Risk unmanaged is risk exacerbated
I am among those who find a wealth of excellent advice every time I pick up my copy of The Art of War and re-read a passage or two in any of its 13 chapters. (FYI, Samuel B. Griffin translated the edition I prefer, published in a paperbound by Oxford University Press.) As I began to read Surviving and Thriving in Uncertainty, I recalled several insights that perhaps, just perhaps, Frederick Funston and Stephen Wagner may have had in mind while writing their book: every battle is won or lost before it is fought, all warfare is based on deception, and five constant factors govern the art of war, to be assessed when determining the conditions in the field. They are The Moral Law (leaders and followers have values and goals in alignment), Heaven (physical environment: night and day, cold and heat, times and seasons), Earth (distances, strategic positions, terrain), The Commander (virtues of wisdom, sincerity, benevolence, courage, strictness), Method and Discipline (readiness, organization of forces and resources, agility and resilience). These are the essential components of what is generally regarded as traditional, indeed “classical” strategic thinking about potential risks and how best to manage them.
I suggest you keep these components in mind as Funston and Wagner first explain why and how risks become “brutal realities,” how to survive and thrive by making correct judgments, why conventional risk management has failed, and why an unconventional approach to risk management is needed, especially “under risky, uncertain, and turbulent conditions.” For Part Two, they devised a very clever format within which to present their material: In each of Chapters 4-13, they juxtapose a “fatal flaw” in risk intelligence thinking (e.g. failing to challenge assumptions, shirt-termism, lack of operational discipline) with a skill needed to avoid or overcome that flaw. To their substantial credit, they focus almost all of their attention on the nature and potential extent of the given flaw and explain how to develop the skills needed to avoid of overcome it.
Funston and Wagner also include dozens of “Voice of Experience” mini-commentaries relevant to the given context. Other reader-friendly devices include checklists of key points (e.g. “Ten Essential Risk Intelligence Skills” and “The Rewards of Risk Intelligence”), Exhibits (e.g. organizational and performing characteristics of “Tightly vs. Loosely Coupled Organizations”), and a “Questions to Ask about [a core concept”]” section at the conclusion of Chapters 4-13.
Risk cannot be managed until it is recognized within its context, its frame-of-reference. Moreover, its implications and possible (if not probable) consequences must also be fully understood, then prepared for with meticulous care. Sun Tzu would urge today’s C-level executives to make certain that their organizations have a cohesive, comprehensive, and cost-effective program in place that addresses contingency planning, risk management, and crisis response…one that fully accommodates factors such as those previously identified. Frederick Funston and Stephen Wagner present and explain such a program in this book.
Adam Bryant conducts interviews of senior-level executives that appear in his “Corner Office” column each week in the SundayBusiness section of The New York Times. Here are a few insights provided during an interview of Peter Löscher, president and C.E.O. of Siemens A.G. who was reappointed to a five-year term last week.
To read the complete interview as well as Bryant’s interviews of other executives, please click here.
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The Trust That Makes a Team Click
Bryant: Do you remember the first time you were in a leadership position?
Löscher: I was captain of the volleyball team in high school and then in college.
Bryant: And did that role come pretty naturally to you?
Löscher: Yes. It came naturally because, at the end of the day, it’s about fostering the best performance from the people on the team. It’s less a question of how you train and your physical conditioning. The difference between a good team and a great team is usually mind-set. When you watch great games in sports, you see there’s a moment, all of a sudden, when the team clicks. It’s something that’s always caught my attention — why and how that happens with teams.
Bryant: And how do you make those moments happen?
Löscher: When you’re in business, I think the underlying principle is trust. How do you establish within a team a blind trust so that each person plays for the other? Business is about lining up a leadership team or a group of people and you rally them behind a cause or a certain direction. But the underlying strength is the trust within the team — so that you actually are no longer just playing individually at your best, but you’re also trying to understand what you can do to make the team better. And for me a defining moment in this regard was when I arrived for the first time in the United States, and had my first leadership role running a whole company.
