Starbucks: Opportunity Cost

With the return of the prodigal Schultz, Starbucks seems to have made the choice that it's about good coffee, and not necessarily fast coffee. To that end, they dump their coffee (which was in a thermal carafe to start with) every 30 minutes, whether its been consumed or not.

As a consequence it seems like they're always out of coffee now. Every time I get up to the front its, "sorry, we're brewing a new pot, it will take a few minutes". What? This is New York City! Not some laid back fish market in Seattle! I need my caffeine fix NOW.

But they've made their choice. They will not be slinging coffee as fast as possible, in order to assure quality.

(No if they would just purchase more coffee brewer machines and stagger the brewing frequency they could have it both ways, but never mind...)

Opportunity Cost

You have to focus. Doing one thing really, really well is infinitely better than doing many things merely adequately. That means selectively choosing which activities to engage in. This is true whether it's a business or a private individual doing the choosing.

In business, doing everything ensures mediocrity. This rule seems to hold true regardless of the size of the business. As companies like Yahoo and Microsoft have found out, as they try to find new horizons to conquer it becomes difficult for them to maintain the compelling nature of their original offerings. Additionally, people have a hard time accepting the company as a business that exists outside of their original space. For example, most people view Microsoft as an operating system and office suite company, or at least a maker of desktop and server applications. Far fewer think of them for their online offerings, such as Office Live or MSN.

I hear a lot of ideas for Internet start-ups, and I see a lot of people making the mistake of trying to do everything. It's gotten to the point that when I hear a pitch for a business that contains a bundle of the currently hip buzzwords ("social networking" is the term du jour), I instinctively start to wonder if there's a real idea in there. It's just too easy to start building an Internet business without establishing the business part.

Sometimes this comes from start-ups comparing themselves to established businesses. They assume that they have to launch with all of Amazon's e-commerce features, all of Google's search capabilities and all of Facebook's social networking features. Not only is this a way to wrack up an enormous development bill, but it won't particularly serve the start-up in the marketplace. The Internet rewards great new ideas, or at least ideas done in a great new way.

So the secret is to not do everything. Strategically choose features not to implement, business areas in which not to engage. If your core idea is good then you'll have a foundation on which to build, and if it's not then all those additional features won't save you anyway.

Tracking Distributed Art

A while back I had mentioned I was making a recording, collaborating over the Internet, with my old band. I've started a blog on Tumblr where I'll be tracking that project, in case you want to follow it. The blog is called "The Sound of One Amp Exploding", and can be found here: http://oneamp.tumblr.com/.

Sports Museum of America

The long-awaited Sports Museum of America opens to the public today.

It is an experiential place, full of tangible exhibits and games. One can hold Alex Rodriguez's baseball bat, compare the weight of an Olympic javelin and shotput, and do skill tests in cycling, skiing, rowing and--most interesting--Nascar pit crew.

SmA is an Ai client, and a few of us had the pleasure of attending their opening night gala last night. (I posted a few photos after the event.) Having toured the museum firsthand, I can confirm that it's great fun for any sports fan. We expected to just poke around during cocktails but wound up spending more than an hour reading, watching and playing.

Congratulations and best of luck to the Sports Museum of America and its founding team.

The auto opt-in

I have been surprised in recent months by the number of ecommerce sites that have defaulted to opt-in upon completion of a purchase.

Opt-in is, of course, supposed to be a voluntary and user-defined action. But it hasn't been that way for me as much as it used to.

As consumer spending slows, retailers, anxious to retain traffic and minimize customer acquisition costs, are taking steps to reach out to shoppers that fit their profiles. And what better way to do that than by hitting up previously converted users?

Interestingly, the sites that have opted me in recently are not uninformed small businesses; they're major corporations with major legal departments, all of whom should presumably know better. Among the offenders:

• Barnes & Noble, where I haven't shopped since 2007
• Citi, for a credit card that gets less than $1000/year in charges
• Home Decorators Collection, after a recent purchase (a Home Depot subsidiary)

Have you been spammed--I mean, opted in--recently? By whom?

