My Radioactive Careers – Nothing has changed in 35 years!

SONGS - San Onofre Nuclear Generating Station

Surfs Up in San Onofre

Today is the 30th Anniversary of the Chernobyl Nuclear crash.  San Onofre has been decomissioned, but the resolution of what to do with the spent fuel is still open.  Based on the cost and lack of funds from Washington it is very likely that the fuel will never leave the existing holding areas at San Onofre.  Here is a reprise of my first post on my personal experience in what proved to be a very dysfunctional industry, and few changes are evident today…

I confess, I was one of ‘those people’ who helped to build nuclear power plants.  This includes a number of sites in the U.S. and Europe, but mainly in my own backyard in California and Arizona.  I was recruited to join Gulf & Western Industries in 1976 after 3 years with Xerox.  This was during the height of building the Alaska Pipeline, and a boom in nuclear energy.  Since I was local to the So Cal area I had a number of dealings with Bechtel who was the AE for both San Onofre and Palo Verde outside of Phoenix.  It was a profitable time, and I was never the low bidder since they were ‘cost plus’ projects.

With little background in piping and engineered projects my role was to work with the buyers from Bechtel and our manufacturing plants.  I learned quickly and loved the challenge.  During this time all of the components that went into all of the plants in the U.S. were sourced with U.S. materials.  Our biggest challenge was providing the reams and reams of documentation that accompanied each component.

The hardest thing to understand is that the engineering on each nuclear plant being built was unique.  With each new plant major decisions over which kind of reactor would be used to start the overall design of the plant.  As a novice I thought this was a waste as compared to the French mode of using comparable designs to keep the engineering costs down.

It was a great business, but alas, it was short lived.  By 1978 there were signs that new plant designs were slowing down, and by December of that year a number were cancelled.  By the time that the Three Mile Island accident occurred the industry was on hold.  The public outrage, and the growing costs of building and maintaining the nuclear plants was hurting public opinion.  TMI was just last nail in the coffin for the industry.  I four months I left the field for a role in the hot new advertising and direct marketing field and never looked back…until now.

Having left a field that went into meltdown, I now find that my 2nd field of direct marketing and print publishing are also in a meltdown of sorts.  I see and hear the same kinds of remarks now that I heard from my former associates back in 1979 – what happened?  My last newspaper, The Orange County Register, now has revenues less than half of what it had just 6 years ago.

What does this mean?  Nothing lasts forever, and nothing ever totally dies.  We need newspapers, and we need nuclear power.  The world for both is going to be ugly for a while, but even flowers grown around Chernobyl, and TMI is still in operation.  Anyone for a quick surf trip to San Onofre – the waters real warm just out beyond the cooling towers.

Print Media is Dying…No It’s Dead!

It has been sometime since I took the time to sit down and write a post for this blog.  I have excuses…the dog ate my homework, the house burned down, and I had cancer.  Of those excuses, only the cancer one is real.  In recovery after surgery and chemo, and now ready to get back in the fight.  While I was off many things have changed.  And for that statement I will claim the title of the master of understatement, at least for the moment.

During the last few years we’ve witnessed the decline of the entire newspaper industry.  My last post regarding The Orange County Register highlighted the decline, but who would have guessed that the decline became a total free-fall that lead to the bankruptcy and auction for the assets.  After fierce bidding with small checkbooks, Digital First won the day and now is a ‘creditor in possession’, at least for now.  They took it away from The Tribune Group who initially outbid them, but had to back off due to threats from the DOJ who threatened to quash the transfer for anti-trust reasons.

So there is the sad state of the newspaper field – after years of decline in revenues, massive falloff of advertisers and subscribers the federal government is still talking about antitrust for an industry that is now circling the drain.  Combinations of papers and newsgroups to create a more fiscally sound base for survival has been the key to survival recently, what will work in the future I don’t know.

The key is that print media is dying.  I know there are still papers being printed, but they are being delivered with borrowed money.  Time is not in their favor now, and the transition to digital communications is marching forward at an accelerating pace.  Digital First is now the largest chain of print and digital media in the U.S.  Dean Singleton, the founder,  must be  laughing now at the site of the chain that he cobbled together from his hideout in Denver and is now owned by a hedge fund.

My last experience with a media company owned by a hedge fund was with the old Pennysaver.  That ended in bankruptcy not long ago.  Hey, I heard a rumor that the Pennysaver may be starting back up again under new ownership.  Good luck guys, I hope the funding isn’t coming from a hedge fund this time around.

Freedom Communications – Challenging Conventional Wisdom for Newspapers

It has been a while since my last post.  I’ve been dealing with some health issues that put me on the sidelines for a few months, but now – I’m back!  Picking up where I left off is an overview of changes in the local media market which has been dear to me for the last 35 years- so off we go!

