Archive for the ‘business’ Category

Perfect ad network

Wednesday, September 10th, 2008

I saw somewhere the following question and decided to share the results of some of the resulting firings of my neurons:

In your opinion, how would a perfect ad network look like?

This blog and my entire Web site is currently working with Google AdSense ad network. It appears to do pretty good job, but the following could improve it:

  • Option to forward all ad requests or part of them to the Webmaster for vetting. Sometimes it is obvious to the Webmaster that an ad will not be effective on a particular Web site.
  • Option for the Webmaster to specify a recommended location for an ad in his Website, overriding the ad network’s choice.
  • Better reporting to the Webmaster of clickthroughs on specific ads in specific locations, to help the Webmaster optimize his overriding decisions.
  • Effective mechanism for ad publisher to complain that clickthroughs from a particular Web site yielded no income and should not be compensated for - this will ensure that the Webmasters are kept honest.
  • Effective mechanism for Webmasters to know whether ad publishers abused the mechanism of repudiating clickthroughs as yielding no income - to keep them honest, according to the Webmasters’ point of view.

A Vista Conspiracy Theory

Saturday, July 19th, 2008

One possible reason for the stupidity of Microsoft in handling MS-Vista, especially in its attempts to ram MS-Vista through its customers’ throats instead of MS-Windows XP, is as follows.

Shortly after SCO sued IBM and other companies due to violation of its Linux copyright, IBM and possibly other big companies decided upon two-pronged counter attack.  First, they would fight SCO in court to the bitter end.

The conspiracy theory expoused below has to do with the second prong.  The goal here is to cause Microsoft to bleed as much money and as quickly as possible, so that it’ll not have the financial means to continue to support SCO until its defendants wear out.

For this purpose, moles may have been installed in Microsoft (or maybe Microsoft employees were bribed) to deliberately make the wrong managerial decisions, to sap the morale of the working software developers, to entangle the projects in cobwebs, to bog the projects down in intricate dependencies and frivolous compatibilities with the past, to surrender too easily to Hollywood moguls when they ask for DRM measures to be built into MS-Vista.

Since Microsoft had the fatal combination of de-facto monopoly position and huge cash reserves, both had to be attacked.  The monopoly position was attacked by making MS-Vista incompatible with MS-Windows XP, so that people would find it just as easy to switch to Linux or to Mac OS as it is to MS-Vista.  The cash position was attacked by turning MS-Vista into huge cash drain.

The Matzliach Method

Wednesday, May 7th, 2008

Matzliach (מצליח) is an Hebrew word meaning “successful”. The Matzliach Method is asking for more than what you are entitled to. If the other side does not object, you get more. If the other side objects, you get what you are entitled to. This method works when there is no penalty for trying to get more than what you are entitled to.

Israel has two high volume dailies - Ma’ariv and Yedioth Aharonot. The issue price for both is 4.80NIS during the week, and 10.50NIS on Fridays, when the issues are larger. The holiday eve issues are usually larger and cost 10.50NIS apiece, even when the holiday eve does not fall on Friday.

Today is the Israeli Independence Day eve. Today, Ma’ariv and Yedioth Aharonot put out larger issues. Ma’ariv charges 10.50NIS for its issue, whereas Yedioth Aharonot charges 4.80NIS.

This discrepancy in prices let the groceries and other vendors of newspapers enjoy a windfall by applying the Matzliach method as follows.

The shopkeeper claims that the printed Yedioth Aharonot price is a typo and the real price is 10.50NIS. If a customer buys this argument, the shopkeeper makes a nice profit. If the customer argues back, pointing out the absence of any billboard notice about this, the shopkeeper backs off and lets the customer buy the newspaper for 4.80NIS.

I want to buy your trash!

Monday, April 7th, 2008

I am a recycling plant.
I extract energy from your organic trash and use it in my other recycling processes.
I extract pure water from your sewage water.
I separate rare metals from your inorganic solid waste and sell them to manufacturers of goods.
I developed technologies for inexpensive transportation of your wastes into me.
I have advanced technologies for separating out mixtures, so that you will not need to sort your own trash.
I invest a lot into R&D for developing cheaper and better methods of processing your refuse.
I have lobbyists in legislature bodies, who cause the appropriate laws to be passed, so that it is cheaper for you to sell me your refuse for a pittance, than to dispose of it in manner which pollutes the environment.
I hand out research grants to scientists, who research methods for separating radioactive nuclei out of material, with the goal of purifying radioactive wastes.

(Translation from inscriptions on a marble slab, which was found in Antarctica after all ice was dissolved due to global warming, and which is believed to be 65 million years old.)