Cost of Leadership

Part of leadership is finding the opportunity to lead. Some contexts crave and reward leadership, others do not. Leadership blossoms when it finds fertile ground. (A little spring analogy for you.)

(For the purposes of this post I'm defining leadership pretty broadly. It could be leadership in the context of business, community, technology, professional or academic areas. The sky's the limit.)

It's tempting to shoot for the biggest target; to attempt to establish leadership in the biggest market, in the most popular meme, or the latest craze. However there is a cost to leadership - it takes time, energy and skill (and sometimes money) to lead within a context. The more established that context is, the more of those resources it will require from a leader.

In the web world, for example, the leaders of the biggest segments get a lot of press. Amazon and Ebay are e-commerce leaders. Google is the search leader. Apple is definitely a leader of something, although we're not sure what to call it ("coolness?"...ew...). Notice, however, that these leaders are also giants. Because they operate in such large, well-established spaces, they need to have immense resources in order to maintain their leadership position.

I'd like to propose that the benefit of being a leader follows a kind of "S"-curve. If you look at the graphic, the straight black ascending line represents the amount of investment (time, energy, money) necessary to attain leadership within a context. The red line is the benefit to the leader to hold that position. Notice that there are two places on the graph where the red line exceeds the black line. Those are the sweet spots.

The first spot, on the far right, is the one that gets all the press. This is the geometric value afforded to Amazon, Google and so forth, because they hold a leadership position in a well-known established space. The benefits here are obviously huge. Unfortunately it requires an enormous investment, which is often not an option for smaller companies, or individuals, making it seem like it's an impossible task to get ahead through leadership.

However, there is a second, less noticed sweet spot just left of the middle of the graph. This represents a space in "early adopter" territory. A new idea that is beginning to get some traction, but hasn't yet entered the mainstream is an area where a modest investment in time, energy and perhaps money can yield a significant benefit. One can "hitch their wagon" to the new thing, and become recognized as a leader for doing significant things at a modest scale. For individuals, small companies and organizations this is the acheivable sweet spot.

When the space matures and moves along to the middle of the graph the return on investment of leadership evens out: the idea has entered the mainstream, and the benefits of displaying leadership are no longer attractive in proportion to the amount of investment that has to be made. At this point it's too easy to be accused of just "jumping on the bandwagon", in other words - not a leader.

To sum up, the opportunity for benefit from leadership comes in identifying an idea, meme, technology or whatever that has significant momentum behind it, but isn't quite ready for prime time for non-early adopters. Get involved, make things better somehow, contribute to any surrounding community. The benefit that comes back will exceed the cost of leadership.

Continuous Breakage

When I started working at Ai there were about 6 people. Now there is about 40. In speaking with a colleague yesterday, I stumbled upon the essential mechanism of a scaling company: breakage. A scaling company is one in which good, working processes break. Continuously.

The mechanism itself is simple: business processes put in place when there are 6 people stop working when there are 12. Processes that work at 12 people then strain under 24. Processes at 24 fail at 35. Failing processes are a normal part of a growing company. It's healthy. Painful, but healthy.

The role of good management is to be ready for process failures and respond actively: either by adjusting or replacing business processes to fit the needs of the company at its new size. Unfortunately, this can't be done prematurely - it can be just as destructive to roll out a process that is optimized "too large" than it is to cling to one that is optimized "too small". The balancing act is to wait until the appropriate time to adjust a business process, recognizing that occasionally it will feel like overkill when it is initially implemented.

The other factor that can be easy to overlook is that there are people involved. Processes shape people's jobs and thus their experience at work. If a person's job description changes as a consequence of a process adjustment, it can be interpreted as a change in their prestige or status. Great care needs to be taken in order to not unduly ruffle feathers in the pursuit of a working organization. The people have the same value they've always brought - its the organization that has changed.