"Birth of a Salesman"

Jeffrey Preston Bezos was 4 years old when he first arrived at his grandfather's cattle ranch in Cotulla, Texas. The Lazy G is a sprawling 25,000-acre spread in the southwest part of the state—an unspoiled habitat of mesquite and oak trees, the home of whitetail deer (popular among local hunters), wild turkeys, doves, quail, feral hogs and sheep.

Jeff's maternal grandfather, Lawrence Preston Gise, was a just-retired rocket scientist who was ready to trade in his missile research for the simple and demanding life at the ranch, and he wanted to share that life with his grandson. Until he was 16 years old, Jeff spent every summer there.

Keith Webb

Jeff Bezos, Amazon.com chairman and founder

At the ranch he learned to clean stalls, to brand and castrate cattle, to install plumbing and to handle other ranch-hand tasks. One day, his grandfather towed in a dilapidated D6 Caterpillar bulldozer with a stripped transmission. Fixing it would be tough: He would have to remove a 500-pound gear from the engine. No problem; he simply built himself a small crane. Jeff helped.

"One of the things that you learn in a rural area like that is self-reliance," Mr. Bezos said. "People do everything themselves. That kind of self-reliance is something you can learn, and my grandfather was a huge role model for me: If something is broken, let's fix it. To get something new done you have to be stubborn and focused, to the point that others might find unreasonable."

***

In the summer of 1994, Mr. Bezos quit his job in New York as a vice president at the financial-services firm D.E. Shaw. He and his wife, MacKenzie, moved to Seattle to take advantage of the explosive growth of the Internet and to start Amazon. The company's original name, Cadabra, was nixed after someone misheard it as "cadaver."

Enlarge Image

Time Life Pictures/Getty Images

When the site first launched in 1995, everyone at the company was working until 2 or 3 in the morning, kneeling on a concrete floor, to get the books packed, addressed and shipped. Jeff Bezos in 1998, above.

Their first rental, a three-bedroom house in the suburb of Bellevue, cost $890 a month. Mr. Bezos chose it in part because it had one crucial requirement—a garage, so that he could boast of having a garage start-up like Silicon Valley legends from Hewlett-Packard on. The garage had actually been converted into a recreation room, but Mr. Bezos figured it was close enough.

The site was launched on July 16, 1995—just as masses of people started moving onto the Internet and before many competitors had created strong commercial sites.

Mr. Bezos moved the company to an industrial neighborhood that it shared with a needle-exchange program and a shuttered pawnshop. He had 1,100 square feet of office space on the second floor and 400 square feet in the basement to use as a warehouse. The desks were made from cheap doors, with sawed-off two-by-fours for legs. The warehouse could store just a few hundred books on their way from the distributor to customers.

Thanks to discounts of 10% to 30%, orders started coming in as soon as the site launched. At first, there were a half-dozen orders per day. One of the programmers set up the computers so that a bell would ring every time an order came in. A great novelty at first, it quickly got annoying and had to be turned off.

Charis Tsevis

Jeff Bezos

Three days after launch, Mr. Bezos got an email from Jerry Yang, one of the founders of Yahoo. "Jerry said, 'We think your site is pretty cool; would you like us to put it on the What's Cool page?' " Mr. Bezos later recalled. "We thought about it some, and we realized it might be like taking a sip from a fire hose, but we decided to go ahead and go for it." Yahoo put the site on the list, and orders soared.

By the end of the week, Amazon took in over $12,000 worth of orders. It was hard to keep up. That week, the company shipped just $846 worth of books. The following week brought in nearly $15,000 worth of orders, and the team was able to ship just over $7,000 worth of them.

At launch, the site wasn't even truly finished. Mr. Bezos's philosophy was to get to market quickly, in order to get a jump on the competition, and to fix problems and improve the site as people started using it. Among the early mistakes, according to Mr. Bezos: "We found that customers could order a negative quantity of books! And we would credit their credit card with the price and, I assume, wait around for them to ship the books."

During the first few weeks, everyone at the company was working until two or three in the morning to get the books packed, addressed and shipped. Mr. Bezos had neglected to order packing tables, so people ended up on their knees on the concrete floor to package the books. He later recalled in a speech that, after hours of doing this, he commented to one of the employees that they had to get knee pads. The employee, Nicholas Lovejoy, "looked at me like I was a Martian," Mr. Bezos said. Mr. Lovejoy suggested the obvious: Buy some tables. "I thought that was the most brilliant idea I had ever heard in my life," he said.

