investiledysfunction

In this day and age (saying that makes me seem old, eh?) of Second Life, avatars, the Sims, networked video games, etc, being actively involved in a virtual world is pretty common (or at least more common than it was 5 years ago). Sometimes, the virtual worlds are pretty exciting relative to the humdrum real world we live in and so we get enthralled/lost in these alter-worlds.

But let us remember one of the pitfalls of such worlds is that the friends and assets we accumulate in these pixelated alter-worlds can all go away if someone decides to turn the servers off. And at those times, we’re smacked with the reality that there is a reality and we just might have to deal with real people and not the idealized avatars that we interact with on the computer.

So where am I going with this? Well, it looks like the servers just went off in one of these virtual worlds and the denizens of this happy place are fighting mad. This group of folks (real ones) is upset with Disney for shuttering their Virtual Disneyland which Disney killed this past Wednesday. Basically, this online version of the theme park let people create avatars and explore the parks various attractions and given that there is a hardcore Disney follower demographic, a group of diehards started coming to the site and spending hours touring the virtual destination, accumulating points to buy virtual items, interacting with fellow diehards, etc.

Disney which built the site to commemorate the 50th anniversary of Disneyland contends the free site was never going to be around forever. And this makes sense. Disneyland cannot offer free services because people really like it. By contrast, Disney’s Club Penguin or Disney Fairies virtual worlds charge or plan to charge because there has to be a business model behind these types of ventures. Yes, it is the sad economic reality that we’re faced with in the real world.

And so my points (you still with me?) are two-fold. Disney made the right call and the people who are enamored with the free VirtualDisney probably just need to get over it. Free rarely lasts because someone has to pay for it.

This speaks to a bigger issue with lots of businesses being created today in what seems to be Bubble2.0. If your business is predicated on social networking, crowdsourcing and advertising leveraging web2.0 or some equally nebulous nonsesne, there is no real economic model behind it, and I suspect there maybe some problems no matter what people/venture capitalists maybe telling you. Yes, some of these cool tools and services will get bought by someone but the vast majority are likely to go the way of VirtualDisneyLand.

I hate to poke fun at my alma mater Wharton or its professors because in all honesty, they’re generally pretty tremendous.  But sometimes, I read something that is just so inane (and it happens to be from some folks at Wharton) that I have to mention it.

The latest issue of Knowledge @ Wharton has an article entitled “The Hard Sell: How to Sell Products That Are No Longer Popular” which talks about strategies to sell products like condos in Miami, SUVs, foods with trans fat, etc.  Pretty interesting idea I thought and so I dove in to get me some education.

And then I read the following quote by Wharton professor John Zhang, “From the individual marketer’s point of view, there are times you feel selling something is impossible. But if you think more about it, there are so many different kinds of customers out there. You just need to find them.”

In the same article, Wharton marketing professor Leonard Lodish states that in such situations marketers need to think seriously about adjusting their price until the market corrects. “At some price, [developers] will sell all those condos in Miami,” says Lodish. Pricing is a critical element of successful marketing, in good times and in bad, he adds, and many companies do not focus enough on getting their pricing right. 

Let me get this straight.  I have something to sell.  For me to do that, I have to find customers who want it, and I have to price it appropriately.  Are you serious?  I never thought of that. 

Overall, the article is a bit too marketing 101.  Although I don’t think you even need a marketing course to know that you should find your customers and offer your product at the right price if you want to be successful. 

I’m a fan of straight talk as those who’ve read my blog know because there is a lack of it in the business world today as people tend to talk in euphimisms, jargon and platitudes all too often.

But there is a limit.  This weekend’s Wall Street Journal has an article Dov Charney and his company, American Apparel’s, growing pains.  (article available with password but a blog entry on WSJ is here)

Charney has built a very successful clothing company on the back of savvy marketing and merchandising but Charney who finds himself now the CEO of a publicly traded company probably should rein it in a bit.  He commented in an interview March 20 about his Chief Financial Officer, Ken Cieply, that Cieply “has no credibility” in the retail apparel industry and is a “complete loser.”  This probably is not a major morale booster for Cieply and also probably not smart for Charney to air American Apparel’s dirty laundry (pun intended).   

From the patently absurd file, it was reported that “Federal employees charged millions of dollars for Internet dating, tailor-made suits, lingerie, lavish dinners and other questionable expenses to their government credit cards over a 15-month period” according to congressional auditors.  Lingerie and online dating charges by federal employees.  Quite a stimulus package, eh?

The article from the Associate Press goes onto highlight that “The review of card spending at more than a dozen departments from 2005 to 2006 found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure — either because they were not properly authorized or they had not been signed for by an independent third party as called for in federal rules to deter fraud.”

Because I’m somewhat of a math genius, I determined that 41% of $14 Billion is a big freaking number.  $5.74 billion to be exact.  So I can understand if a dinner or two goes unauthorized, but how do you let $5.74 Billion go by without authorization.

In the private sector, people’s heads roll for screw ups much smaller than this.  The government needs a serious overhaul of its resource allocation practices because this type of stuff is pretty unacceptable.

The 57 page report issued by the audit committee went on to say “”This audit demonstrates that continued vigilance over purchase card use is necessary.”  You really think so?

The full article contains some examples of the fraud that has occurred by government employees.  Check them out.  They’re so egregious it’s almost amusing.

