Andrew Will Winery’s Washington Wonders
July 31st, 2008 | Posted by innovJay Miller, who covers Washington State for my journal, The Wine Advocate, has been the man on point for one of the most exciting viticultural developments of the last decade, the increasingly sensational quality of wines from Washington State. They have made noteworthy progress, not only with such Bordeaux varietals as cabernet sauvignon, merlot, petit verdot, and cabernet franc, but also with Rhône Ranger varietals such as grenache and syrah. One longtime star (located on the pastoral Vashon Island) is Chris Camarda, who turns out brilliant wines at the Andrew Will Winery (named for his son Will and nephew Andrew), which he founded in 1989. Following are some of Andrew Will’s recent releases.
90 points
2004 Syrah Annie Camarda Washington State
This cuvée is exceptionally fragrant, with aromas of bacon, blueberry, and violets jumping from the glass. On the palate, ample sweet fruit asserts itself leading to a long, pure finish. Although it can be enjoyed now, two to three years in the cellar should lead to greater aromatic complexity and a smoother texture. $45
91 points
2005 Syrah Annie Camarda Washington State
The 2005 Syrah Annie Camarda delivers an alluring perfume of meat, game, bacon, blueberry, and violets. Layered, ripe, and creamy-textured, this hedonistic effort should evolve for three to four years and drink well through 2020. $45
91 points
2006 Two Blondes Yakima Valley
This offering is from a young vineyard whose fruit should offer greater depth and complexity as it ages. Deep crimson-colored, the wine offers up toasty black fruit aromas leading to a ripe, focused mid-palate, smooth tannins, excellent balance, and a lengthy finish. It should evolve for several years and be at its best from 2011 to 2021. $54
92 points
2006 Ciel du Cheval Vineyard Red Mountain
From the Red Mountain American Viticultural Area known for its tannic, age-worthy fruit, this purple-colored 2006 exhibits a fragrant perfume of cedar, smoke, black currant, and blackberry liqueur. The wine itself is medium- to full-bodied, with outstanding depth and grip, mouth-coating flavors, and a lengthy finish. The well-concealed tannins suggest that it will evolve for four to six years and drink well through 2026. $64
92 points
2005 Sheridan Vineyard Yakima Valley
Composed of 42% cabernet sauvignon, 30% cabernet franc, and 28% merlot, this purple-colored effort offers up an array of spices including clove, cinnamon, and allspice as well as cedar and tobacco notes. Saint-Emilion-like on the palate, it hides enough tannin to support two to three years of further bottle age. There is enough depth and balance to suggest that this rather elegant wine will drink well through 2025. $50
92 points
2005 Two Blondes Yakima Valley
The 2005 Two Blondes is a blend of 36% cabernet franc, 35% cabernet sauvignon, and 29% merlot. Revealing expressive red and black fruit aromas, spice box, and smooth-textured, sweet fruit, it is a lengthy, elegant effort to enjoy between 2012 to 2025. $54
93 points
2006 Champoux Vineyard Horse Heaven Hills
This purple-colored wine offers an impressive display of smoky black fruits, pencil lead, and earth notes. On the palate, it is intense, rich, and layered with the structure and balance for a decade of evolution. This powerful effort should drink well from 2015 to 2030. $64
93 points
2005 Ciel du Cheval Vineyard Red Mountain
The 2005 Ciel du Cheval is composed of 40% merlot, 40% cabernet franc, 14% cabernet sauvignon, and 6% petit verdot. It offers up darker black fruit aromas and flavors with significantly more structure, grip, and power than the 2006. It exhibits layers of spicy black fruits that should become increasingly opulent and glossy as it develops in the bottle. Give it a minimum of five to seven years in the cellar and drink it through 2030. $60
94 points
2005 Champoux Vineyard Horse Heaven Hills
The 2005 Champoux Vineyard is made up of 45% cabernet sauvignon, 30% merlot, 20% cabernet franc, and 5% petit verdot. Purple-colored, it delivers an alluring perfume of pain grillé, spice box, and violets. On the palate, it is layered, intense, and powerful. Its impeccable balance should allow it to evolve for up to a decade and drink well through 2030. $60
94 points
2006 Sorella Horse Heaven Hills
Produced from Block One of the Champoux Vineyard, this is the winery’s flagship offering. Saturated purple in color, the perfume is a complex amalgam of pain grillé, scorched earth, espresso, black currant, blackberry, and licorice. This leads to a supple-textured wine with layers of ripe fruit, outstanding depth and concentration, considerable elegance, and a long, pure finish. It will evolve for eight to 10 years and provide pleasure through 2030. $74
96 points
2005 Sorella Horse Heaven Hills
The 2005 Sorella, from the richest portion of the Champoux Vineyard, is a brooding, dense, and masculine wine displaying layers of rich fruit, a mouth-coating palate feel, and exceptional length. It should develop nicely in the cellar and provide peak drinking from 2015 to 2035. $66
FOREIGN SALES GROW, AS DO THEIR TAX PAYMENTS
July 30th, 2008 | Posted by stockFive years ago U.S. equity markets were 57.6% of world markets, today they are 40.5%. Five years ago, the U.S. GDP comprised 29.6% of the world GWP, today it is 21.2%. While the U.S. equity market and consumer remain the largest and dominant component of their respective groups, they are no longer the overpowering element. Where the U.S. used to catch a cold and the rest of the world got pneumonia, now the rest of the world gets the flu. The destination and manufacturing of U.S. products and services have equally changed. Helped along by lower costs for labor, healthcare, pension (and OPEB), and assisted at times by tax laws and product regulations, U.S. companies have moved their operations abroad where products can be more cost efficient to both manufacture and sell.