Despite what seemed to be a pathetically amateurish operation, Amazon grew up very quickly once it was launched. By October, the company had its first day logging in 100 book sales. In less than a year, it had its first hour with an order of 100 books. Word kept spreading, despite the fact that the company did virtually no advertising its first year. The one exception: Mr. Bezos hired mobile billboards to cruise by Barnes & Noble stores displaying the question, "Can't find that book you wanted?" along with Amazon's website address.

The company's customer service—which Mr. Bezos later called "the cornerstone of Amazon.com"—started with the founder himself answering emails. By 1999 it was manned by 500 representatives packed into cubicles and answering customers' questions.

The people handling these emails were generally overqualified and underpaid, with no experience in bookselling. Disaffected academics were popular because they were well-read and could supposedly help find books on a huge variety of topics. They were paid about $10 to $13 an hour, but with the possibility of promotions and stock options dangled before their glazed eyes. The best of them could answer a dozen emails a minute. Those who dropped below seven were often fired.

One customer-service manager recalled that, when the staff got a week and a half behind in answering emails—despite putting in 12-hour days, seven days a week—Mr. Bezos called her to complain. When she told him they couldn't work any harder, he came up with a solution: They dedicated one weekend to competing with each other to see who could get through the most unanswered emails.

During that 48-hour period, everyone worked at least 10 hours beyond their regular shifts. Each person was given a cash bonus of $200 for every thousand messages he or she could answer. It cleared out the backlog.

In the very early days, Mr. Bezos had employees pick out the 20 strangest titles sold every week and awarded a prize for the strangest. Some of the winners: "Training Goldfish Using Dolphin Training Techniques," "How to Start Your Own Country" and "Life Without Friends."

One of his more controversial early decisions was to allow customers to post their own book reviews on the site, whether they were positive or negative. Competitors couldn't understand why a bookseller would allow such a thing. Within a few weeks, Mr. Bezos said, "I started receiving letters from well-meaning folks saying that perhaps you don't understand your business. You make money when you sell things. Why are you allowing negative reviews on your Web site? But our point of view is [that] we will sell more if we help people make purchasing decisions."

Over time, Mr. Bezos's unusual management style began to develop. He's not always a "nice" CEO. He can inspire and cajole but also irritate and berate. He can see the big picture—and micromanage to distraction. He's quirky, brilliant and demanding.

One former executive recalled that, at an offsite retreat where some managers suggested that employees should start communicating more with each other, Mr. Bezos stood up and declared, "No, communication is terrible!"

He wanted a decentralized, even disorganized company where independent ideas would prevail over groupthink. He instituted, as a company-wide rule, the concept of the "two-pizza team"—that is, any team should be small enough that it could be fed with two pizzas.

From the beginning, Mr. Bezos was fanatical about squeezing from Amazon.com every incremental degree of usefulness. New features were often simple things, like 1-Click ordering—whose notorious patent was called by one law journal "probably the most memorable example of an unoriginal software patent." It forbids any other online retailer from using a one-click purchasing option without paying a royalty to Amazon.

An elderly woman once sent an email to the company saying that she loved ordering books from the site but had to wait for her nephew to come over and tear into the difficult-to-open packaging. Mr. Bezos had the packaging redesigned to make it easier to open.

He continues to try to improve the site. In June 2008, Amazon filed a patent application titled "Movement recognition as input mechanism." Customers may soon be able to make purchases simply by nodding their heads at their computer, Kindle or cellphone. Industry wags have dubbed it the "1-Nod patent."

Last December, word leaked out about another new patent, for a system that enables people who get gifts through Amazon to return them even before they arrive. If Aunt Mildred has a habit of sending unwanted gifts, the patent says, the site will include an option to "convert all gifts from Aunt Mildred." (The patent includes the name of the presumably fictitious relative.) It allows the receiver to track when the well-meaning relative buys a gift for him and to change it to something more desirable before it ships. Gift recipients can also apply other rules such as, "No clothes with wool."

The idea is not only to please fussy would-be gift recipients; it also could save Amazon millions of dollars in purchases that don't have to be exchanged. The patent lists Mr. Bezos as the inventor.

" The Collected Wisdom of Warren Buffett"

There is no greater advertisement for the potent combination of formidable intelligence, commonsense, consistency and self-discipline than Warren Buffett. Tap Dancing to Work, Warren Buffett on Practically Everything, 1966 – 2012, a collection of articles about and by Omaha’s most famous citizen, drawn from an archive of Fortune magazine that spans almost half a century, is a wonderful reminder of those virtues.