It is no secret that the media, marketing and advertising world is changing, and the pace of change is accelerating. Media giants who used to rule the world as near monopolies are now shrinking in our new digital world. I’ve spent a large part of my career in the field and it is amazing to see, and yet so hurtful to those still in the field.

In Southern California the Riverside Press-Enterprise, a Belo paper, was sold to the newly evolving Freedom Communications to go along with The Orange County Register. Belo was divesting itself of all the newspapers it owned in order to expand in the television field. The new high-rise HQ of the Press-Enterprise was sold to the City of Riverside and the staff relocated to smaller offices more in scale with their declining circulation.

It is apparent that one of the most valuable components of the papers today is their real estate. Many papers have sold, or are looking to sell their gleaming palaces that used to dominate the city that grew up around them over the last century. A great article “Struggling Newspapers Sell Off Old Headquarters” in The New York Times highlights all of the transitions for real estate for the newspapers in their search for revenues to help them offset their decline in revenue until other options can be found to help them find a brighter future.

The sale of the Riverside Press-Enterprise did not come as a surprise since Belo had signaled the changes when they split their operations into print and electronic operations sometime back thus placing the papers into a separate holding company A.H. Belo that would not impact the status of the publicly traded Belo electronic media. This has also been repeated by the likes of Gannett and the Murdock holdings. Harte-Hanks did the same thing with their Pennysaver shopping publications in 2012 when it placed them off book and wrote down their book value. Since then they have sold the Florida operations to former operators, and recently sold the major holding in California The Pennysaver, to a venture capital firm. Though profitable on a local level, these publications could not generate the revenue growth to bolster the stock price of a publically traded company. That is the death knell for any portion of a public company…show growth or go away.

So who wants to own a newspaper or shopper in today’s world. Form the recent purchases of Freedom, The Pennysaver, and also The Washington Post, it appears to be private cash, and a heavy dose of entrepreneurial spirit, which is just what they need.

In addition to the purchase of the Press-Enterprise in Riverside, Freedom Communications has also executed an expansion into Long Beach which as long been served by the Press-Telegram, a former Knight-Ridder paper now run by Media News who also has a string of papers in an around Los Angeles including their flagship Daily News. The Long Beach expansion is a bold move, and a risky one. Long Beach is not known for being a lucrative newspaper marketplace with a weak advertising base for a single paper, let alone attempting to make it a competitive marketplace. Another player in that market has been The Pennysaver, and this was also one of the weakest markets for them since 1980, and that I can testify based on personal experience.

A bold marketing strategy by the Freedom folks has been their single price package for readers. It is the all-inclusive purchase that includes the daily and digital access. The subscriber is placed at the heart of the coverage and a number of other sweet deals are included in the attempt to build loyalty and longevity.

This focus puts the daily print paper at the heart of the package, which runs counter to the Media News model under John Patton called Digital First. Mr. Patton’s focus is on promoting a mix of products, both print and digital, as the primary path to future success. He drives the message through his extensive organization in trying to get the needed buy in to drive a quality digital integration that will reduce overhead and costs and allow newspapers to survive…and grow.

With competing models now in play in Southern California, this just might be the proving grounds for the future of media and newspapers. My next post will check in to see how all of these strategies are working here in Southern California

Sunday Package Delivery via the U.S.P.S.

When we think about those changing our business universe we couldn’t come up with a better ‘odd couple’ than those named yesterday – Jeff Bezos of Amazon and Patrick R. Donahoe, postmaster general of the USPS.  We have grown accustomed to Bezos now after his purchase of The Washington Post, but Mr. Donahoe is not well known to those outside of the mailing industrial complex of direct mailers, printers and postal employees.  I have been following him for some time since he proposed his teams plan to help bring the USPS into the modern age with modernization, downsizing and rate and service changes.  This dynamic duo of Bezos and Donahoe have announced new Sunday delivery service for packages on Sundays…. yes, Sundays!  Both the New York Times and Los Angeles Times have written on this proposed change.

 I’ve written a lot over the last few years as I have followed proposed changes for the USPS authored by Mr. Donahoe, most of which I heartily agree with.  Their model has changed with 1st Class mail volumes down over recent years as we simply mail fewer letters and pay more bills via the internet.  The cash cow was dying, and farmer Donahoe came up with plans to ‘trim the herd’ and reduce services, post offices and days of service to reflect living within their revenue stream as required by Congress.

 Unfortunately, Congress saw it differently.  Service cuts were not fully possible as projected, and think about closing post offices…not a chance in my district!  Cut out Saturday delivery…how will the elderly get their medicines on Saturday.  Now they can get them Sunday, along with that new weed-wacker via Amazon.  Put that in your pipe and smoke it Mr. Congressman!

