The Challenge Dividend

Illegal Challenge to Textbook Market

2008-09-30T06:00:00-04:00

You may have heard over the past few years that the price of textbooks for college continues to increase rapidly at the same time that digital printing and new classroom techniques should be bringing prices down. Despite protests, the handful of textbook publishers seems to have been able to retain its pricing power. They have cleverly forced through updates that kill the used book market, and are forcing add-ins like digital workbooks and problem-solving sets that go unused. But while the market atrophies and government sits on the sidelines, today's student is taking matters into her own hands - by embracing Internet piracy.

It's pretty clear that the textbook market is an inefficient one. First, there are few competitors in the market - each classroom must use a single edition, and the marketplace has consolidated. Second, schools and professors directly benefit from the high prices. At best, they don't feel students' pain, so fail to drive lower prices. Even worse, they make more money when prices go up and the used book market is quashed. Students have no choice other than quitting school or refusing to take a necessary class. Some push the pain off to parents or long-term loans - which further minimizes the true market impact.

Protests against rising textbook prices are gaining at schools across the country. An organization called Make Textbooks Affordable unites several state school student organizations to lobby congress and push the debate. But Alex Beam in the Boston Globe praises students that are doing to textbooks what kids did to the music industry with Napster years ago. He summarizes the benefit of this illegal challenge to textbook publishers:

"A young Northeastern University student named Shawn Fanning wrung billions of dollars of excess profits from the record companies when he invented Napster...But Steve Jobs found the right price point for music at iTunes. Between the pirates and the publishers, we'll find our way to the right price point for textbooks, too."

I am certainly not a fan of copyright violations and the act of taking money out of the mouths of those who create intellectual property. But at times when the market is not working efficiently, when it does not contain enough challenge to drive improvement, dramatic actions will occur. As in this case, the court of public opinion will get ahead of our legal system and politicians, and people will "take up arms" against repression.

Like the record industry, which is finally innovating and adjusting to listeners' anger over price increases, album formats and usage controls, the textbook industry had better improve the value equation for students quickly, or a surge in illegal sharing will upend its entire business model.

Capitalism May Prevent Cold War 2

2008-09-25T06:00:00-04:00

The nation of Russia seems to be feeling a surge in pride after its walk over the former Soviet republic of Georgia. But the party seems to have left the country with a bit of an economic hangover. Actually, you might call a 43% drop in the country's stock market is a lot more damage than a hangover.

According to Bloomberg.com, foreign investors have pulled $35 billion out of the country. Russian President Dmitri Medvedev has ordered the government to do "everything necessary" to reassure foreign investors. Sorry, Dmitri, but even a nation sitting on so many naturally resources still rests on global exchange and cooperation for economic success.

The only thing Russia can do to improve its economic stability is to bring military stability to its part of the world. Whatever George Bush says, the real power rests with investors in today's society. Russia's economy is still relatively small and volatile, and while it may have a powerful military - it is not strong enough to ignore investors' wrath.

While some fear we are heading into a second Cold War - and I believe the McCain/Palin ticket seems eager for this as a way to scare voters into sticking with a Republican ticket - the reality is that our economic co-dependencies will increasingly prevent dangerous military actions. The challenge of this powerful, global flow of capital, and the present example of the economic results of Russia's action, will lead to fewer flare-ups, greater stability, and a chance for everyone to make more money together.

Electing to Fact Check

2008-09-23T06:00:00-04:00

In the history of warfare, major conflicts often brought some breakthrough innovation in technology that defined the scale and outcome of battle. The English Longbow defined the Hundred Years' War. The machine gun drove trench warfare of World War I. And the threat of nuclear weapons defined the Cold War.

Similarly, every four years the presidential election seems to bring at least once new innovation that defines the period and drives outcomes. In 1960 it was the use of television and Kennedy's polished look over Nixon's five-o'clock shadow. In 2004 we saw the rise of bloggers as a respected part of the media sphere of influence. I predict that this election of 2008 will be defined by the rise of the Fact Checker.

If you take a semi-close look at the newspaper and television coverage of this election, it seems now more than ever that reporters are spending as much time discussing the truth of candidates' statements as they do sharing the statements themselves. Fox News has the "no spin zone" and CNN talks about "the spin cycle." In both and other features, experts from both parties counter the claims and check the facts of candidates' words.

I've been particularly impressed by the work of FactCheck.org. Factcheck.org is a non-partisan, non-profit group that "aims to reduce the level of deception and confusion in U.S. politics." The group is a project by the University of Pennsylvania's Annenberg Public Policy Center. The website is the hub of the group and it is surprisingly deep. There are RSS feeds and mobile alerts and the fact-checking analysis is updated at least daily. I found the site to be hard-hitting on both parties. TV commercials from each side are pointedly criticized - whether it's "an Obama ad plays fast and loose with McCain's voting record" or "Palin says Alaska supplies 20 percent of U.S. energy. Not even close."