Disciples of Buffett who devour the shareholder letters that he sends to owners of Berkshire Hathaway stock, or who have read The Snowball by Alice Schroeder and The Making of an American Capitalist by Roger Lowenstein, will not be startled by anything in this compilation assembled by longtime Fortune writer (and Buffett confidante) Carol Loomis. Instead they will be reminded of the qualities that have made Buffett the most successful investor (as opposed to inventor or entrepreneur) in American history and a man whose pronouncements immediately appear on the front pages and are tweeted hither and yon.

Buffett has achieved the inconceivable as an investor. He is not just respected for his prowess (which might also be said of other investors whose achievements are far less significant) or admired for his approach (which could be said of far fewer) but his genial disposition and ready wit have helped him achieve the impossible: as an investor he is much loved. In all these articles it is hard to uncover a detractor (beyond perhaps a shareholder who disliked his support of the pro-choice movement) let alone a collection of people who harbor deep grudges or feel mistreated by him. Instead tens of thousands of Berkshire Hathaway shareholders make the annual pilgrimage to Omaha for the company’s annual weekend celebration of capitalism, during which Buffett and his partner, Charlie Munger, patiently answer questions for five or six hours with the stamina of thirty year olds rather than the octogenarians they allegedly happen to be.

Buffett, born during the year of the Great Crash, bought his first stock at the age of eleven and has never wanted to do anything else but invest. He has pursued this with the purposeful dedication usually associated with artists who work in the same studio for their entire life, or the writer who has employed (or at least used to employ) one typewriter for decades.

Buffett has been successful in part because of what he chooses not to do. He has not got side-tracked by the baubles of the 1% club: multiple homes (and wives); art collections; sports teams and society balls. Impatient with the world of non-profits and intimidated by the time required to intelligently give money away, hefamously delegated his philanthropic activities to his close friends, Bill and Melinda Gates. Buffett has been clear about what he likes: living in Omaha, sleeping in his own bed, driving an American car, traveling infrequently, eating burgers and ice-cream, drinking cokes, playing bridge and – buying stocks.

Berkshire Hathaway, despite a market value now approaching one quarter of a trillion dollars, is managed from a tiny office with a staff smaller than a soccer team’s starting roster. Buffett is not the slave to a corporate calendar jammed with the humdrum inanities of business life like performance assessments, facilities planning, analyst meetings, compliance training, budget reviews and travel. This leaves him time to read and think so that for Buffett the only real difference between a weekday and the weekend is that for for two days the markets are closed. Buffett is no fan of spreadsheets or reams of analytical mumbo-jumbo. Facts, a pen, a sheet of paper and an agile mind are his tools. He made a $3.5 billion profit some years ago after investing $500 million in PetroChina having only read its annual report.

Buffett is both an investor and first-rate manager. As an investor he has leavened the slant towards value espoused by his first mentor, Ben Graham, with an appreciation for the qualities of a first-rate business. While he began by buying bad businesses because they were cheap he later gravitated towards buying good businesses when they were cheap. That makes things much easier. He once bought portions of businesses but after the float generated by his insurance operations furnished him with the firepower, he began buying entire businesses. Those are now housed within Berkshire Hathaway and that is where his management skills are on display.

As the CEO of Berkshire Hathaway, Buffett does what great leaders (and managers) do. He sets an ethical example for others to emulate; demonstrates a level of performance that his juniors can only aspire to; carefully picks people and designs their rewards; allocates capital and decides how much risk is prudent. But he doesn’t meddle, dwell on details that don’t matter or micro-manage. He readily admits that people inside the Berkshire Hathaway operating companies are far more versed in their businesses.

When Berkshire Hathaway’s interests are trampled upon or a CEO leads a good business into the muck, Buffett acts – no matter how much he dislikes confrontation. Just ask, among others, Doug Ivester, John Gutfreund, Richard Santulli (deposed heads of Coca Cola, Salomon Brothers and NetJets respectively); Irene Rosenfeld, CEO of Kraft, whose takeover of Cadbury appalled Buffett; or David Sokol, a senior Berkshire Hathaway officer, who blotted his copybook. When Buffett buys stocks, the interests of Berkshire Hathaway’s shareholders come first and his investments frequently contain preferential terms that only he can command. There is nothing he values more than the underlying value of Berkshire Hathaway which – on occasion – causes him to buy back stock as he has done recently. This lets his shareholders own more of the business they all cherish.

The reader of this compilation will be treated to Buffett’s views on topics dear to his heart. These include the lunacy of pension fund accounting; the tendency of investors to hunt in packs; the self-dealing ways of intermediaries and buyout firms (ludicrously now labeled private equity funds when they should be called public debt firms); the way in which securitization (the bundling of hundreds of different loans) conceals the seeds of destruction; the toxic nature of derivatives; self-serving annual reports; the crippling consequences of the federal deficit; and the legacy of the Wright brothers – billions of dollars lost in airline investments. Even the tartest of Buffett’s observations are coated in honeyed analogies. Best of all, Buffett’s lessons about complicated subjects are delivered in a way that a precocious 11 year old, contemplating his first stock purchase, can understand.