Confessions now from the author here.  I have worked in the direct mail, media and advertising field for over 35 years.  Most of my relationships with the USPS were adversarial since I wanted things they were loath to relent on.  Most of the time they won, and I found work-arounds to satisfy my customers.  Now the USPS is coming with the work-arounds to please…well just about everybody!  Who says you can’t teach an old dog new tricks.  If there is someone who can do it then I guess there is a high probability it might be coming from Jeff Bezos and the team at Amazon, now powered by USPS on Sundays.

I’ll be following this proposed change for Amazon and the USPS and report back later to see how the test rollouts in NYC and Los Angeles are going.  Also looking for feedback from Congress to see if they like this end run around the current operating model for the USPS.

The End of Nuclear Power in Southern California – A Lesson in Hubris and An Exercise in Failure

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We live in an age of high technology and in this digital age we have gotten used to getting more power, and faster solutions for our dollars.  In a review of the recent troubles of the nuclear power industry in the U.S., it is apparent that this has not been so with our nuclear power industry.  Technology has not improved our yields, but has, in fact, failed us.  The recent decision to shutter the San Onofre Nuclear Generating Station (SONGS) is testament to the failure of attempts to introduce new technology.  Errors in design have led to a multi-billion dollar mistake and a permanent closing of nuclear power in here.

I’ve posted several times on the nuclear industry mainly since I led a company in selling piping components to several nuclear plants in the United States in the late 70s, including several million dollars worth of piping components for the construction of units 2 & 3 at San Onofre.  My experience in the industry at that time led me to believe that nuclear power could be both safe and a great option for our total power needs in the United States.  I still think nuclear power should be a part of our overall mix for generating electrical power in the U.S.

By the end of the 1970’s it was apparent that the nuclear energy was going to enter a new phase and that production of new plants was going to slow down, actually it was going to end. As the head of a distribution company that supplied ‘nuclear certified piping products’, I had a warehouse full of product, and that product was not going to move as the industry was starting to grind to a halt even before Three Mile Island.

At that time, nuclear plants were in design and nearly ready for construction in Washington, Texas and Georgia were out to bid, but then the bidding process was delayed, then halted.  Everyone in the industry knew what was happening and government funding was constricted, and subsequently, cut off.  Nuclear plants were only able to be built with the subsidization of federal funds, and without them, commercially funded nuclear power would never happen.  After reviewing all the facts I left the field for a career in advertising and marketing.

Last Sunday, Abby Sewell and Ken Bensinger wrote for The Los Angeles Times an insightful article – “How San Onofre’s New Steam Generators Sealed Nuclear Plant’s Fate and Save Money.  The Opposite Ensued.”  This should be required reading for anyone who wants to know about the current state of nuclear power both in the U.S., and around the world.  Versions of what happened at San Onofre are taking place in Georgia, France, Japan and everywhere we have nuclear power plants.

All of our nuclear plants have the same essential functional elements.  Pressurized water in tubes ais passed by extreme heat from a nuclear ‘boiler’ in a highly controlled environment and that steam drives generators that create electricity.  This is just like any other plant including oil and coal, but nuclear is highly radioactive – hot in a totally different manner.  The biggest difference of all is that the fuel used to create the heat will never cool down and must be kept contained under the most critical standards – forever.  That’s “Nuclear Power #101” for average folks.

At San Onofre, in a major retrofit undergone to extend the life of the plant, a new design and piping scheme was tried – and it ultimately failed.  The story by Sewell and Bensinger outlines just how the good intentions went wrong. I won’t go over it in detail since they do it so well.

The “New Design” that the article highlighted was a major departure from the existing model, designed to be better, but as we know things don’t always work out that way.  The existing units 2 & 3 were designed by Bechtel in the 70’s and had the then current design with engines from either GE or Westinghouse.

Over the years the units functioned well, but were reaching the end of their serviceable life and licensing from the NRC.   It was decided to try a revamp with new and improved power engine – boilers, and a modified version of steam tubes that carry the super heated water that drives the turbines.  The consortium that controls SONGS which included several cities, Southern California Edison, San Diego Gas & Electric, under the guidance of the NRC, brought in Mitsubishi Heavy Industries to both design and build the new nuclear generators.  This is where things went wrong, as the Times article points out.

Soon after the new installation and break in period it was apparent that something was less than optimal with the new system.  It was at first attributed to ‘settling in’ issues and they thought it would eventually work itself out.  But it didn’t.  After a prolonged period of time it was evident that the minor issues were becoming big issues.  The design was not right, there was wear and tear from excessive vibration in the tubes, and leaking was starting. This is not good with pressurized radioactive water.  After a prolonged period of stops and starts, running at reduced power, the decision finally came to close the plant.

One of the key factors contributing to the final decision is that the public had turned away, support was failing fast.  After the final decision we were also treated to the information that there had been design flaws on the tubing from the outset.  The new design was wrong.