I have just released my S&P 500 Global Sales 2007 report that quantifies the current status of known foreign sales within the S&P 500. While globalization is apparent in almost all company reports, exact sales and export levels are difficult to obtain. Many companies tend to categorize sales by regions or markets, while others segregate government sales. Additionally, intra-company sales, (and hence profits) are sometimes structured to take advantage of trade, tax and regulatory polices. The resulting reported data available for shareholders is therefore significantly less than the desired level for analysis. Still, with utilization of over slightly half the issues in the S&P 500, it does permit a rare glimpse into its composition. What are needed are actually defined reporting classifications and values in a tabular form, similar in nature to the many GAAP-required items. Additional reporting on country of manufacturing, country of sale, and insight via a matrix of how a change in currency would impact costs (both hedged and unhedged) would be ideal, but at this point there appears little hope for that on the near-term horizon.
There can be little doubt that the growing shift of U.S. economic power and influence will continue to have a negative impact on our society. However change, and the hardships that it brings are not new, and this country has a long track record of meeting and conquering its challenges. Unfortunately that history also shows we are sometimes slow to react. Eventually we will, and eventually, the power shift will stop and reverse itself. Our government does react to the ‘will of the people’, but mostly it is to the short-term will. We, as the people, need to make it clear what our objectives are, as well as our time horizon and expectations.
The bullet points of the report are below, for the full report tab here
S&P 500 foreign sales increased 12.5% while domestic sales increased 2.6%.
Foreign income taxes increased US$ 10.9 billion or 9.7%; U.S. federal income taxes declined US$ 4.2 billion or 2.7%
European sales represented 28.8% of foreign sales, with 4.6% coming from the United Kingdom. Asian sales represented 16.8%.
Higher growth for Emerging markets, the decline in the dollar and concern over U.S. consumer spending are fueling the continuing shift to sales abroad.
Half of the issues still do not report sufficient information for a complete breakdown – big on pictures, short on tabular tables.
Of the reporting issues, 45.8% of all sales were produced and sold outside of the United States, up from 43.6% in 2006.
July 29th, 2008 | Posted by innovThere is a great saying in the South: “You can’t read the label when you are sitting inside the jar.”
From our experience this saying applies directly to your ability to innovate. If you have been with a company for more than six months, it is time you realize something: You’re stuck in the jar. The way you think about new ideas is distorted by the corporate container you find yourself working within.
As a result, it is extremely difficult for you to see the priceless ideas that are all around you, ideas that will become the very new products and services your competitor will use to steal market share and give your boss a reason to question the effectiveness of your whole innovation strategy.
We know, we know. We can’t be talking about you. We had the same reaction initially. But if any of the following sounds familiar, you are in the jar—just like we were. (And fear not, there is a way out, which we will tell you about.)
You know you are in the jar when you hear the following:
“We’ve tested that idea. It didn’t work.”
What idea exactly? People who are in the jar interpret ideas based on how they last saw them. In their minds, when they hear about a scooter, they think skateboard, not Segway. When they hear about an auction, they think Sotheby’s (BID), not eBay (EBAY). They have literally judged an idea before it has been reenvisioned by the brilliant people around them. Their experience blinds them to the possibilities of the future.
Silence.
When your team is trying to brainstorm new ideas, the room gets eerily quiet. The reality is that they are probably desperately trying to be creative but they keep seeing hurdles. They don’t want to appear negative, so they decide to be silent and nod a lot.
“Yes, but…”
Trying to be polite, people will just “but” other people’s ideas to death. (“It is a really interesting idea you are proposing, but it will never work because…”) This is usually not about intent—they really want to be helpful—but they are too busy thinking about regulatory issues, manufacturing issues, political issues, budgetary issues…deadening their ability to be creative. Not only are they in the jar, but the lid is really tight.
An idea for (yet another) safe line extension.
Line extensions and evolutionary innovation should be a large part of your plan. But when that’s all your team is producing, it probably means they have lost the ability to recognize big ideas, or worse, they no longer have the fortitude to push the rope up the hill. Even when senior management begs for revolutionary thinking, they already see the outcome—”Let’s just add a button, a flavor, or a perk and move on.”
“Huh?”
If you are often asked by really smart consultants or newcomers to your company what in God’s name you are talking about, you’re probably in the jar. Seems that after a few months in the jar together, we develop our own language. Often laced with industry-borne acronyms, this strange way of communicating seeps into our customer and client communications. These industry clichés keep our customers from recognizing great innovation.
A few years back we scored big points with about 40 million customers when we convinced a client to change the last line on its monthly billing statement from “Account Balance” to “What you owe.” You are surrounded by hundreds of similar examples.
At the root of Zen philosophy is the ability to objectify your situation, to be able to step outside your situation and see it for what it really is—warts and all. So now that you see yourself in the jar, what do you do about it? Following are three simple tips:
1. Get experts from outside your industry to help you stay honest and see what is happening outside the jar.
2. Get outside your office and act like an anthropologist. Spend time with your customer and bring an expert interpreter and a couple members of your team. Compare notes; you will be shocked at how differently you all see the situation.