"5 Insider Tips for a Better Social Media Strategy"

1. Viral content on Twitter lasts longer than it does on Facebook. “When content goes viral on Twitter, you have an influencer picking it up and then another influencer picking it up and it trends that way,” said Kamdar, whose company tracks 3.5 billion page views from content and digital media websites. “On Facebook, you’re going to hit more people but the life cycle is going to be shorter.”

Speiser added that businesses shouldn’t “beg influencers” to re-tweet their content, but instead produce “tweets” that are likely have utility for their audience.

2. LinkedIn is emerging as a distribution mechanism for content. “Right now, what we see is that business and education related items tend to do really well on LinkedIn,” Kamdar said. “I think more and more traffic is going to be coming from LinkedIn, as they start to have their own organic content and push their own editorial strategies.”

3. Don’t ignore your search strategy. While Speiser’s company focuses on Twitter data and algorithms to help companies engage users, he said companies should still value search. “There’s no way I’m going to convince you to stop spending money on search because it works,” he said. Kamdar agreed: “For any website, there’s some SEO that you just need to do.”

4. The worth of an individual "like" is not a good measure. “If you don’t build your audience with the contextual intention for them to consume that type of content, the 'likes' work against you,” said Speiser. “The 'like' itself is hard to value because the way you got it matters more than the fact that you have it.”

5. Social data is only one piece of the puzzle. Because social functions have spread across all company operations, Kamdar said social media data should be married with other data to present the best opportunities for businesses. “You want to combine social media on the brand side with sales or on the media side with users,” he said. “Businesses should really try to build social data back into other areas of their organization.”

" 9 Daily Habits That Will Make You Happier"

These minor changes in your daily routine will make a major difference in your life and career.

Happiness is the only true measure of personal success. Making other people happy is the highest expression of success, but it's almost impossible to make others happy if you're not happy yourself.

With that in mind, here are nine small changes that you can make to your daily routine that, if you're like most people, will immediately increase the amount of happiness in your life:

1. Start each day with expectation.

If there's any big truth about life, it's that it usually lives up to (or down to) your expectations. Therefore, when you rise from bed, make your first thought: "something wonderful is going to happen today." Guess what? You're probably right.

2. Take time to plan and prioritize.

The most common source of stress is the perception that you've got too much work to do.  Rather than obsess about it, pick one thing that, if you get it done today, will move you closer to your highest goal and purpose in life. Then do that first.

3. Give a gift to everyone you meet.

I'm not talking about a formal, wrapped-up present. Your gift can be your smile, a word of thanks or encouragement, a gesture of politeness, even a friendly nod. And never pass beggars without leaving them something. Peace of mind is worth the spare change.

4. Deflect partisan conversations.

Arguments about politics and religion never have a "right" answer but they definitely get people all riled up over things they can't control. When such topics surface, bow out by saying something like: "Thinking about that stuff makes my head hurt."

5. Assume people have good intentions.

Since you can't read minds, you don't really know the "why" behind the "what" that people do. Imputing evil motives to other people's weird behaviors adds extra misery to life, while assuming good intentions leaves you open to reconciliation.

6. Eat high quality food slowly.

Sometimes we can't avoid scarfing something quick to keep us up and running. Even so, at least once a day try to eat something really delicious, like a small chunk of fine cheese or an imported chocolate. Focus on it; taste it; savor it.

7. Let go of your results.

The big enemy of happiness is worry, which comes from focusing on events that are outside your control. Once you've taken action, there's usually nothing more you can do. Focus on the job at hand rather than some weird fantasy of what might happen.

8. Turn off "background" TV.

Many households leave their TVs on as "background noise" while they're doing other things. The entire point of broadcast TV is to make you dissatisfied with your life so that you'll buy more stuff. Why subliminally program yourself to be a mindless consumer?

9. End each day with gratitude.

Just before you go to bed, write down at least one wonderful thing that happened. It might be something as small as a making a child laugh or something as huge as a million dollar deal. Whatever it is, be grateful for that day because it will never come again.

"B2B Marketing Predictions for 2013"

Change, innovation, progress, while these terms should always be associated with the positive, for marketers entrenched in their current methodologies, the future can seem down right scary as the lines blur. The ways in which consumers can now discover, consume and engage about products and services, makes it a challenge for marketing professionals to keep up. 