Another service that I recently discovered suggests that this trend is bleeding over into other areas of society. A site called SpinSpotter.com launched in "very beta" just a few weeks ago. It features an application called "Spinoculars" that "sites in your browser's toolbar" and is "programmed to spot certain indicators of potential bias" in the articles that you read. Users help add to the rules of the system, and it looks for things like quoting partisan sources, then paints the text in red.

I believe the rise of Fact Checking and Spin Spotting are types of challenges that will improve our government and broader society. Overall, these services force competitors to play fair and be truthful, it's a little bit like an attorney in a courtroom being able to "object" to improper language from the other side. As in a court of law, attorney's end up playing by the rules, and we get a better judicial system. In politics, marketing and journalism, the rise of services that check our facts will help keep all of us playing equally on a higher-level field. The liars will fail to hold an edge, and people will tend to trust statements and claims.

This challenge might lead to a better President in 2009, and better society for centuries to come.

Nike+ Challenging Me to Run

2008-09-16T06:00:00-04:00

A few days ago, over on my marketing-focused blog, Marketing with Meaning, I wrote about my early experiences with the Nike+ system. For those who haven't seen it, there's a sensor for your shoe that links to an iPod, which in turn tracks your time and distance while running then syncs with a Nike website. It's a great example of a value-added tool from Nike that helps improve people's lives while selling more shoes. But as I continue to use the system myself, I'm finding some very interesting Challenge Dividends.

The overall goal of the Nike+ system is to coach you to run more miles and run faster. There are multiple ways that the system challenges you to improve. For example:

All of your runs are recorded, giving you a chance to watch your progress over time. It's motivation to increase your total miles and lower your total average time. Personal bests for total distance and best time on 1 mile, 5k and 10k are recorded.
You can set goals for yourself that are tracked with your runs. I've got a goal right now to run 24 times over 4 weeks. When you achieve a challenge, you get a marker for your "trophy case."
There are events like the recent Human Race 10k, in which you upload a 10k time and see how you placed among people around the world.
There are hundreds of challenges created by friends and people in the community. Right now I'm participating in two challenges: (1) the NFL challenge in which the team whose fans run the most miles wins; and (2) the "4 For Fall" challenge set by a couple of friends in which we're trying to run the fastest 4-miles by October.
Nike+ periodically recognizes you for adding on miles. At 10 miles, it encouraged me to hit 100. And when you hit 100 you enter a special hall-of-fame with about 250,000 other people
Although I tend to use my iPod just to track my distance, if you listen there is a voice that encourages you to keep going or tells you that you hit a personal best.
The system offers goal-based training programs to help you plan out weeks of preparation for, say, a 10k or marathon.
You can create a screen saver and Facebook widget called a Nike Mini - it's a character that says and does things based on your recent runs. Mine is above.

I'm sure results vary for Nike+ users, but so far I'm enjoying the heck out of it. Every time after I run I rush up to my laptop to sync my information. I love the feedback of seeing my new info and updated totals. Yesterday I ran my fastest 5k in over a decade as a way of working toward the 4-mile challenge with my friends. And my 24 runs in 4 weeks challenge is motivating me to make it happen.

These challenges from the Nike+ system are paying other dividends as well. I feel both physically and mentally healthier than I have in years because of my return to running. I have lost about 10 pounds in a month without having to curb my eating choices at all. And I'm really having a lot of fun both running and discovering more about how the Nike+ system can work for me. I have to compare it to my Guitar Hero experience, which also felt like a fun activity that actually is designed to build skills.

I'm still only a few weeks into my return to running through Nike+, and although I love it now, I am somewhat wary that I may grow tired of it. But I trust Nike will keep investing in and improving the system, knowing that only a continuous flow of new challenges will pay the dividends to both the brand and its customers.

UPDATE: I reached 100 total miles!

The Power of Vetting

2008-09-02T06:00:00-04:00

(Sorry for my lack of posts lately. I've had vacation and some busy work weeks.)

Don't you just love it when a rarely-used word seems to be everywhere you turn all of a sudden. My word-of-the-month is "vetted". No, it has nothing to do with Corvette - sorry for the lame pun and photo. Instead, it's the "process of examination and evaluation" that is used to check into something or someone before a final decision is made. It's also an interesting sub-point in the idea of The Challenge Dividend.

Most readers have heard "vetting" used to describe McCain and Obama's search for a Vice Presidential candidate. We heard news stories of potential nominees that were and were not vetted. In the past week we've seen praise for the selection of Joe Biden, a man vetted by many campaigns and decades in the Senate. And this weekend we've seen analysis on the risk of the selection of Sarah Palin, a political newcomer who was vetted by a committee but not the harsh glare of national media.