3. Be very careful about the language you use. In this case, “voice of the customer” should be taken literally. Customers recognize, respond to, and build from their own words more than yours. So use their language when exploring insights, writing concepts, and introducing new products.
Ever notice how a 5-year-old can walk into a situation and ask an innocent question that elicits the “because that’s the way we do it” response? Then you realize you’ve never really quest
July 28th, 2008 | Posted by innovWhen you announced that the original Rock Band content could be exported to Rock Band 2 you said it’s “almost all” the songs. Why not all? Is it a licensing issue?
Alex Rigopulos: Yeah, it’s purely a licensing issue. We licensed the original music on Rock Band for the Rock Band 1 disc. To be able to export that for use in another application we basically have to re-license all that music. Until we’ve completed the process, we don’t know what percentage of that soundtrack will be available.
So you yourself don’t actually know which songs won’t make it?
That’s correct. At this point we’re still in the licensing process so we don’t have a final list.
From a “battle of the bands” standpoint, obviously you’re going up against your former creation, so how do you feel about how the Rock Band brand stacks up against Guitar Hero now?
We feel great about it. When we set off to build Rock Band we wanted to take the genre in a very different direction, focus on co-op play and authenticity, and focus to the greatest degree possible on the music itself, and I feel we’ve done that successfully, and I especially feel that’s coming to fruition now in Rock Band 2 with our platform strategy. By holiday of this year we’ll have 500 songs available for play on the platform—that’s something we’re really proud of.… For a music game to be as compelling as possible to the largest number of people possible, it’s critical to have the largest and most diverse song library possible, which is why we made such an investment in interoperability of the content between different applications. I feel this is an area where we really distance ourselves from the competition.
Do you feel it’s gotten easier to secure some of the songs or bands that you want now because of the massive popularity of this music game genre? It seems like the bands are seeking you out rather than you having to go after them…
Yeah, that’s absolutely the case. It was hard to get record labels as recently as three years ago to even return our phone calls. At this point we have great rapport with the music publishers and record companies, and now recording artists are reaching out to us on a weekly basis to talk about ways they might get more involved in the game. Everything is changing around.
Behind the scenes is there a new IP or other projects that Harmonix has its sights set on or is it 100% Rock Band still?
For the short term, we’re very much focused on Rock Band just because I feel we’re at the very beginning of what the franchise can be. There is a great deal of dream that is still unexplored in terms of feature set and the amount of content for the platform. … Meanwhile, we have a skunkworks thinking about what’s next behind the horizon.
Speaking of feature sets, some people have wondered if it’s really necessary to launch a new Rock Band game so soon after the last one. With no music studio option in the new game, what qualifies it as Rock Band 2 as opposed to say Rock Band 1.5?
A few things. First of all, the soundtrack alone is an incredible value proposition—being able to get 100 playable songs for the price of $60. In the feature domain, there was so much innovation in designing the first Rock Band, so there wasn’t a lot of time to refine those features. We wanted to get Rock Band 2 out for this holiday because this is the first complete manifestation of the original vision. Big ideas like playing the World Tour mode online, the complete career mode with your band online distributed around the world—that was something we wanted in the first one that we didn’t have time to do. The Battle of the Bands tournament system is an incredibly fun new flagship feature… It takes the play experience to a whole new level.
There are also dozens of other playability refinements that we made… things like being able to create custom set lists and the jukebox mode—a lot of nice “to haves” that we wanted to have in the first game that there wasn’t time to do. We didn’t want to wait two years to release a sequel; we wanted to polish it up and refine the original experience and get that out into the world with this incredible new soundtrack.
Also, the drum trainer is another big feature. You’ve got millions of people who’ve learned some basics of drumming through playing the original Rock Band; that’s been incredible to watch and we wanted to take it to the next level. This new drum trainer mode takes you outside of the gameplay and actually teaches you interactively basic drum patterns, some fundamentals of how to do fills well. You can even do freestyle drumming and use it like an electronic drum set. You can just improvise, or if you have music stored on your Xbox 360 hard drive, you can actually load that up and drum along.
With respect to the music studio, we actually are huge believers in the power of user-generated content, but we actually don’t think an integrated music studio in the game is the right way to go about it. It’s easy to rush something to market and have something that, in our estimation, is going to be a dead end. We have a very different approach to what we think is the right way to do user-generated content, and we’ll be discussing that at a future date.
As someone who makes music games for a living, what are your thoughts on Nintendo’s new Wii Music, which has been a big focus for them at E3?
I have not heard enough about it to have an informed opinion. However, I will say in the early days of the Wii when it was first announced, we contemplated using the Wiimote for a drumming interface. We backed away from it because we found that the tactile element of actually hitting a surface when you’re drumming is a fairly critical part to the visceral feel of actually playing drums. So when you’re air drumming, it was a critical element you’re missing in the experience. So that’s one of the reasons we backed away from it and decided to build a custom drum peripheral.
Are you at all annoyed by the new Guitar Hero set up? Do you feel like Activision and Neversoft is ripping Rock Band off with the drums and vocals in GH: World Tour?
It’s to be expected. Rock Band has seen so much success this year that it’s a natural response on their part. I would say we don’t spend a lot of time focusing on the competition; we really have our own agenda for where we want to take the franchise and the [music] category. We very much see it as our role to continue to raise the bar for the other parties.
In terms of difficulty, and I’m sure you’ve heard this before, but the guitar parts in Rock Band seem to be generally easier than in Guitar Hero. Is Rock Band 2 going to adjust this difficulty?