Ph.D. dissertation about Deaf entrepreneurs

Wednesday, March 19th, 2008

Yesterday I spent all day reading Sue Ellen Pressman’s Ph.D. dissertation “A NATIONAL STUDY OF DEAF ENTREPRENEURS AND SMALL BUSINESS OWNERS: IMPLICATIONS FOR CAREER COUNSELING”. As far as Pressman and I know, this is the first time such a study was undertaken.

I have a methodological note: the study claims to be based upon a representative sample of the deaf entrepreneurs in USA. However this claim is not supported by the methodology used. The sample was self-selected by consent to answer a questionnaire, and by being member of (or known to) Deaf and hard of Hearing Entrepreneurial Council (DHHEC) i.e. included in DHHEC’s mailing list.

There also seem to be few non sequiturs. Most entrepreneurs had some postsecondary school experience (some of them having college degree), but it does not by itself imply necessity of postsecondary school experience for success in business. Similarly, the fact that most of the entrepreneurs use voice to communicate with hearing customers and employees - does not by itself imply that voice is necessary or advisable for business success.

The following study findings are not obvious:

  • Deaf entrepreneurs usually had hearing employees and hearing customers.
  • Percentage of college graduates among Deaf entrepreneurs is higher than that among hearing entrepreneurs.
  • To communicate with hearing employees and customers, about 60% of the Deaf entrepreneurs used writing.

I made the following mental notes upon reflecting upon the study:

  • Cultivation of relay services goes together with development of deaf owned businesses.
  • There is a problem (not mentioned in the study) of lack of mutual trust among the Deaf in business, at least in Israel.

The “Intelligent Design” Battle

Saturday, March 1st, 2008

In USA, there is now a battle between science supporters and “Intelligent Design” supporters over incorporation of “Intelligent Design” in science education standards. See, for example, Creationism in the Classroom: Florida and Texas, Then the Nation.

Due to the fundamental role of evolution in understanding biological processes, may I suggest that venture capitalists, investors and businesses specializing in medical, pharmaceutical and biotech technologies - boycott districts, states and countries, in which the educational establishment promotes “Creationism” and “Intelligent Design” over objections by scientists.

Furthermore, it would be a good idea to move existing factories out of those regions, in which the educational establishment does not meet its duty of educating, in science, future employees for those establishments.

2008 Mar 04 update:   see also Creationist Biologist Says Civil Rights Violated by Employer’s Insistence on Evolution.  This is a case, in which a research establishment, in which evolution plays a fundamental role, was sued by a creationist, who was asked to resign from his job there after revealing his creationist beliefs.

Neo-marxist solution to the modern day customer service woes

Saturday, December 29th, 2007

A series of blog articles about the bad customer service of HOT (the Israeli provider of cable TV, which provides also Internet and alternative telephony services) appearing in Dakar’s blog (the links are: http://www.dakars.info/general/hot-rumbling/ http://www.dakars.info/general/hot-the-story-continues-1/ http://www.dakars.info/general/hot-the-story-continues-2/ http://www.dakars.info/general/hot-the-story-continues-2-2/ - all in Hebrew) prompted me to think the general issue through. The problem is specific neither to HOT nor to Israel.

Essentially, what happens is that companies provide excellent service until the moment you sign over the dotted line. Once you are committeed to pay the monthly payments, they neglect to do proper installation, activation or maintenance/upgrades. When you want to disconnect from the service, they make you jump through hoops in their customer retention department.

Hundred years ago, this kind of problems did not exist due to the following reasons:

  • Very few deals involved post-sale customer service. You simply bought something, forked over the money and went home whistling merrily.
  • Service-oriented businesses catered to the Rich and Influential. They were not price-conscious. So companies were not under price competitive pressure to cut back in service quality.
  • Managers were not subjected to the kind of pressure today’s managers are subjected to by investors, who expect steady growth in earnings each quarter.

On the other hand, hundred years ago employees suffered from horrible working conditions. This problem was ameliorated through the marxist approaches of laborers’ committees, labor unions, and employee part-ownership in the business. Those solutions were enforced by strikes and other means.

Let’s try to carry further the analogy between capitalist-laborer gap of hundred years ago and today’s provider-consumer gap.

One of the problems is that the service providers answer to their stock owners, who are typically pension funds - rather than their own customers. So their management is supposed to serve the owners’ interest by squeezing as much profits as possible - rather than by provision of great service to owners who are also customers. Therefore, one solution is for customers to own a part of the business and have enough influence in its board to get it to have the proper trade-off between service quality and stock dividends.

Other possible approaches:

  • Customer representative committees, with which the companies have to negotiate acceptable service quality levels. Class action lawsuits, which already exist today, are a step in this direction.
  • Customer boycotts - are analogous to laborer strikes.

One more aspect is that hundred years ago, companies formed cartels, which monopolized their respective industries. The monopolies typically fixed prices. Those practices were largely stopped thanks to legislation, which regulates and prohibits anti-competitive behavior. Customers were (and still are today) price-sensitive, so there was a lot of political support for this kind of regulation.