It only makes sense that with dynamic change, some concepts fall by the wayside, while others emerge to further our goals. Here are some pertinent predictions for 2013.

Is outbound marketing over?

2012 saw the continued growth of social media and the ‘Big Data’ explosion – will 2013 deliver more of the same, or are there more new strategies and functions on the horizon?

According to Useful Social Media’s research with over 100 CMOs, 2013 will see:

• The death of push marketing

With the advent of inbound marketing, it’s long been predicted. But will 2013 really be the end for outbound? We’ll get back to you on that in 12 months’ time…

• More customer centricity

The companies that understand their customers and prospects best and put them firmly at the centre of everything they do will have the greatest success.

Will your marketing be retro and responsive?

Meanwhile, on the Marketing blog, they’re predicting B2B will see the rise of:

• Responsive websites

By 2015, mobile is expected to surpass the PC as the most popular way to get online. All websites now need to resize automatically to the screen they are viewed on.

• Retro offline approaches

Apparently, more brands will decide to go retro and personal in an attempt to cut through the noise facing decision makers with a return to direct mail! Who’d have thought it?

Is marketing automation taking over?

The use of marketing automation continues to rise as businesses see the rewards those already using it well are reaping. SiriusDecisions has some predictions for how it will evolve:

• More choice, more functionality

The solutions available will become more sophisticated; and email marketing solution providers will enter the automation space by adding increased functionality to their existing systems.

• Advanced tactics

Those best-in-class companies that are already using it well will up their game even further with more advanced lead scoring processes.

The Modern World of Marketing

Change can be a scary thing, and making the exodus from our comfortable world where we know how everything is done won’t be easy. But businesses who do manage to adjust to the new environment may be the ones to ‘inherit the Earth.’

One example is the move many marketers are making towards streamlined measurement and metrics to keep track of how they are doing. Research has proven that businesses that use revenue performance management in conjunction with marketing automation are the best performing businesses out there.

The Brave New World is coming, whether we like it or not. So how do we learn to survive it? Predictions for B2B marketing in 2013 include the extended use of automation and the rise of responsive websites. What predictions have you got?

Photo credit: Blurred marketing lines – courtesy © Dmitriy Danilenko – Fotolia.com

• Bio
• Twitter
• Google+
• Latest Posts

Sookie

Tomorrow People

Sookie Shuen is the community manager at Tomorrow People, a leading UK inbound marketing consultancy, that provides free advice and updates through a five step inbound marketing methodology.

"Eyes of the world on UK again for G8 summit"

One year on from the Olympics, the eyes of the world will again be on the United Kingdom next summer, as we host theG8 at Lough Erne in Northern Ireland.

Some people ask: does the G8 still matter, when we have a G20? My answer is “Yes”. The G8 is a group of like-minded nations who share a belief in free enterprise as the best route to growth. And as eight countries making up around half of the world’s entire GDP, the standards we set, the commitments we make, and the steps we take can help solve vital global issues, fire up economies and drive prosperity all over the world.

Lough Erne 2013 will be focused on three ways in which we can support the development of open economies, open governments and open societies to unleash the power of the private sector. Advancing trade, ensuring tax compliance and promoting greater transparency.

First, trade. There is no greater stimulus for growth in the world economy than trade and no more important battle than the fight against protectionism. As the G8, we have a collective responsibility to drive forward trade liberalisation.  I am already leading EU efforts to finalise a free trade agreement with Canada and to launch negotiations with Japan and America over the next year. I want G8 leaders to seize the opportunity of the discussion at Lough Erne to agree how we will accelerate progress across our ambitious trade agenda. To take just one example, the EU and US together make up nearly a third of all global trade. And an ambitious deal between the two could provide an enormous boost to jobs and growth adding over £50 billion to the EU economy alone.

Second, taxes. People rightly get angry when they work hard and pay their taxes, but then see others not paying their fair share. So this G8 will seek to maintain the momentum generated by the G20 on information exchange and the strengthening of international tax standards. We will look to go further including, for example, on tax havens by improving the quality and quantity of tax information exchange. And we will work with developing countries to help them improve their ability to collect the tax that is due to them too.

Third, transparency. The G8 has a long history of advances on development - and this G8 will be no different. The UK is meeting our commitment to spend 0.7 per cent of our gross national income on aid from 2013 – and we will be holding other countries to account for their promises too. We will also be leading the way in the battle against hunger with a special event on food and nutrition a few days before the main meeting, to follow up on this year’s Olympic Hunger Summit.

But I believe the UK’s track record on aid gives us the legitimacy to use this G8 in a radically different way by supporting what I call the “golden thread” of conditions that enable open economies and open societies to drive prosperity and growth for all. These include the rule of law, the absence of conflict and corruption, and the presence of property rights and strong institutions.