The guiding philosophy for us when authoring patterns is staying true to the music. What we found was if material in Rock Band was actually easier compared to Guitar Hero, it’s because the actual guitar parts are easier, whereas the design mandate for GH seems to be more focused on a gamer mentality in ratcheting up the difficulty. What you see are these note charts that are very disconnected from what’s actually happening in the real guitar parts in the music; they might be more crazy from a gameplay point of view, but they’re also more disconnected from the music. So for us, that departs from our core design mandate. That said, we are bringing some music to the platform, which we’re not ready to talk about yet, that the nature of the music itself is so insane, it will be the most challenging material imaginable to play in the Rock Band universe.
With Activision hinting at a major iTunes-like platform for Guitar Hero with Vivendi’s Universal Music Group, will MTV team with Harmonix to launch a competing digital distribution platform?
Certainly these sorts of things are obviously on our minds, looking at how music and interactive music can be delivered together to consumers, and there are a lot of options that we’re contemplating but nothing we’re ready to talk about specifically at this point.
From a business standpoint, can these two different music games that are extremely similar and both rely on digital distribution for expanded music lists continue to co-exist? Can the market continue to support two proprietary closed systems? Something has to give at some point, right?
The category has already become very huge and it’s growing very quickly and will continue to grow. Like any other mature entertainment category, I think there will be a place for multiple successful franchises within the category. And I also think that while you might see feature set parity among different games, you will see stylistic differences and sensibility differences between these games that will make them appeal to different audiences. My own feeling is that the category will support multiple successful franchises for some time.
Why are you limiting RB2′s launch to one platform (X360) initially? Doesn’t it make sense to launch on all platforms right away like your competition?
The reason we’re releasing it on the 360 early is that it’s the lead development platform, so we’re finishing the game on the 360 first. And rather than hold that version back to release it when the other versions are complete, we decided we wanted to get it into the audience’s hands as early as we could.
So it’s strictly just a matter of getting it out there as fast as you could. You didn’t get some sort of incentive deal from Microsoft?
Well, Microsoft has been a great partner for us and we’ve worked with them in a number of ways, and in fact there are a number of the 360 platforms which are very well suited to Rock Band, particularly the mature online feature set and the new things we’re doing in the online world in RB2. But really, we just wanted to get the game to market as early as we could.
From your own personal viewpoint, do you feel your knowledge of music has grown since working on Guitar Hero and now Rock Band?
Absolutely. I would say that over the last few years, the process of reaching out to artists, talking to them and understanding their concerns, helping them get into this world, collaborating with them artistically… that process of starting to become an interface between the music artist community and the audience on an interactive platform has been a mind blowing experience.
What about your own musical skills. You consider yourself a musician?
I consider myself a musician, but quite a bad one. [laughs] I still play music all the time with my family and friends.
What will you be doing online?
When we launch RB2, RockBand.com is getting a major upgrade. People have gone crazy with the character creation system. We’ve really built out the character creator in RB2. For the first time we built some tech to export your character and career data from the console servers out onto the RB.com servers. So on RB.com you’ll be able to host your own personal band page like a MySpace type band page with career achievements and artwork. And we’ve built this sophisticated suite of tools that runs right in the browser where you’ll be able to create custom band art with your band members… and render it in high-res imagery. You can of course put it on your band page, but we’ve taken it one step further and we’re working with a number of third party custom merchandise manufacturers so that you can just press a button and get a custom band poster, hats and t-shirts, bumper stickers or even a figurine. So come this fall, you’ll see people walking down the street with band t-shirts of their fake RB bands on. At that point when we really start blurring the line between the game world and the real world, that’s when you’ll probably see more RB band groupies.
So how far can video game music titles go? Where do you see this genre ultimately headed? What’s the next step?
The genre will continue to evolve on at least two axes. The first is the content axis, meaning if you look at the entire universe of amazing music only the tiniest sliver of it is currently available in an interactive form. As the years go by this will just blossom and you’ll see a lot more music coming to interactive platforms. And of course, there’s the feature axis. We’ll continue to innovate in terms of the types of play, the way players are able to interact with the music. You’ll see both of these happen. Big picture, where all of this is headed, I think the market’s notion of what music entertainment is, is going to evolve. MTV’s big innovation in the ’80s was watching music… and we’re at the beginning of a similar revolution of music now where playing with music is what people are going to expect to do with music that they love. It’s how they’re going to expect to consume it, and that’s going to start touching people in every facet of their lives where they’re experiencing music.
July 28th, 2008 | Posted by innov“Design thinking” may seem like just another new buzzword in the lexicon of innovation, but Procter & Gamble (PG) is using the approach to change its culture. Leadership is listening, learning, and deploying; cross-functional teams are cracking vexing problems across its business landscape; and visualization, prototyping, and iteration are facilitating communication internally and with customers like never before. Here’s a look inside one of the most intriguing change management efforts going on in Corporate America today.
“It has been transformative for our leadership teams,” says Cindy Tripp, marketing director at P&G Global Design, as she describes her work rolling out the company’s Design Thinking Initiative. With a cadre of 100 internal facilitators, more than 40 design thinking workshops have been held in P&G business units across the globe during the past year. The design thinking facilitation team comes from every function at P&G (such as marketing, research and development, info tech, and product supply as well as design). Perhaps most important, half of the workshops focused on something other than new product initiatives to include other types of pressing business issues such as strategy, retail relationship building, and matters of operational excellence. “We want people to use these techniques daily in their work—using broad insights; learning faster; failing faster. Design thinking can be applied everywhere, every day,” says Tripp.