Nuclear power works well at many places in the world with France being perhaps the best model to review. In France where nuclear power provides 75% of the electrical power for the nation is to have a consistent design implemented at all plants.  The national government is in control and staff are able to be transferred around for need and opportunity and this is easier to do because of standardization.  Each plant in the U.S. Is different, and movement is not easily done, since there is significant training and recertification needed to accomplish.  It really doesn’t happen since the costs are too great.

The model is accepted in France, but that also appears to be breaking down.  Environmental activists are actively pushing to close nuclear plants claiming that there are security flaws and worry about future catastrophes.  Greenpeace is active in this area and is working to put pressure on the government.  Recently President Holland has committed to a long-term goal of reducing Frances dependency on nuclear power from 75% down to 50% by 2025.  Much of this could come from building more efficient plants in the future and the decommissioning of older plants along the way.

It also has to be known that France is a major exporter of nuclear technology including reactors, fuel products and services.  This is still a big viable business for France.  France has also touted the value of nuclear in helping them maintain a sense of energy independence -something both culturally and politically important to them.  Even with that there is a strong conservative look now at the true cost of nuclear power in France.  The French pay a higher cost for their power on a unit basis, and much of that is passed along to the consumer.  Not so in the U.S. Where costs are kept low as a means of keeping the good will of the users and rate payers.

What next for nuclear power?  SONGS will close and some other plants may never be built including new units in Georgia at the Vogtle facility.  Again there is a new plant design in play, and this is also a location that went through major hurdles back in the 70’s with several starts and stops before the first unit was built.  It is only happening with federal funding and liberal write offs for the power companies.  Our current energy availability may also contribute to a negative future.

Today we find ourselves awash in new energy from domestic sources due to fracking and tar sands.  Both of these processes were under development in the late 70’s and competed for attention right along with nuclear power.  Nuclear took a hit with Chernobyl and Three Mile Island, “fracking” and tar sands conversion in Canada, the technology wasn’t yet proven on a commercial scale, and the investment dollars and government sanctions kept them from commercial application.

What is in common with both nuclear and new petroleum extraction systems is that they are very expensive and potentially destructive.  Of the two, nuclear is the scariest, and the recent tidal waves that led the to Japanese problems at Fukushima are in the front of our minds.  “Fracking” is potentially hazardous to those who live nearby and risk contaminated ground water, but many have grown richer from being paid to have wells on their land.  No one gets paid for sitting close to a nuclear plant.

The final challenge for SONGS , its owners the utilities and cities who own a stake, and also the rate payers who are also on the hook, is who will pay for this ‘mistake?’  The courts and lawyers will be working on this for decades.  And for decades hundreds of tons of nuclear waste will remain at SONGS with no final resting ground as had originally been planned.  That picture at the top of this post shows children on the nearby beaches, that is likely to be just how close anyone ever comes close the beaches there again, in many decades.

Perhaps it’s time for a visit to San Tropez.  I hear that the beaches there are great this time of year, and they are sunny and the water is especially warm.

 

Print Media is Running Out of Time

No More Time!

No More Time!

The transition from our legacy analog world of ink and paper is accelerating.  Major changes in newspapers over the last several years with revenues significantly down to levels not seen in 10 years.  Growth ceased, and status quo is hard to digest to those in the industry that used to grow by showing up.  Population growth meant circulation growth.  Those trends no longer exist, and print media outlets are starting to drop like flies. First it was newspapers, now the trend has extended to magazines and direct marketing publications.

In a recent Daily Beast article by Daniel Gross “Why Time Warner Felt It Had to Spin Off Magazine Unit Time Inc we see why this is happening.  Its all about stock prices.  This trend is now making its way felt through the entire communications field from newspapers, magazines and direct marketing publications.

 Newspapers were the first to feel the pinch of declining revenue.   The grind of producing, printing and delivering daily papers IS not easy, and its expensive to do it every day, especially on those days when the paper is not full of ads.  Recent changes in newspaper ownership around the county brought some promise of hope when heavy hitters like Warren Buffett bought in and gave some hope to other owners that were still viable.  But Warren likes to buy and hold, and he likes to buy things he knows a lot about – and HE still reads his paper daily.  Not everyone agrees with Warren, nor do they all have his deeps pockets.

Even with his very deep pockets Rupert Murdoch owns bunches of papers in the US and in Australia and England, but Rupert also owns lots of digital media in those markets as well.  He also sees the enduring value in the print, but he was one of the first to see that revenues were lagging in print, and those lagging revenues reflected poorly on the ability for the overall stock value of these publicly traded companies to grow.  He has lead the move to split his holdings into discrete segments – digital on one side and print media on the other.  Future dollars for investment and growth are attached to the digital side, and print you’re now on your own now.