Today’s Wall Street Journal had a blurb from their Business Tech Blog about Ramon Baez who has started a campaign against jargon within the company.  Wow - this is a seemingly simple thing but something a lot of organizations with their own language, e.g., finance, IT, etc fail to do.

The blog posting which I’ve included below almost in its entirety is refreshing because of Baez’s outlook.

Baez has tried to eradicate tech speak and acronyms since joining the consumer-goods giant a little over a year ago. He’s starting with the emails that the information-technology department sends out whenever it has to make changes to a system. You probably know these messages: They’re the ones that make your eyes glaze over for the three seconds it takes to find the delete button.

Baez tells the Business Technology Blog that these emails used to say things like the TFPS server will be unavailable on Saturday. “Even I don’t know what that is,” Baez says, adding that the information is useless unless it’s clear to people what a system does. When Baez sought out the source of the email, he found it was sent by the team that manages that server in India.

In order to make sure that his staff is sending out messages with information people can use, he’s brought in communications staffers to vet each outbound email. And he insists that the emails make it clear who a message is intended for, with language like “if you use this system please read on.” That way, people who don’t use it can delete the message immediately.

Baez also made sure he solved one other consequence of the dreaded email from IT: Tech staffers must coordinate maintenance schedules with the rest of the business. That way, no one will time a network upgrade for the one weekend when everybody has to work.

This last point is so incredibly key.  How many times have I seen or experienced tech taking a system down because they had to with little no thought to the business needs for that system?  With all of the talk of governance and the business value of IT and other rambling nonsense, it’s nice to see a CIO who realizes that it can be simple things that can make a difference.  And doing these basic little things can build a great deal of credibility with the rest of the organization.

I’d previously written about Aberdeen and their “paid research” model which the Wall Street Journal slammed several months ago.  Now we can add HP and the Gantry Group to the list of those churning out useless research. 

In this blog posting entitled, “ROI Study: Project Portfolio Management Yields Results“, Michael Krigsman writes, “Project portfolio management (PPM) software is receiving growing attention from CIOs. Riding this wave, HP sponsored The Gantry Group to analyze key ROI measures for PPM software. Although the results are somewhat coupled specifically to HP PPM Center software, the research is useful to anyone studying the PPM category.”

Why on earth would this research useful or believable at all?  Let’s explore the logic that goes into sanctioning such research with top-secret transcripts that have been uncovered by the Brilliont team of conversations between HP and the Gantry Group.

HP:  Hi Gantry Group.  We need you to do some research about how Project Portfolio Management yields ROI.

Gantry:  Sure.  We’d be happy to do that.  We are known for our best-in-class, paradigm shifting, web2.0, eco-friendly rigorous research reports which are always 100% objective (wink wink)

HP:  Yes we know.  That is why we’d like you to do this analysis.  We will pay you a great deal of money once the findings are revealed and reveal the impacts of PPM.

Gantry:  We look forward to receiving the large check and you can rest assured that our findings and its potential impacts on future business will not be influenced by this at all (wink wink)

Give me a break.  Are we all that dumb or do you just think we are?  If anyone believes this type of research, I have some real estate in Phoenix which I’ve just released a research report on which confirms it will go up 20% per year indefinitely for the next 30 years.  Please email me if you are interested in purchasing this property from me.

So are we in a recession? Or aren’t we? Who knows? Economists have a different view, and despite a track record as good as your local weatherman, we still listen to them for some reason.

But now a whole host are coming out with their wisdom after the fact not adding much to the dialogue but somehow their “insights” get picked up by the media. The first one is Lakshman Achuthan.  Achuthan is the managing director of the Economic Cycle Research Institute and feels the Fed didn’t act quickly enough when it begn cutting key interest rates last fall. The economic stimulus package also came too late, he said. (article link)

“If they had done all this in the fourth quarter … we might not have had a Bear,” he said in reference to investment bank Bear Stearns which collapsed last week.

“I think we’d be having a different discussion,” Achuthan said.

Achuthan pointed to the end of 2007, when inventories were low, as the time to act. A boost to the economy then would have spurred consumer spending and resulted in increased productivity, he said.

“There was an opportunity that was wasted by policymakers because they didn’t understand those dynamics,” he told CNN.

Thanks Lakshman. Where were you about 15 months ago?

The other economist who is also crying is John Ryding of Bear Sterns economics squad. In a note issues last Thursday, Ryding and team suggest “that the failure of the Federal Reserve between 2003 and 2006 to adequately raise the federal-funds rate to a more normalized level in part contributed to the downturn the market is experiencing - and by extension, the collapse of Bear Sterns.” (quote from 3/22/08 Wall Street Journal)

While I understand that it  must suck to be a Bear Sterns employee these days, I doubt Mr Ryding was arguing too much with the Fed’s actions when money was cheap and Bear Sterns stock price was above $100.

Being a Monday morning quarterback sure is easy, ain’t it?

So everyone knows that Al Gore invented the Internet, right?  Well, if you didn’t know that, now you know.

But not to be outdone, AOL wants you to know they’re the trailblazing pioneers in another technology movement.  With their recent acquisition of Bebo, a social networking site, AOL is stepping into the latest web2.0, paradigm shifting, synergistic space.  But don’t think they are new to the space.  AOL chief Randy Falco states, “Social networking was really invented here at AOL.  We let it get away from us.”  So now you know who to thank for the countless hours you’ve spent on Facebook, LinkedIn, MySpace or Friendster (for those who remember this has been).

It just got away from them.  I like that.  Thanks for social networking AOL.  We owe you.