The Shock Doctrine, Naomi Klein and Milton Friedman

This troubling little film by Alfonso “Children of Men” Cuarón and Naomi Klein, and directed by Jonás Cuarón, brings the stark realities of disaster capitalism, or what Klein calls The Shock Doctrine.

Immediately following September 11, the Bush Administration outsources the running of the “War on Terror” to Halliburton and Blackwater.

After the tsunami wipes out the coasts of Southeast Asia, the beaches are auctioned off to tourist resorts.

New Orleans’s residents, scattered from Hurricane Katrina, discover that their public schools will never be reopened. Instead, following Friedman’s suggestion, the government replaced the school system with privately run charter schools.

Klein’s arguments make for compelling reading at The Guardian’s minisite or read the excerpts beginning here.

NYT, IHT stop charging, is WSJ next?

Finally, and its subsidiary, have given up the pay-model.

After much lobbying and railing from bloggers, the two-year TimesSelect is no more.

In addition to opening the entire site to all readers, The Times will also make available its archives from 1987 to the present without charge, as well as those from 1851 to 1922, which are in the public domain.

However, they state that there will be charges “for some material from the period 1923 to 1986, and some will be free.”

Oh drop it already.

NYT claims TimesSelect had “met expectations, drawing 227,000 paying subscribers — out of 787,000 over all — and generating about US$10 million a year in revenue.”

“But our projections for growth on that paid subscriber base were low, compared to the growth of online advertising,” said Vivian Schiller, senior vice president and general manager of

What changed, the company said, was that many more readers started coming to the site from search engines and links on other sites instead of coming directly to the site. These indirect readers, unable to get access to articles behind the pay wall and less likely to pay subscription fees than the more loyal direct users, were seen as opportunities for more page views and increased advertising revenue.

“What wasn’t anticipated was the explosion in how much of our traffic would be generated by Google, by Yahoo and some others,” Schiller said.

Schiller would not say how much increased Web traffic the paper expects by eliminating the charges, or how much additional ad revenue the move was expected to generate.

Colby Atwood, president of Borrell Associates, a media research firm, said that there have always been reasons to question the pay model for news sites, and that doubts have grown along with Web traffic and online ad revenue.

“The business model for advertising revenue, versus subscriber revenue, is so much more attractive,” he said. “The hybrid model has some potential, but in the long run, the advertising side will dominate.”

In addition, he said, The New York Times Company has been especially effective at using information it collects about its online readers to aim ads specifically to them, increasing their value to advertisers.

Many readers lamented their loss of access to the work of the 23 news and opinion columnists of The Times — as did some of the columnists themselves. Some of those writers have such ardent followings that even with access restricted, their work often appeared on the lists of the most e-mailed articles.

Experts say that opinion columns are unlikely to generate much ad revenue, but that they can drive a lot of reader traffic to other, more lucrative parts of The Times site, like topic pages devoted to health and technology.

The Wall Street Journal, published by Dow Jones & Company, is the only major newspaper in the country to charge for access to most of its Web site, which it began doing in 1996. The Journal has nearly one million paying online readers, generating about $65 million in revenue.

Dow Jones and the company that is about to take it over, the News Corporation, are discussing whether to continue that practice, according to people briefed on those talks. Rupert Murdoch, the News Corporation chairman, has talked of the possibility of making access to The Journal free online.

The Financial Times charges for access to selected material online, much as The New York Times and IHT have.

The Los Angeles Times tried that model in 2005, charging for access to its arts section, but quickly dropped it after experiencing a sharp decline in Web traffic.

It’s not the mountain, it’s the climb

From Soul Prints:

“It’s not the mountain, it’s the climb”

A true-life epic does not exhaust itself in grand finales or in what psychologist Abraham Maslow called peak experiences. It arises from the details of daily living. Most of life, after all, is a plateau and not a peak.

We are taught not to explore plateaus but to scale mountains, aiming only for the top. We become so focused on the summit that we no longer experience the echo of each footstep along the way. We laud this type of living, calling it strategic, effective and goal-oriented. We ignore the precious and profound pleasure of the climb.

To make matters worse, we focus not on reaching the top of our own private mountain — everyone can and should have a personal Sinai – but on reaching the top of the mountain.

When the urge to compete motivates your climb, then your story by definition is determined only in relationship to somebody else’s story. It is the word ‘only’ that makes that situation so problematic.

Who remembers the runner-up for the Oscar, the underbidder on the contract, the loser in congressional campaign? Competition both focuses us on a story not our own– and even without our own story it focuses us only on the result.

Process becomes a necessary evil, a means that has no value toward an end that has supreme meaning.

…When we tell our children’s stories, we tell of their successes and first place finishes. We rarely acknowledge their near misses and surely try to exorcise their failures and defeats. What makes this custom so pernicious is that children’s academic and competitive public achievements are all that are celebrated.