This attitude signifies an extreme shift for the $81.5 billion global consumer-product giant, whose long-tenured design managers describe P&G’s former attitude about design as “the last decoration station on the way to market.”
“Once business leaders see they can use design thinking to reframe problems, they are transformed,” says Tripp. “The analytical process we typically use to do our work—understand the problem and alternatives; develop several ideas; and do a final external check with the customer—gets flipped. Instead, design thinking methods instruct: There’s an opportunity somewhere in this neighborhood; use a broader consumer context to inform the opportunity; brainstorm a large quantity of fresh ideas; and co-create and iterate using low-resolution prototypes with that consumer.”
In his new book, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation, P&G CEO A.G. Lafley explains the difference between the two methods: “Business schools tend to focus on inductive thinking (based on directly observable facts) and deductive thinking (logic and analysis, typically based on past evidence),” he writes. “Design schools emphasize abductive thinking—imagining what could be possible. This new thinking approach helps us challenge assumed constraints and add to ideas, versus discouraging them.”
An excellent example of this type of reframing can be experienced by going to www.olayforyou.com. As a female consumer, I’ll be the first to tell you that Olay products are frustrating to shop for. There are too many, you can’t zone in easily on what’s right for you, and it seems like you ought to feel a little better about shelling out $29 for a tube of goo to try to keep yourself looking good. Apparently I’m not the only woman feeling this way. Through the insights into these frustrations gleaned at a design thinking workshop, Olay marketers came up with the Olayforyou.com Web site, a streamlined way to connect with consumers online.
With her soothing voice, the site’s narrator walks you through a series of engaging questions about your skin. What are your habits and goals? What problems are of concern? The experience is simple yet conveys a deep understanding of the myriad factors that make up your specialized needs. Analyzing your responses, the system quickly assembles a tailored set of recommendations for a regime that is designed to meet your age and stated desires. I found myself wishing that all retail encounters could be this easy and fulfilling.
Olayforyou.com provides a calming, easy way to receive a credible consultative experience without ever leaving your own home. P&G now offers a beauty service. Through menu choices that indicate your interests and skin issues, Olay marketers are able to start a new type of dialogue while collecting important data on users that can be more informative than expensive market research. Consumers can opt to have Olayforyou.com send a personalized skin-care regime profile by e-mail.
Dan Hamilton, brand manager for Olayforyou.com, said: “The most important result is that people are finding the right solutions and sticking with them. They describe increased satisfaction and a better experience. As a result we are seeing an increase in our equity scores and better loyalty to the brand.”
Witness in this example the underpinnings of business model innovation. With this seemingly small enhancement, Olay will also differentiate itself in a highly complex, competitive market; speed up the time in which it understands and can build new solutions for its target prospects; and build a database that will enable P&G to reach out directly to its customers on a personal basis (which is a rarity for consumer-product companies).
The innovations through design thinking continue to come: Herbal Essences’ brand transformation (BusinessWeek.com, 6/17/08), a Tide media breakthrough, and new business and organizational development strategies represent how design thinking is changing the game at P&G.
The Design Thinking initiative was the brainchild of Vice-President for Design Claudia Kotchka, who got the task from Lafley, to “get design into the DNA of the company” when she took on her position seven years ago. In a process-laden place like P&G, this is no easy task, especially because there is no way that design could take hold if perceived as tangential to P&G’s existing set of operating models. Kotchka drew together the “deans of design thinking”: Roger Martin, dean of the Rotman School of Management at the University of Toronto; David Kelley, founder of Stanford’s D.School; and Patrick Whitney, dean of the Institute of Design at Illinois Institute of Technology. “How do we teach people what design thinking is and how to use it in a way that it could scale across a company with 130,000 employees? How could we engage more functions within the organization?” says Kotchka. “If we could get this right, then the prospect of fulfilling A.G. Lafley’s vision had hope.”
The first prototype workshop with the hair-care business in London in November 2005 yielded mixed results. “Somehow it didn’t quite deliver—people didn’t take action; the lessons didn’t have staying power,” said Tripp. The workshop agenda was redesigned with more emphasis on business. “There was too much academic stuff—philosophy and theory of design. We got rid of all the theory and settled on a completely experiential approach. To effect a major transformation in the way a problem is viewed through design thinking, the team must engage completely,” Tripp continues. “Our business people wanted to get on with it. We will always engage when working on a problem in our business; but not necessarily engage when working on theoretical problems. From then on we were very selective to find worthy problems and assemble the right types of stimuli to get to the crux of the matter.”
The resulting design thinking workshop structure became more of a fast-paced immersive experience that ends with a serious reflection point about what’s different using this methodology. Says Tripp: “Most of our workshop reflections suggest that the power of doing design thinking rather than just reacting to design thinking shifted many standoffish leaders into real partners for design. Once they get it, they can’t get enough of it.”
“Participants get scared using such rough prototypes to elicit consumer feedback at the beginning, but they are won over when they see the benefits of co-creation,” says Kotchka. “We have found that the more finished a prototype is, the less feedback people will give you. When you give prospective users something half-finished, they think you don’t know the answer. They know you need their help—and really open up.”