Bryant: Tell me more about that.
Löscher: It was an agricultural group, and I had the responsibility to lead a team that stretched from Mexico to Canada. There were three different entities but one leadership team. So all of a sudden I find myself in cultural situations where I start to recognize that even though two people are speaking English, there’s a distinct cultural difference. So the challenge was how to lead a diverse team, and this was always one of my interests.
My forefathers are from Italy, my parents are Austrian, my wife is Spanish, two of our children are American and the third is Spanish, so I have the United Nations at home. You have to adapt to a diverse environment and appreciate the diversity.
My career has allowed me to hone this skill. I’ve worked in Asia. I’ve worked in Europe. I’ve worked in the U.S. When you start to run a global business you must appreciate the different environments you’re operating in and then try to combine them. When I arrived at Siemens, the global leadership team was mostly Germans with a certain cultural background, with a certain experience. Now we have a much more diverse team. The last thing you want as a leader is to have clones of yourself.
Bryant: Any other lessons learned from starting so many new jobs as you’ve moved around?
Löscher: The most important thing is, when you arrive somewhere new, that you come in without a preset agenda. I didn’t join Siemens with a leadership team in mind. I’m just the 12th C.E.O. in the history of the company, which was founded in 1847. So the culture of the company was actually formed over a long period of time, through longevity of leadership. So for me the important thing was to come in and say Siemens doesn’t need a revolution. We will go for an evolution but with speed, speed, speed.
And I said I need 100 days. Obviously the first expectations are: What are the first decisions? What will he do? I said I need 100 days because I want to talk to as many people as possible, and go around the world so that I really understand what is on people’s minds, what the issues are. I went from China to India to Japan to Brazil to the U.S. Slowly but surely the agenda was formed, and then you move forward, and you work closely with your leadership team and all the changes that we have initiated.
And then I went through a complete assessment program for the top 100 positions. We benchmarked everybody against outside candidates, and it was a totally open process. You have to think about how you develop an agenda together with your team, and how you build trust. And one element of building trust is transparency.
Bryant: You did this benchmarking assessment, but certainly chemistry with you is part of it, too.
Löscher: Absolutely. This was very important. At the end of the day, there must be chemistry, there must be a sense that this is the team that I want to create, with people who believe in its totality. Because you can have a great team of superstars, but it’s by no means certain that they will actually be a great team.
Bryant: How do you hire for key leadership positions in your organization?
Löscher: The most important thing is to look for diversity in your career path. I will look for passion, because I think that’s a very important element.
Bryant: And how do you get at that?
Löscher: How do you describe your successes, and what is important to you as a leader? I would try to understand your values, your learning experiences, why you have done what you’ve done. Our company does business in 190 countries, so you need to have diversity of experience. I put a lot of value on this. And have you demonstrated team impact, or do you want to talk about yourself? Because at the end of the day this is what really makes a difference — you will be put into a situation where you have to convince people, you have to build trust, and you have to rally people around you. So you must be able to foster very solid and robust discussions to understand what the options are, the reasons for different decisions, and you must be able to draw this out of the team.
Bryant: What about the culture you’re trying to create?
Löscher: When you talk about leadership culture, I very much try to implement an execution culture. Think about how the world is changing — I think the speed of change has massively accelerated versus what it was 10 years ago, 20 years ago, in all aspects. So there’s speed of change, and the world is also far more connected, and this has a massive impact in terms of how you lead. You can no longer rely on hierarchical structures.
For me it’s very important to have an execution culture in place because it’s not about the brilliance of strategy. In rare instances, a company will do something totally different and build a completely new class of products. Otherwise you are really in a broad-based competitive environment, and therefore you must have an execution culture. And you have to recognize as a leader that you also make mistakes. I’m always telling people, “Look, I make a mistake every day, but hopefully I’m not making the same mistake twice.” If you think that you’re not making mistakes then you are not making the tough decisions that you should make as a leader.