However, this kind of regulation does not seem to extend to service levels. So consumers are often faced by having to deal with one of few companies, which provide essentially the same product/service, and at very similar prices - AND with similarly horrible levels of service.

There may be a market failure lurking in this, because customers typically shop by prices alone. They would know and value the quality of customer service only if anything goes wrong - not the thought one entertains when ordering the product/service. If a company offers different levels of service at different prices, most of the customers would buy the lowest level of service and then demand the highest level of service… Maybe customer representative committees can help with this, by helping to adjust the expectations of both producer and customer from each other.

Difference between music (or books) and video

Thursday, December 27th, 2007

Peter Fader, a marketing professor in Wharton, was interviewed few months ago about the Radiohead’s release of their album online (Radiohead’s Free-for-all: Performance Art or New Business Model?, registration required).

He got it wrong when comparing movie DVDs to music CDs.

When you view a movie, you want to view it on a big screen with speakers, in a comfortable surrounding, and with popcorn or sunflower seeds on hand. Thus, viewing a movie is not an activity to be performed at any random place and time. You have at most few venues in which you would view a movie. Therefore, it is feasible to force you to use a memento, (such as a VCR cassette or a movie DVD) having a volume and a weight, to view a movie.

On the other hand, music is consumed in iPODs and MP3 players and everywhere. So ideally, you want to have it as a weightless bitstream. Therefore, any attempt to lock music down to a CD album would be counterproductive. Similarly - for books. While books require one’s undivided attention, one wants to read them at idle moments everywhere. Therefore they had better be available as weightless bitstreams in e-book readers, as well.

Technical Debt

Saturday, November 3rd, 2007

When developing software, there are several times at which you can choose among quick&ugly hack, which will incur higher maintenance headaches in the future, and slow&clean design. Usually, the slow&clean design is the way to go. But life is complicated and has a way to contrive an exception for each rule. Therefore, one should know how to manage the consequences of quick&ugly hacks.

This is the subject of technical debt, written about by people like Steve McConnell.

Roughly, you incur technical debt whenever you make a design or implementation decision which will require future rework or higher maintenance workload. The decision could be also something trivial such as not bothering to invest in documenting your present design, causing the future maintainer to waste time learning your design before modifying it.

Technical debt is written off when the software package in question is taken out of use due to replacement by a newer software package, the application area becoming irrelevant, or the company going bankrupt.

References:

The Financial Services Marketing Handbook

Saturday, October 20th, 2007

Authors: Evelyn Ehrlich, Ph.D., and Duke Fanelli.

English edition originally published by Bloomberg Press (2004), ISBN-10: 1576601560.

The book was translated into Hebrew by Esti Vachtel, and the Hebrew edition was published by Triwaks Enterprises/Matar Publishing House at 2006. The Hebrew translation is excellent.

The target audience for the book are financial service providers. Their point of view is also the one expoused in the book. The book does not teach them how to cheat their customers, but it hints at the annoyance of legislation limiting telemarketing and spam E-mail.

The original reason for my reading the book was to learn how we are being cheated by financial service providers. However, the book turned out to be unsuitable for this purpose.

The book provides good introduction to marketing in general, dividing it into the following sub-topics:

  • Market segmentation
  • Positioning and branding
  • Marketing plan
  • Advertising
  • Public Relations (PR)
  • Sponsorship
  • Direct Marketing - direct mailing, telemarketing
  • Internet
  • Personal Marketing - cooperation between marketing and sales
  • Exhibitions and Seminars
  • Customer Conservation (Customer-focused marketing)

According to the book, marketing of financial services differs from marketing of other products or services in the following ways:

  1. Financial services are not products, as usually defined. Products are something, which can be branded and guaranteed to be identical for all customers. However, financial services are tailored for each customer separately. Financial services are also not services, as usually defined: each customer has different experience, according to the banker or broker serving him.
  2. Financial services are often “sold” not by the provider’s employees but by independent sales agents, such as insurance agent, pension fund consultant, or personal finance consultant. Therefore, marketers of financial services need to sell their service to both the customer and to the sales agent.
  3. Financial services need to be sold as both product and service. There was an example of a credit card, which was sold without good post-sale service, so customers cancelled it en masse.
  4. As a product: it is possible to separate production of a financial service from its consumption. It is not a perishable product. It is amenable to mass production.
  5. As a service: it is possible to launch it with low initial expenditure. One can enter market quickly. On the other hand, it is impossible to have exclusivity (no intellectual property right protection).
  6. Money has heavy psychological luggage.
  7. This economic sector is very regulated!

The book ends with an appendix, which illustrates how four financial service agents succeed by applying the principles expoused by the book to their specific circumstances.