Recently Time Warner felt the urge to ‘unmerge’ its holding and to spin off its magazine unit, including Time, Fortune, Money and Sports Illustrated and make them a new stand alone organization and take them public as their own group.   The magazines are still profitable, but they cannot keep with the market and are thus a drag on corporate earnings.

Harte-Hanks, Inc. originally started off as group of small Texas newspapers, but chose a different way to grow outside of newspapers and moved into direct marketing, and over 20 years sold off all other holdings, including all of their newspapers and became a powerhouse in shoppers publications covering millions of households in California and Florida.  A still thriving industry for small communities covering a market just below that of the newspaper they provided cost effective targeted advertising and in the process stole market share from larger local newspapers.  Those golden days are now over.  Having written down all of their goodwill equity in the declining value of The Pennysaver, they were able to unload them quickly.

In December the Florida operations were sold back to their founder Dick Mandt, a former boss of mine, and his team of highly effective industry managers.  Were they losing money -no, but they had to go.  Sources tell me that the same thing is likely in California where the original Pennysaver circulates.  Staff cuts are being made, offices are closing, and they appear to be on the same trajectory as Florida.  Can they still make money – yes.  But they can’t grow in the manner that a public company needs them to.

Like Time, Inc., Harte-Hanks, is a publicly traded company and must show growth.  The huge revenue base of the Pennysaver could not keep up the growth curve for Harte-Hanks and stock prices lagged. Decision time came, and decisions were made.  Heads rolled, and the new management staff has a mandate for growth, and a tight timeline.  This is the new story for print and direct marketing, especially for those mailed publications.  If you are on the big march and you fail to keep up – we’ll leave you a canteen of water, and a couple of biscuits, but your on your own.  Tough love, I think we call it!  Time is not always on our side.

Lessons from 2012 for Business & Politics

ap_presidential_debate_romney_obama_pointing_thg_121016_wgThe 2012 election drives home some basic new realities about how we communicate and conduct our business and our daily lives.  The advent of the digital and social world has changed us forever.  In politics as in business we see those who are on the leading edge, and the stragglers.  Many of my clients, and certainly my future clients, have come to this understanding late.

Here are a few thoughts on how this worked out for the latest election cycle.  Everything we saw as business and communications work nearly exactly the same in business as politics.  One side triumphed over the other, and the reasons were more for business practices in the conduct of the marketing for the election, than in purely political leanings.  Just a few thoughts…

 Nate Silver and the Pundits  The biggest winner of the 2012 election cycle was 538 – by Nate Silver.  The success of Nate with his ‘system’ that followed individual polls, weighted the results, and then posits results by election area, became a new standard for tracking forecasts.  The single poll as a key talking point will recede as conglomerated results become the new norm.  This will also impact the role of the pundit who is basing their forecasts on feelings and not empirical data.  Pundits were especially routed in this election cycle when their results did not match the data on the ground, and the final results.  They are now relegated to mere ‘talking heads’ and all of their wishing on hoping are just that.  Show me the data is what we now expect.

The Role of Social Media  The biggest change in this campaign from 2008 to 2012 was the role of social media.  2008 was the digital campaign yea . 2012 became the social campaign, all of the benefits of the digital conduit for communications, along with tailored messaging, and listening, with their targeted audiences.  Obama’s team built a large social-digital staff that literally drove the campaign.  Nothing did more for the Obama campaign, and this will set the standard for all future campaigns.  Little time here for the details, and I will go into more detail in future posts, but for now, we must see that a return to more traditional messaging will not work in future campaigns.  The die is cast.

The Power of Print Media  Print media still lives, and will still have a key role in future campaigns, just as they do for day to day business, but it will play a lesser role in the future.  The power of the press, and especially of the official endorsements no longer drives the electorate.  Day by day, their hold on the public is loosened.  The results of who endorsed each of the candidates had a low correlation to the final outcome.  We now want newspapers to tell us what is going on, but not who to vote for…we’ll get that from our friends on social media or general social contacts, if we need those at all to make up our minds.

The major dollars spent at the end of the campaign by the Romney campaign in print and television did very little to move the needle.  By the time they ran, minds had already been made up.  Words and print images are simply not as powerful and recent and visual images on the web or on television.

The Party Vs. The Campaign  In this election cycle we were treated again to the real power of incumbency.  Though many thought Obama carried a lot of negative baggage, and that incumbency in a poor economic climate would act as a drag, it did not turn out that way.  As the incumbent, he was able to rebuild his election team from 2008, and take advantage of all of their previous experiences to come up with an even stronger campaign organization.

Romney was perceived to have been a great organizer, but it didn’t work out that way in this campaign.  With a long primary, his team was late coming up to speed, and messaging and marketing continually ran behind.  They also gave up the advantage when the Obama campaign was able to define them before they could build their own image.