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Adam Bryant, deputy national editor of The New York Times, oversees coverage of education issues, military affairs, law, and works with reporters in many of the Times‘ domestic bureaus. He also conducts interviews with CEOs and other leaders for Corner Office, a weekly feature in the SundayBusiness section and on nytimes.com that he started in March 2009. In his new book, The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed, (Times Books), he analyzes the broader lessons that emerge from his interviews with more than 70 leaders. To read an excerpt, please click here. To contact him, please click here.
Heidi Grant Halvorson, PhD, is a motivational psychologist, researcher, and consultant. She writes about the scientifically-tested strategies we can use to be more effective reaching our goals at work and in our personal lives. Her new book is Succeed: How We Can Reach Our Goals (Hudson Street Press). Heidi serves on the Board of Advisors to Columbia Business School’s Motivation Science Center. She is also the co-editor of the academic handbook, The Psychology of Goals, a regular contributor to the BBC World Service’s “Business Daily,” and an expert blogger for Harvard Business Review, Forbes, Fast Company, SmartBrief, Huffington Post and Psychology Today. Her website is www.heidigranthalvorson.com.
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Morris: Was there a turning point (if not an epiphany) in your life that set your career on the course you continue to follow? Please explain.
Halvorson: I started college, believe it or not, as a chemistry major. I’ve always loved science, probably because I have always wanted to solve mysteries like Sherlock Holmes, and science is essentially about problem-solving and figuring out what’s really going on beneath the surface.
I took a psychology class my junior year, just to fulfill a course requirement, and discovered that not only was it a science, but it was the best possible kind – a science about people, why they do the things they do, and how to change what they do for the better. What is more interesting than that? Or more useful? That course changed my life, and put me on a path to using the methods of science (testing, objectivity, etc.) in order to help people lead happier, more effective lives. Succeed is my attempt to take the scientific findings, and break them down into easy-to-implement steps (in plain English), so that people can find the solutions they need.
Morris: You have written countless articles and a few books in which you share what you have learned about human achievement. More specifically, about why people tend to blame their failures on the wrong reasons. For example?
Halvorson: There is a strong tendency, especially in the U.S. but in Western cultures more generally, to attribute our successes and failures to ability. And by that we usually mean some innate quality or aptitude. So you either win the DNA lottery and end up with lots of intelligence, or creativity, or willpower – and are therefore successful – or you don’t, and you fail.
This explanation is wrong in two very important ways. First, ability simply doesn’t work that way. No matter which ability you’re talking about – whether it’s intelligence, creativity, athletic prowess, conscientiousness, or self-control – research shows them to be profoundly malleable. In other words, no matter what you start with, what you end up with has everything to do with experience, learning, and effort. If you want to be smarter, you can get smarter. If you want to have more self-control, you can build your willpower “muscle.” But when we think of our abilities as fixed and innate, we give up on ourselves when we encounter difficultly, and resign ourselves to failure (“I guess I’m not just good at this sort of thing.”)
The second way in which this explanation is wrong is that no matter how much ability you have, successfully reaching a goal has everything to do the actions you take (or don’t take) along the way. Effort, strategy choice, help-seeking, mindset, motivation, confidence, planning, and monitoring of progress are the true keys to achievement, and they are much more powerful than “ability” or “aptitude” when it comes to predicting who will ultimately succeed. But until we start rejecting explanations like “I’m just not smart enough” or “I don’t have what it takes,” we won’t start looking in the right places for the real problems, and figuring out solutions.
Morris: Are there any “right” reasons to explain failure? Please explain.
Halvorson: Absolutely – we need to look to our actions, rather than our abilities. We need to think about the aspects of our performance that are under our direct control: the effort we put in, the strategies we used, the critical steps we may have neglected to take, whether or not we considered the obstacles to success and made plans for how to deal with them, etc. Succeed is, more than anything else, a guide to diagnosing where you went wrong, and putting you back on the right path.