Transparency and accountability are vital for this. Too often, development at the G8 has been about rich countries doing things to poor countries. But at Lough Erne, we in the developed world will concentrate on issues that involve us putting our own house in order and helping developing countries to prosper. Take the issue of mineral wealth. We need to make sure that, for developing countries, this is a blessing not a curse. So the UK is leading efforts in the EU to require oil, gas and mining companies to publish key financial information for each country and project they work on. And I want this G8 to drive greater transparency all around the globe so that revenues from oil, gas and mining can help developing countries to forge a path to sustainable growth, instead of fuelling conflict and corruption.

These defining advances in trade, tax and transparency could lay the foundations of long-term growth and prosperity for generations to come. But to achieve them we also need to cut through the bureaucracy of traditional international summits.

So Lough Erne 2013 will return the G8 to its roots. The original leaders' fireside chat which inspired today's G8 gatherings took place at the Chateau de Rambouillet in 1975, organised by the then French President in response to the need to address worldwide economic problems. They held searching discussions, and issued a succinct declaration just 15 paragraphs long.

Nearly forty years on, we will go back to those first principles. There will be no lengthy communiqué. No mile long motorcades. And no armies of officials telling each other what each of their leaders thinks – or should think. Instead we will build on the approach taken by President Obama at Camp David this year: one table and one conversation with G8 leaders holding each other to account and ensuring that good intentions really do become vital actions to advance growth and prosperity across the world.

I look forward to welcoming my fellow leaders to Lough Erne and to showcasing Northern Ireland to the world as a modern and dynamic part of the United Kingdom that is open for business, with huge potential for investment and tourism.

Northern Ireland’s transformation over the last two decades was made possible by the courage of so many people across all sections of its community. Their determination and leadership has inspired the world. And we must show the same resolve to make sure this G8 delivers growth and prosperity for the United Kingdom and for the world.

"The True Measures of Success"

About a dozen years ago, when I was working for a large financial services firm, one of the senior executives asked me to take on a project to better understand the company’s profitability. I was in the equity division, which generated fees and commissions by catering to investment managers and sought to maximize revenues by providing high-quality research, responsive trading, and coveted initial public offerings. While we had hundreds of clients, one mutual fund company was our largest. We shuttled our researchers to visit with its analysts and portfolio managers, dedicated capital to ensure that its trades were executed smoothly, and recognized its importance in the allocation of IPOs. We were committed to keeping the 800-pound gorilla happy.

Part of my charge was to understand the division’s profitability by customer. So we estimated the cost we incurred servicing each major client. The results were striking and counterintuitive: Our largest customer was among our least profitable. Indeed, customers in the middle of the pack, which didn’t demand substantial resources, were more profitable than the giant we fawned over.

What happened? We made a mistake that’s exceedingly common in business: We measured the wrong thing. The statistic we relied on to assess our performance—revenues—was disconnected from our overall objective of profitability. As a result, our strategic and resource allocation decisions didn’t support that goal. This article will reveal how this mistake permeates businesses—probably even yours—driving poor decisions and undermining performance. And it will show you how to choose the best statistics for your business goals.

Ignoring Moneyball’s Message

Moneyball, the best seller by Michael Lewis, describes how the Oakland Athletics used carefully chosen statistics to build a winning baseball team on the cheap. The book was published nearly a decade ago, and its business implications have been thoroughly dissected. Still, the key lesson hasn’t sunk in. Businesses continue to use the wrong statistics.

Before the A’s adopted the methods Lewis describes, the team relied on the opinion of talent scouts, who assessed players primarily by looking at their ability to run, throw, field, hit, and hit with power. Most scouts had been around the game nearly all their lives and had developed an intuitive sense of a player’s potential and of which statistics mattered most. But their measures and intuition often failed to single out players who were effective but didn’t look the role. Looks might have nothing to do with the statistics that are actually important: those that reliably predict performance.

Baseball managers used to focus on a basic number—team batting average—when they talked about scoring runs. But after doing a proper statistical analysis, the A’s front office recognized that a player’s ability to get on base was a much better predictor of how many runs he would score. Moreover, on-base percentage was underpriced relative to other abilities in the market for talent. So the A’s looked for players with high on-base percentages, paid less attention to batting averages, and discounted their gut sense. This allowed the team to recruit winning players without breaking the bank.