When was the last time you heard someone say: ‘My child had a bad fall off his bike. He’s had to do therapy for the last six months and he had done a wonderful job.’? Yet falls and recovery are what life is all about…

Active Inertia: Why good companies go bad

“The difference between ‘involvement’ and ‘commitment’ is like an eggs-and-ham breakfast: the chicken was ‘involved’ – the pig was ‘committed.’” – Unknown

Donald Sull introduced the term active inertia to represent how a company’s reluctance to change can have disastrous consequences.

Sull believes these companies are so wedded to their past successes they can’t divorce themselves from what worked before, whether it’s a core strategy, a key customer, product, service, or method.

“When the competitive situation changes, they respond to the future by doing more of what worked in the past – I refer to this as active inertia.“, he tells Steve Kayser.

Q: What is active inertia?

A: When companies fail, people often assume the problem is paralysis. Managers freeze like the proverbial deer caught in headlights. I’ve found the opposite is true. Most environmental shifts happen gradually, and managers anticipate them and respond quickly and forcefully. Their response, however, is often ineffective. Sometimes the problem is managerial arrogance or insufficient resources. My research, however, suggests another cause.

They respond to disruptive changes by accelerating activities that succeeded in the past. When the world changes, in other words, they respond with more of what worked before. A better analogy is a car stuck in a rut: managers put the pedal to the metal and dig the rut deeper.

Examples of prominent companies that fell prey to the active inertia trap include Laura Ashley, National Westminster Bank, Daewoo, Firestone, and McDonalds. Attempts to break out of active inertia can derail for any number of reasons, including time pressure, lack of resources, or just plain bad luck. But patterns of failure do emerge.

Q: How can active inertia be overcome?

A: Commitments. Transforming commitments.

Q: Which are?

A: Pay to play. To fundamentally overcome and transform a company, you must commit to taking actions that break the status quo. To do this, the price (and pain) of not changing has to be higher than the price of changing.

Managers must explicitly commit bold actions that remake an organization’s success formula.

Q: Bold actions? Give me an example.

A: Managers might, for example, exit a legacy business, publicly commit to a new goal, or fire powerful executives who oppose the new direction.

Q: Fire powerful executives?

A: Yes, if they backslide into the old status quo pattern or don’t support the new goal.

Q: Companies that have done that?

A: In the book, I describe several successful transformations, including IBM, Nokia, Asahi Breweries, Samsung, and Lloyds-TSB.

Q: Do or die?

A: Yes, but only if it’s right for the company. Sometimes transforming commitments aren’t necessary. Transforming commitments are not a panacea. They can work wonders, but they also have serious side effects.

Q: Not for the fainthearted – or lazy – is it?

A: No. The transformation might destabilize the core business and jeopardize a predictable profit stream. They leave a company particularly vulnerable because they simultaneously set out on a risky new direction while destabilizing the core. Managers shouldn’t take these actions lightly.

Q: How can you make sure your transforming commitment is effective?

A: Don’t make 397 of them.

Q: Granted, but …

A: Effective transforming commitments share three characteristics: they are credible, clear, and courageous.

Q: Credible?

A: A manager’s commitments are credible to the extent that other people believe they will stay the course even when changes in the business context might promote another course of action in the future. If customers, employees, colleagues, partners, or other stakeholders believe that the manager will be steadfast in honoring their commitment, then they will adjust their own behavior accordingly.

Q: Sounds like trust to me. They have to trust their leader. Clear commitments?

A: Yes. Trust. You are right. Clear commitments increase credibility, are easier to communicate internally and externally, and they provide an easy-to-visualize alternative to the status quo.

Q: Simple. Short. Easy to understand?

A: Yes….And finally, transforming commitments are risky business that requires managers to break from the existing formula rather than fortify it. If your company’s survival depends on transforming commitments, then you will require courage.

Q: Are there certain mistakes that always seem to surface?

A: Yes. In studying transformational efforts, I have observed a small number of common mistakes that managers consistently make. I call them the seven deadly sins of transforming commitments because any one of them can kill a transformation. Most are errors of commission actions that managers should not have taken but did anyway. Others are errors of omission actions that a manager should have taken but failed to.

The Seven Deadly Sins of Transforming Commitments

1) Repeating what worked last time.

2) Failing to run the numbers.

3) Not sweating the details.

4) Delegating the hard work.

5) “Half Tackles” Recognizing problems that arise but failing to act on them.

6) Ignoring core values.

7) Sticking with transformational commitments past their sell-by date.

In the book, I illustrate these common mistakes with examples including Enron, Arthur Andersen, Apple Computer, Bertelsmann Group, Compaq, Kmart, Sunbeam and Vivendi.

Q: How would a great leader begin this process … take decisive action to fulfill the mission?