Halvorson: You’re right, “success” is very subjective. In the book, I typically use it to mean reaching whatever goal you’ve set for yourself, so “success” will look very different from person to person depending on what they want out of life. There do, however, seem to be goals that are more likely than others to lead to lasting happiness and well-being, because they satisfy three universal human needs: relatedness, competence, and autonomy. In other words, pursuing goals that make us feel connected to others, help us to master skills and acquire knowledge, and allow us to engage in activities that reflect our personal values, will lead to the kind of life satisfaction that we can probably all agree constitutes “success.”
Morris: In Denial of Death, a book published two months after his death, Ernest Becker said physical death is inevitable but another form of death could be denied: that which occurs when we become wholly preoccupied with fulfilling others’ expectations of us. What do you think?
Halvorson: When we think about our goals in terms of seeking validation and approval from others (wanting to prove that we are smart, likable, and worthy – or what I call trying to “be good”), it has several very unfortunate consequences. First, it diminishes our interest and enjoyment, because we are too focused on the final performance rather than the process of getting there. We can’t savor the experience of the journey, because we are too worried about the destination.
It also increases the tendency to see our performance as a measure or reflection of our ability or self-worth. When things get difficult, it creates anxiety and withdrawal – two very powerful goal saboteurs. People who seek validation are more likely to give up on themselves too soon, and suffer from longer, deeper episodes of depression.
If instead, we look at our pursuits as opportunities to learn and develop – to seek growth, rather than validation – a very different pattern emerges. I call this kind of goal a “get better” goal, because it’s more about progress. It’s about getting smarter, rather than proving that you already are smart. When we frame our goals this way, studies show that we enjoy what we do more, feel less threatened by challenges, and persist longer when the going gets rougher. We are less concerned with making mistakes, and consequently we make fewer of them. We’re less likely to be anxious or depressed, and more likely to experience lasting well-being. Switching from the be good to the get better mindset is the subject of a full chapter in Succeed because it has been shown to have so many life-altering benefits.
Morris: You believe that there is a “science” of success. How so?
Halvorson: Absolutely! Success isn’t random or accidental – there are reliable principles involved, ones that have been uncovered through hundreds and hundreds of studies over the last 50+ years. We know a great deal about why some people reach their goals and others don’t – and why otherwise successful people still end up having goals that give them trouble.
We know which strategies work, and which ones don’t. And we know why some intuitions about success are spot on, and why others are dead wrong. It can be very difficult (actually, it’s impossible) to look at your own behavior objectively and figure out what you did right or wrong, but the picture becomes clearer when we step back and look large groups of people striving for the same goal. We can identify more easily the key elements that bring about success, and feel more confident that we’re on the right track.
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To read the complete interview, please click here.
Here’s a recent post by the folks the Drucker Exchange (the Dx) that hosts an ongoing conversation about bettering society through effective management and responsible leadership. It is produced by the Drucker Institute, a think tank and action tank based at Claremont Graduate University that was established to advance and build on the ideas and ideals of Peter F. Drucker (1909-2005), “the father of modern management.”
“The Dx was first published as Drucker Apps in 2009 (see Dx archives). Renamed and reconfigured in October 2010, the Dx is now designed to stimulate a discussion of current events that is illuminated by Peter Drucker’s timeless teachings. It is a blog for people who want to get informed, involved and inspired to convert ideas into action.”
In several dozen previous posts, I’ve shared a wide variety of opinions about what innovation and creativity are and do. Once again as is generally the case, Peter Drucker was at least 15-20 years ahead of his time, providing the “shoulders” to which a 12th century French monk, Bernard of Chartres, once referred and on which so many prominent business thinkers now stand. In the article that follows, the focus is on Mozart but — once again — through the prism of Drucker’s original insights.
To check out the wealth of resources and sign up for email alerts, please click here.