Campaign Timing  In past campaigns both sides usually started at roughly the same time, the incumbent having an advantage.  In the current election cycle, the challengers were exceptionally late due to a long and contentious primary campaign.  The party used to play a larger role in the overall campaign, but in recent campaigns it is the candidate who basically runs the entire show.  Funding still comes from the party, but direct campaign funds and the direction of the campaign really are driven by the candidate.

I first saw this with Richard Nixon, who had the California campaign staff taking the lead and driving the campaign.  This worked for most campaigns from Carter, the Bushes and Bill Clinton, but in this last cycle we saw the Chicago group take out the Boston group who struggled to mount the right campaign.  They went to battle ill prepared for what was ahead, and the experienced crew out managed them.  Future campaigns should take heed from this.  Next time there will be no incumbent, but the team with the best plan, crew, message, and funding sources will likely win – all other politics aside.  The same goes in business.  Thinking you have the best ‘product’ will not trump the best marketing campaign, especially in a short ‘campaign’ with a finite deadline on election day.

Digital Donations  The Romney strategy was based on large donations and the use of PACs to drive their message, and they did exceptionally well in this area, both in the primary and election campaigns.  The money was flowing, but the results did not match the massive amounts spent, much of it too late to change minds already set by the other side.

The very large PAC infusion of money, much of it from just a small group of very wealthy donors did not accomplish the goal of total domination.  In the end, the other guys had some strong PACs as well, but even more they discovered the power of small digital donations via text or emails.  The power of small donations by the many, repeated several times by strong messaging did the trick.  The key fact is that the masses that donated also took the time to vote in large numbers.  The ‘engaged’ donor became the very engaged voter.  For me that was the big win that I did not see coming, especially the size of total donations via this methodology.

Audiences and Precise Targeting  In the world of direct mail the Republicans set the standard, and their lists were gold to the party.  Election cycle after election cycle they yielded fantastic results.  I’m sure they performed well this cycle as well, however, the Obama team who switched the ball game to heavy digital marketing outperformed them.  Appeals went out on a nearly daily cycle; immediacy trumped the heavy mail package.

What we found out later is, that in this new 2012 cycle, the digital team advanced the art and science well beyond their initial efforts in the past cycle.  Offers were tested, run, revamped – all within the span of a few hours, something impossible in direct mail.  The single most interesting fact that I found out later were that nearly all of the appeals tested worked…they all worked.  Message may be the key, but in this case it was more likely that methodology triumphed.  For business, resisting digital and social marketing is at your peril.  They must be a part of your mix in the future if you want to win the business in your daily marketing cycles.

Generations & Ethnicity…and Single Women  Perhaps nothing explains the results of the 2012 election than the results shown by generations and ethnicity.  They certainly skewed in both directions.  But the bigger question is what this means to our electoral and business future.  Targeted messaging is critical to identifying and supplying messaging to each audience.  The days of mass marketing producing and mass result in the general marketplace are fast fading.

In future any marketer must target and message for their audiences, each with their own concerns and issues.  Not only is the messaging variable, so is the media.  Fewer of us subscribe to a daily paper.  Confession here, as an old direct marketer and newspaper advertising executive, I used to subscribe to all the local papers on a daily basis.  Now I have just one paper on Sunday, and the other for 4 days a week.  All the rest of my news comes from the Internet via computer, iPad and iPhone.  I also consume at least 3 times more total information as a result.  For me, less is truly better.

For many, the iPhone, and other fully featured phones are now their prime communication vehicle and news source.  Any business, or candidate, who does not take this into account, will not survive the next election cycle if they need that audience to win.  As we saw the older audience does not use these tools as much now, but that audience is literally dying out.  Not good ways to run a campaign in the future, if you want to have a future.

Single women also went heavily for Obama, married women more Romney.  Messaging alone wouldn’t change the results here.  It becomes a platform issue of what each party stands for.  Is a party platform a key component of the message and do they need to be in synch.  Much was made of the distinction in this case and through the Republicans courted single women, their overall message that was ‘heard’ was negative.  Now we need to heed and message to gender, age, marital status, ethnicity and generational location as key factor in future campaigns.  This is a very tough challenge for any marketer in business or politics and will determine the results of most future elections here.

Unforeseen Events  Unforeseen events, like ‘Sandy’ will not be unforeseen in the future. What?  I expect that future elections will forecast for every possible event and preparations will be at hand.  Kind of like packing for a trip to Hawaii, but bring your snow skis anyway.  With the outcome resting on any unforeseen event, they simply have to be built into our future radar.  There is not time to regroup and react – bring the kitchen sink with you, we may need it will be the new motto.

Closing thoughts…  Future elections, and future business will never be the same.  Our digital and social tools have changed everything.  I also expect this trend to continue as newer processes replace the old.  Keepup, use the tools, or lose it all.  No looking back now.

Big Data vs. Big Money…and the Winner Is?