A: Transforming an organization is messy and complicated. But at its essence, it’s a three-step process. But first, let me tell you how not to choose an anchor.

How Not to Choose an Anchor.

1) It worked last time.

2) It worked in my last job.

3) It works in theory.

4) It worked for our competition.

5) It worked for GE.

Q: Okay. (Sounds vaguely familiar, where have I heard that before?) The first step?

A: In the first step, a leader selects an anchor. The anchor is what the manager commits to, a new strategic frame, process improvement, renewing the company’s resource base, stretching relationships with external parties, or novel values. Different anchors have advantages and limitations as levers to pull an organization out of active inertia. Anchors provide an overarching objective to prioritize actions. They help managers avoid trying to change everything all at once.

In the second step, a manager secures the anchor with transforming commitment actions such as exiting a business, public promises, or personnel decisions that prevent a company from falling back into the status quo.

Q: So, if one had the opportunity to choose a business model in the typewriter market or a forensic DNA testing service, one would choose an anchor between those two?

A: Yes.

Q: And the choice would be?

A: Doesn’t take a Harvard Business School professor to answer that. Perhaps you should read “All I Really Need to Know I Learned in Kindergarten” by Robert Fulgum.

Q: Thanks, I don’t typically delve into theoretical intellectual treatises. But I appreciate your suggestion. Next?

A: In the final step, the manager realigns the organization’s remaining frames, resources, processes, relationships and values. The leader’s transforming commitments will create tension with elements of the existing success formula and employees can easily slip into the status quo. In this third step, the leader must struggle against backsliding as he brings the success formula into a new alignment.

Q: What type leaders (attributes/personality traits) have the most success at leading change and successfully executing transforming commitments?

A: The best candidates share a few characteristics: they are familiar with the company’s business without being trapped in the existing success formula. Their personal values and professional backgrounds are consistent with the anchor chosen and the commitments made. And they don’t try to do it all themselves.

They surround themselves with a strong and diverse team. And they have the necessary support, tenure, and incentives to succeed in this leadership role. If these criteria don’t fit, then it’s dangerous to undertake the transformation.

Q: Any final thoughts?

A: Transforming the status quo demands a personal commitment that feels very different from business as usual. Making bold commitments requires managers to stick their necks out and they have to decide whether they are the right person to do that.

They have choices; committing isn’t the only option. They can sit and wait it out or they can quit and do nothing. The last chapter gives people the license to say, “I’m not ready for this.” It will help managers think about not only what needs to be done, but also whether they are the right person for the job.

Employee gets US$152,000 bonus for great idea

How do you reward ideas from employees?

By giving them half the savings generated from the idea.

Consulting firm Interminds did just that. According to this Harvard Business Review article, this company put its money where its mouth is.

An $38,000-a-year executive assistant came up with a process improvement to automate the laborious system of manually tracking 900 field representatives. She built the business case with an individual in the finance department.

The company implemented her plan and saved US$304,000 in the first year. She earned a US$152,000 bonus that year.

The company’s employee entrepreneurship program proved its value in drawing out an workable money-saving idea that will save the company millions over time.

It can happen at your company, too. If only media companies thought more like this.

The pilot who cares

[via and Church of the Customer Blog]

Here’s a heartwarming story of a pilot who cares. WSJ describes the unusual lengths by which Capt Denny Flanagan of UA will go to keep passengers happy.

He passes out information cards to passengers with fun facts about the plane; he signs two of them, whose owners will win a bottle of wine.

He snaps pictures of animals in the cargo hold to show owners their pets are safely on board.

He instructs flight attendants to pass out napkins asking passengers to write notes about experiences on United, good or bad.

He orders 200 McDonald’s hamburgers for passengers if his flight is delayed or diverted.

Capt Flanagan personally calls parents of unaccompanied children to give them reassurances when there are delays.

Kenneth Klein, whose 12-year-old son was delayed by thunderstorms in Chicago last month on a trip from Los Angeles to see his grandfather in Toronto, relates: “I picked up the phone and he said, ‘This is the captain from your son’s flight.’ It was unbelievable. One of the big problems is kids sit on planes and no one tells you what’s happening, and this was the exact opposite.”

Capt Flanagan explains his technique: “I just treat everyone like it’s the first flight they’ve ever flown.” The 56-year-old Navy veteran who lives on an Ohio farm and cuts the figure of a classic airline captain – trim and gray-haired – says: “The customer deserves a good travel experience.”

Randall Levelle of Morgantown, W.Va., and his family were flying to San Francisco because his father-in-law had just died. Capt. Flanagan invited Mr. Levelle’s three children into the cockpit during boarding.

“If other folks in the airline industry had the same attitude, it would go a long way to mitigating some of the negative stuff that has come about in the last four or five years,” Mr. Levelle said.


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