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“They showed no corrections of any kind. Not one. He had simply written down music already finished in his head.” This line, from the film version of Amadeus, is how mediocre composer Antonio Salieri describes a musical score by Wolfgang Amadeus Mozart. In real life,
Mozart’s work had plenty of false starts. Nevertheless, the idea of creativity being nearly heaven-sent is a persistent one across many fields. The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators, a new book by professors Jeff Dyer of Brigham Young University, Hal Gregersen of INSEAD and Harvard’s Clayton Christensen, offers a heftily-researched look at how innovation and creativity work. “Becoming a more innovative thinker takes patience and hard work,” explains an article about the book on CNNMoney. “Groundbreaking ideas, even those that look like bolts from the blue, usually come from painstaking preparation.”
This was a concept that Peter Drucker frequently emphasized, most prominently in his 1985 classic Innovation and Entrepreneurship.
Companies that innovate successfully don’t view inspiration as mysterious and elusive—or get caught “waiting around,” as Drucker put it, “for the muse to kiss you.”
“They view it as the result of concerted effort and sound processes. “Most of creativity is just hard and systematic work,” Drucker told an interviewer in 2000. “Innovation has to have a systematic approach.”
That approach doesn’t even have to be fleet-footed. “While others rush around in the frenzy and busyness which very bright people so often confuse with ‘creativity,’ the plodder puts one foot in front of the other and gets there first,” Drucker wrote in The Effective Executive.
Drucker ultimately identified a very particular course for the plodder to travel by spelling out seven specific sources of innovative opportunity.
“The line between these seven source areas . . . are blurred, and there is considerable overlap between them,” Drucker wrote. “They can be likened to seven windows, each on a different side of the same building.” They are:
Unexpected events (successes or failures)
Incongruities (or the difference between what is and what everybody assumes something to be)
Process needs (where you perfect a process that already exists or replace a link that is weak)
Disruptions in industry or market structure
Changes in perception
New knowledge (both scientific and nonscientific)
For those who are relatively unfamiliar with Peter Drucker’s work, I highly recommend The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, published by Harper (2008). t is available in a softbound edition and for sale by Amazon for only $11.42
When I present one of my book synopsis presentations, I like to read some of the key quotes from the book and then ask folks to “turn to the person next to you and tell them which quote most resonated with you.” It always sparks some lively and useful conversations.
Here’s the next step – the takeaway for you whenever you read a book. Ask yourself:
“what have I read that resonates with me – with my situation, at work, especially at this time?”
Now, ask yourself this question:
“So, what am I going to do about this?”
When you get the answer to this question, then you can begin implementing what you have learned from reading your book.
In other words, understand – get clear! – and then, do!
In other words, the world belongs to those who understand, and then execute!
For those who never execute – it’s all just wishful thinking…
I recently had lunch with a top-notch business consultant – you know, the kind who has the ability to listen well, diagnose really well, and then prescribe the next steps for the company to go forward.
Like many such good consultants, he meets with the executive team, in a series of sessions, helping them come up with the best way forward. In the midst of our conversation, he said this:
“Every time I take a company through the steps of the process, somebody has to leave.”
Whoa… that was enough to get my attention. But, it should not come as a surprise. Getting the right people, and the right mix of people, on the team is beyond critical. Get this right, and many future possibilities become even more possible. Get this wrong, and the whole enterprise is in jeopardy.
Oh, and by the way, the right team today, made up of the same people tomorrow, may no longer be the right team tomorrow. Each team member has to keep growing, developing, stretching, to ensure that tomorrow’s team is as healthy as today’s team. Today’s critically important person may turn into tomorrow’s downfall. So, this process is constant, and ongoing.
You’ve read the books, and they all say the same thing. “Get the right people on the bus…,” and all that.
But making a change with such a key person on the top team – “getting rid of someone” – can be excruciatingly painful, and difficult. (But, keeping that person who is simply no longer right for this team, now, can be every bit as painful and difficult – maybe more so).
Or, in other words, leadership requires some tough, difficult decisions. That’s why good leaders are so rare.
So – back to the title of this article: “Who do you need to get rid of?”