Last week I encountered the concept of "vetting" while meeting management of one of my clients. We were receiving our annual agency performance review (itself a great Challenge Dividend concept), and heard that - while lots of other new agencies are trying to do work for the client - the digital agency world is full of over-promising and under-delivering. Our client felt great that we were doing great work and delivered on our promises. In her words: "You are vetted."

The vetting process is smart for all manner of "hiring" decisions, and seems to be increasing as we have access to new tools and technology. When I interview people, I usually take only a cursory look at the resume - and instead use tools like Google and LinkedIn to form my initial impressions. Why? Well, the resume is like a one-sided advertisement. You only see the good stuff in the best possible light. But other information, tools, and personal references help to "vet" candidates in a more trusted way. And when I have to make a critical employment decision, I cannot afford to trust only a resume and a few hours of interviews. Meanwhile, the act of vetting job applicants ensures that these people work harder to make impartial, positive impressions.

We'll see if the "vetting" concept dies away as the Vice Presidents are picked and the race for the White House is finished. I think this one might stick around, as it's another powerful way that challenge drives improvement.

Inside Seinfeld's Challenge

2008-08-18T06:00:00-04:00

I think I'm a pretty good presenter. Presenting and speaking in public is something I've loved for years. In fact, I'd probably rather speak in front of 300 people than walk up and strike a conversation with 1 stranger at a party.

Part of what makes me better is a desire to continue to improve. Every time I see another person take the stage I immediately go into learning mode - judging his or her approach, what's working, what's not, and what I want to build into my skill set. It's why I read the Presentation Zen blog, and why I rushed to buy a DVD that shares the remarkable story of another "presenter" that continues to challenge himself: Jerry Seinfeld.

The movie, Jerry Seinfeld - Comedian, has actually been on the market for around five years. It is a documentary film that follows Seinfeld as he tries to return to his stand-up comedian days. We follow him from months in small venues working on his craft, to his big moment back before crowds of thousands. The film dissects the process of writing and testing new material. We see Seinfeld's drive to keep performing again and again, even though he has nothing to prove and plenty of money to burn. In driving after midnight in hopes that a club is still open, Seinfeld says, "I could be in Bora Bora snorkeling right now." But he presses on.

The movie is also fascinating in that it shows how Seinfeld continues to learn from other comedians. In the bar between acts, he pulls insights from Colin Quinn, Robert Klein, and Bill Cosby. Despite his success, Seinfeld isn't too proud to admit that he is struggling and he even bombs in front of the crowd (and cameras) a few times.

There's a ton to learn from this 82 minute movie, and each person will take away different lessons. For me, it's a great reminder that even though I have skills and success, I must push myself to perfect my craft. I must remember that each performance is a fresh start, a new audience and another challenge. Kudos to Jerry Seinfeld for opening up his ego to criticism. By challenging himself in this way he improved, and so do we.

1-Year Daily Journal Anniversary

2008-08-14T06:00:00-04:00

A year and a day ago on August 13, 2008 I challenged myself to start a new habit of writing a short journal entry at the end of each day. I drew inspiration from Gretchen Rubin at the Happiness Project blog, where she talked about her own anniversary of starting a "one-sentence" journal. I also used the Seinfeldian Chain to mark off successful days on a calendar to build the habit.

It's been a very interesting personal experience so far, with several benefits. First, it really helps me reflect on what was meaningful over the course of each day. When I have bad days, I have a way to work through the pain. On the good days, I smile again and revel in what went well. On the average days, I find something worth remembering.

I'm also really happy that my journal will be something that my children and their children (and so on), can read long after I'm gone. I see the benefit of such journals when I read the Little House on the Prairie books to my girls. They are priceless first-hand accounts of a life that is long past. In fact, I often write thinking about what my ancestors might say when the read my words 100 years from now.

Finally, it's not really that much work. I have a reminder system but don't need it as much anymore. I really look forward to writing my entries 5 minutes before bed.

I haven't looked back at any posts, and I rarely go back to read my journals that I've kept on and off in the past. I don't want to relive past memories, but writing the present memories helps me appreciate what's next so much more.

France Makes Good

2008-08-11T06:00:00-04:00

I've blasted the French a few times here in this blog. While I love visiting France, I feel that its cultural aversion to free market competition has led the country toward ruin. In April '06, for example, the country caved to protesters after trying to weaken laws that make it almost impossible for companies to fire workers. But now France seems to be making positive steps, as last week the government-imposed 35-hour work-week was finally scrapped.

France's President, Nicolas Sarkozy, was elected on a platform to modernize France's economy. He has been unafraid to attack sacred cows and cut government bureaucracy. The 35-hour work week has been one of his most visible targets. It was introduced 10 years ago in an effort to solve 13% unemployment by spreading hours over more people. Economists show that while unemployment did drop to 9%, it came at the cost of $17 billion a year in government aid, and drove the country to under-perform versus most other developed nations in terms of growth.