Having facilitated so many workshops over the past year, Tripp reflected on the impact the initiative has had on her personally. “I get goose bumps at the high level of dialogue and caliber of discussion that happens. Design thinking activates both sides of the brain—it makes participants more creative, more empathetic toward the human condition P&G consumers face. Our managers don’t leave their analytical minds at home; instead they are able to operate with their whole brain, not just the left hemisphere.”
Kotchka, who recently announced her retirement from P&G after 31 years, said: “Design is going to continue to grow and prosper at P&G. That was my goal when I took this position. Our senior leaders are really engaged in design now; we have amazing global design talent, and design thinking gets all the other disciplines engaged. We have a wait list of people from every function in the company that want to become facilitators in design thinking.”
Time will tell, of course, whether design will get into P&G’s DNA as Lafley has envisioned. At any rate, the efforts of Kotchka and her team to change P&G’s game with design will go down in business history as one of the most challenging cultural transformation efforts undertaken by a major global corporation.
Bordeaux: The Other White Wine
July 25th, 2008 | Posted by innovIt is no secret that the 2005 vintage produced extraordinarily long-lived, rich red wines that have become the darlings of speculators, investors, and wine consumers. Prices are already through the roof, and they will go only higher, as this year is considered by many to be a great, modern-day classic vintage for Bordeaux. Lost in all the hyperbole about the red wines is what remarkable progress Bordeaux has made with its dry whites, usually blends of sauvignon blanc and sémillon and perhaps a tiny quantity of fragrant, flamboyant muscadelle. The finest wines can age surprisingly well, and 2005 was a delicious vintage for these dry, crisp whites that often smell of fresh figs, white currants, crushed rocks, and tropical fruits. Here is a selection of my favorites in different price ranges.
91 points
2005 La Grande Clotte Bordeaux
Michel and Dany Rolland’s beautiful generic Bordeaux admirably showcases their enviable talents. Lovely aromas of honeysuckle, wax, wheat thins, lemon oil, and pie crust-like scents emerge from this medium-bodied, fruity, well-delineated white. It should drink nicely for another four to five years. $35
91 points
2005 Reignac Bordeaux
As one might expect from proprietor Yves Vatelot, the 2005 Reignac is a superb effort exhibiting copious quantities of honeysuckle, citrus, lemon butter, and a touch of smoky oak. This serious, medium-bodied effort is meant to be consumed over the next four to five years. $35-$42
92 points
2005 De Fieuzal Pessac-Léognan
The 2005 Fieuzal offers up aromas of hazelnuts, lemon zest, white peaches, currants, and honeysuckle. Gorgeous acidity, a touch of creamy oak, and a full-bodied mouthfeel result in a Burgundian-style white Graves. Enjoy it over the next 20 years. $55-$65
92 points
2005 Malartic Lagravière Pessac-Léognan
Made in a beautiful, elegant, zesty style, the 2005 Malartic Lagravière offers copious quantities of honeyed grapefruit and other assorted citrus, crushed rock, spring flower, nectarine, and marmalade, as well as brilliant acidity and a bright, refreshing, mineral-dominated personality. It should evolve for 10 to 15 or more years. $50-$65
93 points
2005 Carbonnieux Pessac-Léognan
Beautiful aromas of white peaches, crushed rocks, candle wax, and lemon rind along with a touch of quince emerge from this medium-bodied, crisp, flavorful effort. Excellent acidity as well as a long finish suggest it will drink well for 10 to 15-plus years. $50
93 points
2005 Pavillon Blanc de Château Margaux Bordeaux
This stunningly rich 100% sauvignon blanc is drinking fabulously well at present, yet it has the potential to evolve for 15 to 20 more years. Waxy lemon oil, honeysuckle, nectarine, and subtle new oak characteristics are all present in this light gold-colored, long wine. $55-$60
95+ points
2005 Smith Haut Lafitte Pessac-Léognan
A stunningly rich, concentrated effort, the 2005 may be one of the finest whites Smith Haut-Lafitte has ever produced. It exhibits notes of honeyed oranges, honeysuckle, spring flowers, lemon grass, and melons. Gorgeous acidity, excellent concentration, and a beautiful texture result in an impressive, full-bodied wine to consume over the next two decades. $55-$70
Decreasing Expected 2008 S&P 500 Dividend Growth To 4%
July 24th, 2008 | Posted by stockDue to the unprecedented dividend decreases in the Financial sector, amounting to $14.5 billion, I are reducing my 2008 dividend payment to $28.85 from $30.30. The 2008 rate represents a 4% gain over the 2007 payment of $27.73, and is the lowest since the 2.1% gain of 2002.
By the numbers we should be past the aggregate dollar value of dividend cuts, but with the number of dividend increases slowing, it will take years to gain back what has been lost -> the determining factor will be how long it takes the Financials to get back to profitability.
Outside the index (ASE, NYSE, NNM, NSC, NGN, common, no funds), dividend cuts are increasing fast (Q2 was the worst quarter in 18 years; Month-to-date 23 decreases vs. 5 for all of July 2007), with Financials leading the way down. I expect dividend payments to be reduced as the problems filter down to the lower-cap issues.