And, here’s a bothersome footnote. Say you are the ”top leader” of the team. What if you are the person you need to get rid of? What then?
Here’s my answer – call me, and I’ll give you the name of a really good, gutsy business consultant. He’s dealt with this a time or two…
All Business is Experienced on a Personal Level — An Important Reminder from Joseph Michelli, Prescription For Excellence
I don’t think it’s personal, Dana.
Oh it is personal, Jeremy.
(A scene from Sports Night – How Are Things in Glocca Mora, when Pete Sampras allowed an unknown to take him to five sets – thus delaying the airing of Sports Night)
Here’s the lesson. There is no business encounter, no business transaction, that the customer does not take personally. Thus, a company must view each business encounter, each business transaction, as a personal encounter.
In other words, humanize each and every business encounter and transaction.
I’m reading Prescription for Excellence: Leadership Lessons for Creating a World Class Customer Experience from UCLA Health System by Joseph Michelli for next Friday’s First Friday Book Synopsis. It’s good. (Bob Morris says it is Michelli’s best book – read his review here).
In the book, Michelli states:
It can be argued that certain business transactions, such as fueling your car or buying a product online, are impersonal. By contrast, businesses like childcare and healthcare are high-touch industries.. In healthcare, personal connections obviously matter, and the ability of staff members to create authentic caring relationships leads to success. However, even in businesses where service seems secondary to product, strong customer connections drive brand differentiation and other positive business outcomes.
In other words, all business encounters are taken, and experienced, personally.
So — how are you doing?
Samuel Augustus Maverick (1803-70) was a wealthy land speculator in southwest Texas who cared little about cattle. When someone repaid a debt with 400 head of cattle rather than cash, Maverick’s caretakers allowed them to wander unbranded. Over time, locals who saw unbranded cattle would say, “Those are Maverick’s” - and a term was born that today refers to politicians, entrepreneurs, and innovators who refuse to run with the herd.
The need for branding cattle obviously differs substantially from the need to brand a product or service. However, both initiatives involve increasing and enhancing visibility as well as legal ownership.
I am grateful to Roxanne McAnn for calling my attention to a series of articles featured by the BusinessInsuranceQuotes website.
This is one of several well-worth checking out. What follows is an excerpt. To read the complete article, please click here.
As you read the brief discussions of each of ten brands, note what all share in common other than sustainable power. Then please share your own thoughts. I deeply regret that so few people leave comments.
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You might have more in common with your great-grandparents than that receding hairline or cleft chin; some of your favorite brands might have been used by your predecessors, even as early as the Civil War. And while your elders may not be transitioning into the digital age with ease (or at all), several of America’s oldest brands have thrived through multiple technology changes. Here are 10 well known brands that appear a lot younger than they are.
It’s probably not surprising that alcohol is as in demand today as ever. But Jim Beam, the familiar brand of bourbon whiskey, has maintained success as one of the top sellers of whiskey since 1795 and is one of the oldest American liquor brands. Though it faced a little hiccup during Prohibition, it picked up where it left off after the big ban ended and now produces several variations of Jim Beam whiskey. Its recent marketing campaigns have brought the brand into the digital age, with a focus on music and sports by pairing with Kid Rock and ESPN, creating a series of webisodes for the latter. They are also now sponsoring a concert series featuring several well-known bands and musicians. This isn’t the first time Jim Beam has focused on music, though. In the early ’90s, they held a talent contest. The winning duo: Montgomery Gentry, a band that has since been nominated for Grammy Awards and played for millions of fans.