Some complain that the 35-hour week helps retain a unique cultural difference in France. The country takes pride in its zeal for enjoyment of life. According to a BusinessWeek article from way back in 2003, "The French work fewer hours than just about anyone in the developed world, and 24% less on average than workers in the U.S."

But the French have come to realize that they need a little more balance in their work-life. In order to retain their culture and lifestyle, they must have a growing economy. And a growing economy is one that is competitive with the rest of the world. Touche.

TSA Embraces Performance Pay

2008-08-07T06:00:00-04:00

As a frequent traveler, I've had my share of frustrations with the Transportation Safety Administration (TSA). But a few months ago I started to form more of a relationship with the TSA. No, I didn't get put on the terror watch list. Rather, I began to read the TSA's blog. Back in April '08 I blogged about the TSA blog, which does an excellent job of putting a human face on the organization and explaining why they do the things they do. In my day job at a digital marketing agency I tell the TSA blog story continually, suggesting to clients that "if the TSA can do it, you can do it!" (Alas, most still don't get it...but that's another story).

A few weeks ago my love for the TSA deepened, as I discovered that this government organization - usually a sign of bureaucracy and little innovation - is using a pay-for-performance model for its employees. Called the Performance Accountability and Standards System (PASS), the focus of the effort is on random tests of its screeners, whose results are used to determine compensation. I was frankly blown away by some of the comments on the blog and the testimony from TSA Deputy Administrator, Gale Rossides. Here's some killer quotes:

Our belief is that rewarding excellent performers is one way to motivate a workforce with a deadly serious job to do. Conversely, not rewarding mediocre performance based solely on seniority is a way to motivate people to step up or consider other career options.
When you get paid more to do a better job, you do a better job. PASS is targeted to reward excellent performance. That is an incentive to perform at the highest level to which you are capable. PASS rewards the individual performance necessary to achieve TSA's organizational goals and that increases security.
TSA's pay-for-performance system is driven by validated data. Its performance metrics are standardized, measurable, observable and almost completely objective. PASS has been adjusted based on feedback from our Officers about what the real job is.
Our Officers have told us they want a pay-for-performance system because they know what is at stake: they want to know that their fellow officers are equally competent.
TSA supervisors have a significant stake in the PASS program as well, and they are evaluated on how effectively and fairly they administer it. Successful implementation of the program is a component of their own PASS ratings.
Our goal is for our Officers to be switched on and always at the ready. Pay for performance drives their higher level of performance because their earning power is directly tied to their learning power.
While significant advances are being made in our technology and security processes, each day's success begins and ends with our Officers...Pay-for-performance is vital to sustaining this top performing workforce.

It almost brings a tear to my eye to read the story of a government going against the odds to implement a Challenge Dividend-friendly performance pay system. Not only does it take fresh thinking to come up with this idea, but the TSA leadership continues to have to defend it against complaints from the federal employee unions.

So it begs the question: Why did the TSA take such a measure? I believe it's because the stakes are too high, and the TSA leadership chain knew that it had to model the best management tools from the competitive private sector to succeed in this absolutely critical job. So the next time you're going through the usual routine in airport security, you should breathe a little easier knowing that your TSA officers are as motivated to succeed as you are in your job.

Hospitals' Incentive to Be Nice

2008-08-04T06:00:00-04:00

Back in September of 2006 I blogged about a study showing that doctors who are nice to their patients are sued for malpractice less often - despite the fact that nice and mean doctors make about the same number of mistakes. Two years later, hospitals are starting to see the religion of making nice. And patients and hospital owners are smiling about the results.

On the Freakonomics blog on July 21, guest columnist Julie Salamon (who spent a year watching from inside Maimonides Medical Center in Brooklyn) writes that hospitals have banded together in the Joint Commission on Accreditation of Hospitals to require its 15,000 member hospitals, nursing homes, and other health agencies to create and abide by a "code of conduct that defines acceptable and unacceptable behaviors and to create a formal process for managing unacceptable behavior."

This "better behavior commission" agrees that patients who feel their have been treated fairly and kindly are less likely to bring lawsuits against doctors. But their report also suggests that disrespect among staff members can worsen treatment as well. Doctors who treat nurses poorly, for example, create a tense atmosphere that can lead to blinding emotions and resulting mistakes.

While she does not report on any change in malpractice suits or hospital financial performance, Salamon shares the results of a Maimonides survey below, which shows dramatic improvement in staff behavior.

As I said nearly two years ago, the real magic of The Challenge Dividend occurs when challenge not only improves business results and innovation, but when the by-product is a better society.