Currently,
20 dividend decreases vs. 12 for all of 2003-2007, and 5 of those were in Q4 2007
Financials still contribute the lion’s share of dividends, 25.5% down from 34.5%
Increases continue, but at a slower rate
Cash for non-Financials remain high ($620B), with Q2 EPS coming in (48.4% reported) at +14.0% (expected to decline to +10.1%), and buybacks continuing at a rapid, but not record, pace
Top 25 payers by dollars account for 50% of the dividends -> with the exception of C they have decent 2008 and 2009 coverage (estimated earnings over dividends), but estimates are generally based on an improving economy, end of the credit problems, and a housing bottom in Q4/Q1,’09
For additional information tab here
July 23rd, 2008 | Posted by innovEcosystem is an overused term. All companies have one, yet when you strip away the rhetoric, most corporate ecosystems turn out to be conventional supplier or distribution-channel relationships with a few high-profile “strategic partnerships” thrown in for good measure. When they are not simply fodder for PR flacks, these “relationships” are often driven by short-term transactional needs, with distrust, rather than trust, as the foundation.
This is a shame, because these collaborations can become fertile ground for innovation and learning, not just among a few select partners but across an ever-expanding array of participants. SAP (SAP) has set the standard—certainly within the tech industry—and offers a good example of the potential here.
There are many reasons for SAP’s success, but two in particular stand out. First, SAP generated its ecosystem, which consists of customers, business partners, experts and independent parties by addressing the needs of the participants. Too often, companies launch ecosystem initiatives with a clear view of the benefits for themselves, but with a much less developed understanding of the needs and motivations of prospective participants. Second, SAP went further—it focused on the needs of individuals, not just companies. Even though most of its customers and partners are enterprises, SAP recognized that participation ultimately is by individuals. It designed its various collaboration platforms with the goal of making individuals more successful in their daily roles by helping them connect more effectively with the specialized resources most relevant to them.
While many technology companies have invested to build large networks of business partners and customers, SAP is one of the leaders in the scale, diversity, and integration of its vast ecosystem. Companies in many other industries could think much more imaginatively about their own relevant ecosystems, given SAP’s experiences.
Consider some of the stats. More than 9,000 companies participate in SAP’s various partner networks globally, and 1.2 million individuals participate in SAP’s online communities. Roughly 25,000 new participants sign up for the latter each month, and from 2006 to 2007, its number of page views doubled, to more than 150 million. Participants contribute some 6,000 online posts per day and create better than 60,000 wikis to handle ongoing discussions, while at least 1,200 bloggers comment regularly on community topics. More than 3.5 million posts have accumulated in these forums, and the pace of activity is accelerating. It took three years to reach the first million forum posts, nine months to reach the second million, and only six months to reach the third million. In total, 100,000 members have contributed posts to the online forums.
Beyond scale, SAP’s ecosystem has also developed remarkable diversity, with “communities of innovation” organized around specific areas of practice to address the needs of both individuals and companies. For example, the SAP Developer Network (SDN) provides a robust forum for software developers seeking to generate more value from the platforms and products sourced from SAP and its partners. More tellingly, from the time a developer posts a question until she or he receives a response takes 17 minutes, on average, and two to three additional responses typically come in over the following 24 hours to refine and amplify the initial response. About 85% of all discussion threads are closed as complete.
At the company level, 15 Industry Value Networks bring customers together with a broad range of its business partners to address specific issues—for instance, banks looking to develop software interfaces that will help them collaborate more effectively.
By contrast, the Enterprise Services Community provides a platform for technology users and partners to collaborate with SAP to define new services (such as “procure to pay” in the fashion industry or product lifecycle management for the defense industry). Often these initiatives involve the participation of technology users who are not SAP customers. More than half of the enterprise service bundles released in February 2008 as part of SAP’s enhancement package for its core ERP system were based on input provided through the Enterprise Services Community.
Unlike most technology companies, SAP has assembled all of its ecosystem components under one senior executive. Zia Yusuf is the executive vice-president of SAP’s Global Ecosystem & Partner Group. Yusuf believes that this organizational approach is critical to success. In a presentation, he observed that “when individual functions or business groups have responsibility for segments of the ecosystem, these segments tend to become silos and reflect the interests of the groups sponsoring them, rather than serving the needs of customers. By bringing all of the elements together in one place, we can more effectively focus on the customer and mobilize all of the resources relevant to the customer. We seek to improve the economics of our customers materially by accelerating value creation while at the same time helping them reduce costs.”
SAP is continuing to explore ways to scale its ecosystem initiatives and more effectively leverage the growing specialization available within the ecosystem. Already, customers use the forums to collaborate in developing shared approaches to common business needs. For example, 12 hospitals in Germany and Austria came together in an Enterprise Services Community Definition Group and, in less than six months, worked together to define the key service interfaces for several business processes. As ecosystems expand, ecosystem organizers can play a significant role in enhancing the value of the resources by finding more creative ways to connect participants.
What can other companies learn from SAP’s efforts to build a scalable ecosystem at the edge of its enterprise?
Effective ecosystems generate differentiation and specialization
Pundits often throw around terms like ecosystems, networks, webs, and communities without differentiating among these various forms of collaboration. Take a hard look at the ecosystem emerging around SAP, and you will find large-scale networks of partners that mobilize specialized expertise to participate in more focused communities. Even broader webs of participants provide the recruiting ground for new partners to join more formal networks. Each type of collaboration serves different objectives and requires different management approaches. Executives need to be clear about which form of collaboration is appropriate and manage the initiative accordingly. Companies in other industries are likely to find that the relative mix of networks, communities, and economic webs will vary.