Colgate started out making soaps in 1806 and has been making toothpaste since 1873. In fact, Colgate was the producer of the first toothpaste in a tube, creating the eternal debate between spouses over whether the tube should be squeezed from the bottom or middle. As a company, Colgate joined forces with Palmolive in 1928, but they maintained the popularity of Colgate Toothpaste. This may be due in part to Colgate’s competition with Procter & Gamble’s Crest Toothpaste starting in 1955, and the two are therefore pushed to be on the cutting edge of marketing. For example, both sponsored soap operas when TV was first gaining popularity, and they each are on top of the latest trends in oral care, such as whitening and gum care. Colgate, though, ingeniously repositioned its brand when dentists were recommending that people brush three times a day. Knowing that most people wouldn’t follow that recommendation, Colgate Toothpaste promoted itself as “The toothpaste for people who can only brush twice a day,” giving it an edge over competition that were presumably for the thrice-a-day brushers.
Since Brooks Brothers first started in 1818, — which makes it the oldest clothing store in the U.S. — it has seen a lot of competitors rise and fall. Created as a men’s clothing store in New York, Brooks Brothers now makes women’s, boy’s, and girl’s clothes and has stores all over the world. In the mid-1900s, the company stayed modern by providing ready-to-wear, traditional suits during a time when men wore suits almost every day. Today the company has maintained its popularity by catering to executives, politicians, and movie stars. By creating an elite image, Brooks Brothers remains in the public eye, worn by actors on the big and small screen. Some of these include George Clooney, Matt Damon, and Will Smith. President Barack Obama even wore Brooks Brothers accessories at his inauguration, further cementing the company’s place in modern American life.
When it comes to branding, Tiffany & Co. may be the best in the business. This famous jewelry store was started in 1837 by Charles Lewis Tiffany and has come to be known as one of the strongest brands in the world. The company helped refine some of the traditions that go along with engagement and marriage, which has enabled it to keep its hold on the hearts of the country, or at least the women’s hearts. In 1886, before diamonds were the traditional choice for an engagement ring, Tiffany created the Tiffany Setting diamond engagement ring, one diamond in a six-prong setting, the first of its kind. It became an iconic ring that many women dream of receiving from their boyfriends, even today. The trademark Tiffany Blue also became a symbol of exclusivity; you can only get the robin’s egg blue box with a purchase. Tie that in with the hit movie Breakfast at Tiffany’s and the status of Audrey Hepburn as a timeless style icon, and Tiffany & Co. can’t be shaken, even in a recession.
I have never been on board with electronic books. I am not excited about any of the devices such as Kindle, Nook, or iPads. I like a book. I like to hold it, carry it, display it, and engage in conversations about it when others see what I am reading.
I thought it was interesting in the Wall Street Journal on May 9, 2011, when Penguin Books CEO John Makinson claimed there is still a future for physical books. The article is entitled “Penguin CEO Adjusts to E-Books but Sees Room for the Old” (p. B9). The link to the full article appears below, authored by Jeffrey A. Trachtenberg.
Notice that he says that physical books will always be published. “As we add value to the physical product, particularly the trade paperback and hardcover, the consumer will pay a little more for the better experience. I looked the other day into the sales of public-domain classics in 2009, when all those books were available for free. What I found was that our sales had risen by 30% that year. The reason is that we were starting to sell hardcover editions—more expensive editions—that people were prepared to pay for. There will always be a market for physical books, just as I think there will always be bookstores.”
And, even with the closing of Borders’ bookstores, he finds a strong future for such retail outlets. “There is a future in book retailing. A lot of the issue is not just that there are too many bookstores, but that they are too big. How do you diversify the offerings to consumers in order to make productive use of space without losing the experience of being in a bookstore?”
Finally, as I have stressed in other posts on this blog, there is a strong emotional link that book owners experience that goes beyond mere content. Makinson notes that “When you look at the structural competitive advantages Amazon.com has over any physical bookstore, it is overwhelming. But people will willingly pay a higher price in an independent bookshop knowing they can buy [the same book] for less down the road. That’s because consumers feel an emotional engagement with the bookstore and feel that bookstores are providing a public service as well as a commercial service. I see no evidence that independent bookstores will become obsolete.”
I am excited and energized by the fact that a leading, credible authority in the business remains in the physical book arena. While he reads manuscripts in digital devices, he reads physical books as well.
What do you think? Let’s discuss this really soon!