Many business executives seeking to create shareholder value also rely on intuition in selecting statistics. The metrics companies use most often to measure, manage, and communicate results—often called key performance indicators—include financial measures such as sales growth and earnings per share (EPS) growth in addition to nonfinancial measures such as loyalty and product quality. Yet, as we’ll see, these have only a loose connection to the objective of creating value. Most executives continue to lean heavily on poorly chosen statistics, the equivalent of using batting averages to predict runs. Like leather-skinned baseball scouts, they have a gut sense of what metrics are most relevant to their businesses, but they don’t realize that their intuition may be flawed and their decision making may be skewed by cognitive biases. Through my work, teaching, and research on these biases, I have identified three that seem particularly relevant in this context: the overconfidence bias, the availability heuristic, and the status quo bias.

Overconfidence. People’s deep confidence in their judgments and abilities is often at odds with reality. Most people, for example, regard themselves as better-than-average drivers. The tendency toward overconfidence readily extends to business. Consider this case from Stanford professors David Larcker and Brian Tayan: The managers of a fast-food chain, recognizing that customer satisfaction was important to profitability, believed that low employee turnover would keep customers happy. “We just know this is the key driver,” one executive explained. Confident in their intuition, the executives focused on reducing turnover as a way to improve customer satisfaction and, presumably, profitability.

" 7 Changes For Higher Productivity"

Keeping your focus can be quite the task and as much as you don’t want to admit it, you love distractions. It turns out there really aren’t any secret tricks to staying more focused, but it’s certainly easier said than done.

I spoke with Tony Wong, a project management blackbelt and an expert in keeping people on task, so I thought he would be a good person to ask for some tips on staying productive. 

Here are a few of his tips for staying productive:

1. Work backwards. When you break down work into smaller chunks it makes it easier to designate the specific tasks necessary to complete the overall goal. Simply writing down “launch the company website” on your to-do list isn’t the most effective strategy. 

2. Stop multi-tasking. Switching quickly from task to task does not work. Studies shows that changing tasks quickly makes you dumber than being stoned. This means that your IQ drops by five points. Your IQ while multitasking could even drop 10 points, 15 for men, five for women. This means that men are three times as bad at multi-tasking than women.

3. Eliminate distractions. Make a point to shut out whatever it takes to get you to focus. This means locking your door, shutting off your phone, or even turning off the Internet connection. Go to a quiet area and remain there until your task is complete. 

4. Check your email on a schedule.  Checking your email constantly only lowers productivity. Set two or three times during the day that you plan to check and send emails.

5. Use the phone. Email conversations seem to slowly be eliminating the normality of a phone call. Don’t reply more than twice to an email. Pick up the phone instead. 

6. Create an agenda. Most people dive head-first into their day, which often leads to panicking as they read through their emails. This accomplishes nothing. After you wake up, drink water so you rehydrate, eat a good breakfast, then set prioritized goals for the rest of your day. 

7. Work in intervals. It’s important to recharge throughout the day. Get up, go for a walk, have a snack, do something completely different to recharge. 

"Six marketing lessons from Red Bull Stratos"

It was a greater feat than any 30-second spot has ever achieved: skydiver Felix Baumgartner dropped from near-space (23 miles high) back to the Earth’s surface.

It was an astonishing display of the value of human endurance, of adventure, invest-ment and commitment. The fact that this mission to the edge of space was, in fact, funded and created by a brand is, quite simply, remarkable.

Having achieved 8m concurrent views of the spectacle on YouTube, there is no arguing that Red Bull’s Stratos project was an astonishing leap forward in marketing, but it also delivered something far bigger than eye-balls.

[relatedArticlePlaceHolder]

The fact is, a brand both created and funded a mission to the edge of space that will create data and insight that could benefit NASA. As one viewer tweeted: ‘That awkward moment when you realise an energy drink has a better space programme than your nation.’

Stratos was not a CSR project, but is far more than a marketing campaign. While commentators have already waxed lyrical about it as the very pinnacle of content, marketing experts believe that this diminishes the scope of the achievement.

James Murphy, editorial director at the Future Foundation, says Stratos shows that Red Bull isn’t solely a provider of content anymore. ‘This is the purest example of the brand as a story; the brand itself has become content,’ he explains. Murphy believes the scientific and technological pay-off of the campaign reflects a level of sophistication that conventional CSR couldn’t reach. 

1. Embrace a sense of purpose

‘Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?’ Steve Jobs’ pitch to John Sculley – the Pepsi-Cola CEO whom Jobs brought in to run Apple – probably wouldn’t wash with Red Bull founder Dietrich Mateschitz.

Red Bull Stratos has not only underlined the brand’s authentic link to extreme sport and innovation, it has also provided its employees with a motivation bigger than selling sugar water (or energy drinks for that matter) for the rest of their lives.