Dewey vs Truman and Now Romney vs Obama

Sometimes things don’t turn out the way everybody thought!

The election is over, and the team clothed in Blue won, and the margin was large.  After such a contentious election cycle I’m sure all would agree -no more.  The question that I raised in my last post on the eve of the election was “Will Nate Silver be a god or a goat?”  Well we now know that he was spot on in his predictions for the outcome of the election with Obama winning nearly all of the contested states.

How did Nate Silver call the outcome?  He did it by an algorithmic review of all polls (he does not conduct any polls of his own) weights the averages, and then forecasts the likelihood of winning the electoral votes in a given state.  No punditry, shear match, some science, and enough sense to lower the values of what were the outlier polls like Gallup and Rasmussen that did not fit the general results of the other polls.  Viola, we have a whole new way to pick the winner.

So, what happened to the Republicans, who were still forecasting victory right up to the last minute which gave us some memorable moments when Karl Rove had a meltdown on Fox, and Mitt Romney had to write a last minute speech that no one thought he would need since it was obvious to them that he was going to win…ouchers.

So this election came down to a couple of very big things – Big Money and Big Data.  On the Big Data side the Democrats used all of the data tricks learned in the ‘08 election, and then brought in a number of new wrinkles.  They built a large team in Chicago to manage the data, armies of staff and volunteers to use the data to blanket the targets with multiples of messages.  No stone was unturned in reaching and motivating their target audiences.  They had a mission and it was about turnout, and they did it, surpassing their efforts of 2008.  I expect now that major elections in the future would be based on these efforts.

On the losing side, the focus had been on Big Money, mainly big donors who gave directly to the party, and to the Super Pacs.  The Koch brothers and Sheldon Adelson were the big whales contributing an estimated 250 million between the two.  These efforts were supposed to be all that was needed to blanket the airwaves with TV buys that would sway the election in their direction.  In the past this has done it, and more money was spent – over a billion dollars in this heroic effort to carry the day.

The funny thing is that the Obama team also raised huge dollars – they also hit the billion-dollar mark, much by large donations, but a huge portion came from donations, mostly over the Internet.  Their strategy was to go after small sums from a large pool, and then to hit them again and again.  They test all kinds of messaging, and guess what, nearly all of the messaging worked  – and the donations flowed.  The public was really in the dark on the effectiveness of this effort until well after the election – certainly the Republicans were in the dark based on their surprised look at the end of the contest.

I’m not here today to talk politics – my interest lies in the technology and the application of the technology.  I have friends, who are political consultants, and “I forgive them for that, they know not what they do.”  My interest is in understanding how we best influence decisions, mainly commercial or business decisions through communications.  Would the brute force application of traditional print and broadcast media work in todays world – certainly one side thought that it would.  They were experts in direct mail fundraising with golden lists that delivered the manna in each election cycle. On the other side, with a new digital toolbox that worked last time, could it keep up with the promise of a sea of paid media that would not end?  Could they do it again since the other side knew how they were going to proceed?

They did it again…and in my next post I will go into more detail on just how they did it and what this all means to us in our business practices.  Big Data and the Digital World are real and anyone who does not utilize these tools in whole or in part will probably not make it until the next election cycle.  More on Monday!

The Election of 2012 and Big Data

Did you vote today?

Well the election is finally here, but the outcome is not yet finalized.  Sometime late tonight the call will be made, and hopefully it will stick.  Up to now Nate Silver has called the election for Barack Obama with over 90% certainty, based on his model.  That model, much like the Google algorithms is partially a secret.  It is essentially, a weighted average of all of the polls.

Nate called the election in 2008 and earned his stripes as a ‘gold level prognosticator!  Will he earn additional kudos for his call this year, or will he go down in flames, as at least half of the electorate wants to happen.

Beginning in 2008, and wildly expanded in 2012, we are looking at data being used in magical ways to predict future outcomes with great certainty.  Guess what, this is the world we live in today.  Every time we answer and ad, or respond to an email we are leaving a trail that is being used to describe us, and to target us.

This was used to great effect in 2012, and it will be interesting to conduct a business practice autopsy on the body politic after all the results are in.  Why is this important – this is where we live now, and we need to know how to prepare ourselves for the coming onslaught of more and more messages coming our way in the future.

More to follow on how big data is transforming our daily lives, and our politics.  There is no going back from here.

Driving a New Leadership Paradigm

Ursula Burns, CEO of Xerox

Ursula Burns, CEO of Xerox

I was intrigued to see a number of articles recently  in various media that all touched on some themes that I find are continually playing out in our new digital world.  The trends mirror what I’ve been seeing with my clients as well, but these seem so stunning.  What are they?  In our change from a physical world to a digital and social one, we are seeing some of our premier companies making that transition under the leadership of women.  Apparently there is no glass ceiling in the digital world, and as Martha would say…”that’s a good thing.”