Ecosystems evolve over time, but the orchestrator plays a key role in seeding and feeding participant initiatives
Evangelists for collaborative ecosystems often scare off executives with rhetoric suggesting that executives need to give up control and that ecosystems are “self-organizing.” Executives need to understand that traditional control-oriented management techniques do not work well in shaping broader ecosystems. At the same time, though, executives should be reassured that there are significant ways to influence the development of broader ecosystems by focusing on incentive structures and governance techniques. SAP has taken significant initiative in shaping its ecosystem over time by identifying customers’ unmet needs, seeding forums for engagement on specific topics, and encouraging participation. Its programs for recognition of significant contributions by participants have helped to increase involvement significantly in community forums.
SAP awards points for diverse contributions to its community forums, and these points ultimately qualify participants for prizes. More recently, participants can make donations to the UN World Food Program and gain a listing on a prominent Top Contributors Web page.
Robust ecosystems are helpful to individuals, not just institutions
SAP’s networks of partners mobilize firms to contribute specialized expertise in the ecosystem, but the forums where much of this value is delivered engage individuals and help make individuals more successful in their jobs. By providing ways for individuals to get their jobs done faster and become more productive in their work, SAP ensures that participation in these forums is sustained over time. If this is important in enterprise software, it is likely to be even more important in consumer product and service businesses—particularly where significant opportunity exists to engage individual consumers by connecting them with others sharing their interests.
Robust ecosystems require mobilizing large numbers of specialized third parties, not just the vendor and its customers
Troll through discussion forums organized by SAP, and you will find lots of examples of employees at one customer helping out employees of other customers. Part of the richness of these forums is that they bring together not just the experience and expertise of SAP and its clients, but the depth and breadth of thousands of highly specialized business partners. This is perhaps obvious in a complex product business, such as enterprise software, but it also can be important in a broader range of businesses. The value of relatively simple products can often be enhanced by grasping the broader context in which they are used. For example, a maker of office products might add a lot of value to filing devices by bringing together advice on office productivity techniques.
Ecosystems at the edge bleed into the core of the enterprise
Discussion forums provide an opportunity for employees to reach beyond the edge of their own enterprise to access expertise in a diverse ecosystem of other companies. The support they receive provides an opportunity to improve internal business processes and the economic performance of their companies. But the full benefits will not be realized unless executives design ways to disseminate this learning within their organizations.
Ecosystems are not just about connecting to existing resources—they help provide platforms for distributed innovation and learning
Many executives tend to view ecosystems in static terms: diverse resources can be accessed and mobilized through ecosystems. At the same time, these ecosystems can become fertile ground for the innovation of new products or services and, in the process, help all participants get better faster. As one example, SAP formed an Industry Value Network to engage a group of banks and technology partners to define new enterprise services to support activities through the life cycle of a loan, from initial marketing to ultimate repayment. Sustained collaboration by diverse participants generated significant new insights into how software can enhance bank-loan performance.
Bank Profits: Will the Good News Fade?
July 22nd, 2008 | Posted by stockSo far this earnings season, bank profits have appeared strong, or at least above the very low expectations of just a week ago. Some of this strength might be deceptive.
Morningstar analyst Jaime Peters explained why yesterday (when I was talking to her for a story on Bank of America): After all the alarm this month about Fannie Mae and Freddie Mac, and after the collapse of IndyMac Bank, financial stocks plunged. That caused strong banks, eager to prove that everything was OK, to move up their earnings releases. Some other strong banks were already early on the calendar.
Wells Fargo (WFC), Citigroup (C), JPMorgan Chase (JPM), Bank of America (BAC) and several smaller regional names beat analyst expectations in the past week.
Today, however, Wachovia (WB) is reporting weak earnings. Tonight, troubled Washington Mutual (WM) reports.
So, whereas the strong banks reported early, the next couple weeks could bring financial results from some of the more stressed big banks and from regional banks in hard-hit areas like California and Florida. We’ll see.
One benefit of this earnings season — if you can call it a benefit — might be to add some subtlety and nuance to investor behavior. Faced with the looming uncertainty of the credit crisis, investors have punished nearly all financial stocks. As investors get more information, they might learn to distinguish between the strong, the weak and those in between.
Financial Reporting Follies? Not in this case…
July 18th, 2008 | Posted by stockSometimes it’s hard to know why the stock market rose or fell in a given day. Yesterday, it wasn’t. The main reasons for Thursday’s rally were a drop in oil prices (prices had fallen $15 in three days) and a good earnings report from JPMorgan Chase (JPM).
However, Kevin Drum, the well-respected blogger at Washington Monthly, criticizes a New York Times story on the market action, suggesting its “explanation has been created out of whole cloth.”
Drum writes:
Here’s the story they invented to explain it: (a) there’s a widespread belief that the global economy is tanking, thus (b) reducing the demand for oil and (c) driving down oil prices. Wall Street, (d) seeing plummeting oil prices, (e) is elated and (f) drives stock prices up.
If you read the Times story, you can see that Drum is mischaracterizing, or maybe misunderstanding, its explanation of the day’s events.
The stock market reacts to what is new. Worries about a global slowdown — not, please note, a global recession — have been with us for weeks if not months. In fact, this is one reason why high oil prices are such a concern for investors, because they might slow world economic growth. The question, however, was whether a reduction in growth rates would affect oil prices.
The past few days are the first signs that this slowdown might actually be reducing demand for energy. That’s undeniably a good thing for the world’s stock markets. Along with the JPMorgan news, which Drum doesn’t mention.
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