James Whitehead, executive partner at JWT – the agency that, in a clever bit of marketing, sent a Kit Kat bar 22 miles into space to celebrate fearless Felix – says people want more of a relationship with brands. ‘They want to be involved with them and share them, so [brands] need to have a bigger purpose and a conscience that extends beyond sales,’ he says.

2. Beyond Big Society: do more than grow your bottom line

Consumers may have expressed discomfort at David Cameron’s vision of Big Society, but Red Bull Stratos raises difficult questions about marketing taking off where government funding ends. ‘Red Bull has taken science forward and no one is questioning it. Whether you agree that this will benefit NASA or not, there is no doubt that it is fuelling a passion for science,’ says Sav Evangelou, executive creative director at Kitcatt Nohr Digitas. He believes there is a huge opportunity for brands to carry this shift forward if they can share knowledge or deliver progress to society, whether it is through education or investment.

Sean Kinmont, managing partner, creative director at 23red, says the main thing marketers can learn from Red Bull Stratos is that ‘higher order’ benefits can be generated by things other than charitable links or associations with good causes. ‘People can be equally inspired by feats like this one, which take them vicariously into self-realisation, courtesy of the brand,’ he says.

3. Move beyond ROI: pitch for emotional impact

Space exploration appeals to noble human interests: the desire for adventure and a belief in the power of science. James Kirkham, managing partner at Holler, says that for a certain generation Stratos has become an ‘I was there moment’, which has created ‘almost an unfair benchmark’ for marketers.

While media coverage has focused on the volume of You Tube hits, the true scope of Stratos’s achievement reverberates far beyond the marketing fishbowl. In fact, Red Bull itself has blocked agencies involved in the project from talking to the press because it doesn’t want the event to be viewed as a marketing stunt.

‘The industry is obsessed with media coverage, but the real opportunity is earning the right to speak to consumers. Red Bull did this by capturing the imagination of millions of people,’ says Evangelou.

The message is clear: to be truly great, brands must transcend ROI.

4. Embrace ‘extreme marketing’

Of course, not every brand has a fearless Felix to deliver moments of greatness, but you cannot ignore the pace of change in the market. Rewind to 2008, when Honda secured reams of coverage with its live sky-diving ad on Channel 4. However, chances are you probably cannot remember the ad, and it is unlikely to grace the pages of history for delivering anything other than PR for Honda.

Russ Lidstone, chief executive of Havas Worldwide London, says that with Stratos, Red Bull has in effect created a school of Œextreme marketing¹.

Red Bull has built credibility through its support for extreme-sports athletes, the creation of current F1 champions Red Bull Racing and through building a range of events from the ground up. In short, Red Bull could never be accused of simply badging events.

5. Behaviour trumps brand values

The Stratos project also hints at a wider shift in marketing in the digital age: it is no longer enough to obsess over brand valuation and image. Consumers are increasingly demanding that brands prove their worth, a shift that has huge implications for marketers.

Patricia McDonald, executive planning director at Glue Isobar, says that in an age of participation, brands are facing up to a fundamental shift. ‘Brands need to ask themselves what they do for people. It is bigger than marketing: from supply chain to distribution, it’s the fundamentals of how a business behaves,’ she says.

The world’s greatest brands have changed consumer behaviour not just to boost their own bottom line, but to actively improve people’s lives. This is typified  by Nike, which created Run London and has invested in giving people greater access to sport, in an effort to tackle the growing problem of sedentary behaviour, arguably one of the biggest challenges of our time.

Lisa MacCullum Carter, managing director of Access to Sport at Nike, says: ‘Underpinning the London Olympic Games was a commitment to ‘inspire a generation’. Although elite and professional sport can inspire and encourage young people, it cannot on its own increase participation levels and access. Funding is crucial, but effective change will require unprecedented collaboration and action from governments, communities, corporations and civil society.’ Many analysts believe this collaborative approach will underpin the future of marketing for good.

6. Place commitment above all things

Back on Earth, there will doubtless be marketers rolling their eyes at the notion that they should ‘pull a Red Bull’. So here is the killer fact to empower each and every marketer: experts estimate that Red Bull’s investment in marketing is 30% to 40% of its revenues. It is a marketing-driven business model in the truest sense. If you won’t invest in your products and services, staff and brand, why would you expect your consumers to? You can’t use the struggling economy as a one-size-fits-all explanation for failing to commit and perform.

In an age of slash-and-burn marketing, where failure to commit and endlessly delaying big decisions is the norm, Red Bull’s investment and scope is noteworthy. Not every brand has the inclination or budget to invest in something bigger than itself, but the best marketers should at least have the ambition to try.