Who are some of these leaders – the heads of IBM, Xerox, and HP.  Some of the bluest of the ‘blue chip’ companies and all facing great challenges, and most are doing well…extremely well!  I was taken by this trend because I started my career as a sales rep at Xerox in the early 70’s.  Xerox then had just recently started then to hire women in the sales force.  They were a novelty to most of the managers, all men, who wondered if they should treat them differently than men.  Xerox had a culture very similar environment to my old fraternity house.  Men got yelled at when they didn’t perform.  Could they do the same with women.  Could they take them into their offices and counsel then=m, with the door closed?  What if they started to cry? The good news is that everyone learned and adapted quickly and within a short period of time, a couple of years, half of all hires were female, and many of the new managers were also women.

At IBM  who we competed with in the copier marketplace we noticed a similar trend taking place and I knew a few of the early female sales managers, and they were great, and they prospered and grew quickly up the ranks as IBM was very interested an taking advantage of the new resource.

At HP, the course was a little different and men were still the dominant group and they intended to stay that way.  I knew a number of HP managers later on in the 80’s and they still acknowledged that it was still mainly a man’s world.  How the world has changed.

In these three organizations, leaders in their fields, are now headed by women, a fact a rarity in the corporate world of giant organizations.  All of these women, and many others, too numerous to list here, have changed the paradigm forever.  Now, a quick look at these three outstanding women.

At Xerox , Ursula Burns,  is now the CEO.  She started at Xerox as an intern, then an executive assistant and then succeeded Anne Mulchay in 2009.  Now that is amazing, for a woman to succeed another woman in a technology company.

“I took over a company that was solid, but every day was becoming significantly less important in the minds of people,” Ms. Burns said.

This transition happened all while Xerox was moving from selling copiers to selling services and providing backoff support.  A big change from 40 years of growth, but they are pulling it off. This is not something easy to pull off – “That transformation is earth-shattering for our company,” she said recently  To cement it, Ms. Burns led Xerox’s $6.4 billion acquisition of Affiliated Computer Services in 2010.

“What we do well, unlike these really sexy companies like Googles or Apples that have these great things you can see and touch and feel, we actually work in the back office of large companies,” she said. “So most clients don’t really know we’re there.”

IBM built the computer industry, and dominated the word processing field when it was all about typewriters, and later copiers.  Now computers are everywhere, but few are in the ‘clean rooms’ of old where IBM was the dominant player.  They now exist on desks, the cloud, your pocket – they really are everywhere, and IBM is leading that charge to conquer the world of ‘big data’.  This is now the third wave of computing they will discover and and learn on their own – just like “Watson” the supercomputer that conquered Jeopardy.  We are now in the age of cognitive computing!

Virgiani Rometty, CEO, Chairwoman of IBM

Leading the charge as CEO and Chairman of the Board is Virginia Rometty who has spent her entire career at IBM.  Under her watch IBM’s stock is now at its highest point in its history.  IBM is now a consulting company and sifting through all of the ‘big data’ that is spewing forth all over the world.  The key for IBM is constant reinvention.  A good metaphor for all of us to keep in mind.  Change is the new constant.

“Part of it is I get the honor of taking over a company that is a strong company,” she said.

But, she said, she knew she could not coast on their success, and instead charted a clear way forward, including work in cloud computing, analytics and growth markets.

“One of the great things I learned from Sam and Lou is no matter what, you always have to focus on reinvention,” Ms. Rometty said. “Never love something so much that you can’t let go of it.”

Meg Whitman, CEO of HP

Meg Whitman now CEO at Hewlett-Packard, is facing different challenges – survival.  After a great career in consulting and early leadership at EBay where she cemented her reputation. Meg Whitman is now heading HP in trying to turn around a company that has suffered over the last several years of a revolving management team and rapidly changing focuses.

HP is struggling to find its focus in software and hardware and to become relevant in a word this is now incresingly mobile focuses and led by Apple and other tablet makers.  After launching their own tablet in 2010 they quickly killed it…too soon many said.  The current forecast is grim for 2013, and Meg is looking for enough time to turn this around.

Though Meg attempted a run in politics in California, losing to Jerry Brown, she maintains close ties to Mitt Romney.  If HP doesn’t work out there could be something in Washington for Meg, if Mitt were to win.  She is a continual winner, and given enough time, she will find a way to win.

Why are these women import to this narrative?  We have entered a new era, and everything is different.  Business is different.  Old legacy businesses including all media is rapidly going digital.  Mobile communications has changed how we communicate, and when we communicate.  Barriers are being broken down that perpetuated the status quo.  Through all of this we have discovered whole new ways of living and working, whether we want to or not there is no going back.  Women are now fundamentally a part of business, and rightfully a part of management.  We are all the better for all of these changes.