Can YouTube, Facebook and Wikipedia really help you forge closer ties to business customers?

That's the subject Ed Schipul, CEO of Schipul - The Web Marketing Company, will tackle during our February 21st luncheon. Ed himself has a business-to-business blog, (www.brandtobedetermined.com) and is a leader of Houston 's vibrant Social Media subculture. His talk will examine examples of B2B marketing through Social Media -- including what his own experiences as a CEO blogger have taught him. The discussion will showcase best practices as well as examples that failed to have the intended result.
Please join us for an interesting and entertaining look inside this important issue.

Sir Ken Robinson on Creativity and Education

  Sir Ken Robinson 
  Originally uploaded by eschipul

I had the privilege of seeing Sir Ken Robinson talk at the UP Experience recently in Houston. I had never heard of him. Quickly it became apparent he was quite funny, and I don't think it was just the British accent. No, he has impeccable timing. But more importantly he highlights a few challenges we are facing in education.

One point he makes is that the kids entering school today are going to be retiring in 2065. And that NONE of us have any idea what the world will be like in 2065! So the education we are providing is intended to prepare people for a world that none of us have a clue what it will be like.

Another frame he makes is that education is a hierarchy and at the top are college professors. Yet professors are not what most of us would consider the height of human achievement. (yes this applies even if you have tenure.)

There is an option for us to return to educating humans for creativity. And from the video below Ken defines creativity as  "the process of having original ideas that have value".

If you have 20 minutes and are interested in creativity and education, please watch this talk by Ken at Ted.

Speaking Engagements for this Week

Three different speaking engagements this week. All in Houston for a change!

1. TSPRA (Monday)Web 2.0 Trends for Public Relations Professionals on Mon 18-Feb-08 11:00 AM
2. BMA (Thursday luncheon) What Social Media Means for B2B Marketers on Thu 21-Feb-08 11:30 AM
3. Sullivan Group (OTC Marketing seminar) OTC Marketing Seminar on Thu 21-Feb-08 2:00 PM

Also note that tomorrow night, Tuesday, is Refresh Houston with Stephen P. Andersen. The Force Behind Star Wars: Turning Design Ideas into Reality on Tue 19-Feb-08 6:30 PM