June 1, 2009 | Refinancing

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New Twitter Research: Men Follow Men and Nobody Tweets

June 1st, 2009

Twitter has attracted tremendous attention from the media and celebrities, but there is much uncertainty about Twitter’s purpose. Is Twitter a communications service for friends and groups, a means of expressing yourself freely, or simply a marketing tool?

We examined the activity of a random sample of 300,000 Twitter users in May 2009 to find out how people are using the service. We then compared our findings to activity on other social networks and online content production venues. Our findings are very surprising.

Of our sample (300,542 users, collected in May 2009), 80% are followed by or follow at least one user. By comparison, only 60 to 65% of other online social networks’ members had at least one friend (when these networks were at a similar level of development). This suggests that actual users (as opposed to the media at large) understand how Twitter works.

Although men and women follow a similar number of Twitter users, men have 15% more followers than women. Men also have more reciprocated relationships, in which two users follow each other. This “follower split” suggests that women are driven less by followers than men, or have more stringent thresholds for reciprocating relationships. This is intriguing, especially given that females hold a slight majority on Twitter: we found that men comprise 45% of Twitter users, while women represent 55%. To get this figure, we cross-referenced users’ “real names” against a database of 40,000 strongly gendered names.

Even more interesting is who follows whom. We found that an average man is almost twice more likely to follow another man than a woman. Similarly, an average woman is 25% more likely to follow a man than a woman. Finally, an average man is 40% more likely to be followed by another man than by a woman. These results cannot be explained by different tweeting activity – both men and women tweet at the same rate.

These results are stunning given what previous research has found in the context of online social networks. On a typical online social network, most of the activity is focused around women – men follow content produced by women they do and do not know, and women follow content produced by women they know. Generally, men receive comparatively little attention from other men or from women. We wonder to what extent this pattern of results arises because men and women find the content produced by other men on Twitter more compelling than on a typical social network, and men find the content produced by women less compelling (because of a lack of photo sharing, detailed biographies, etc.).

Twitter’s usage patterns are also very different from a typical on-line social network. A typical Twitter user contributes very rarely. Among Twitter users, the median number of lifetime tweets per user is one. This translates into over half of Twitter users tweeting less than once every 74 days.

At the same time there is a small contingent of users who are very active. Specifically, the top 10% of prolific Twitter users accounted for over 90% of tweets. On a typical online social network, the top 10% of users account for 30% of all production. To put Twitter in perspective, consider an unlikely analogue – Wikipedia. There, the top 15% of the most prolific editors account for 90% of Wikipedia’s edits. In other words, the pattern of contributions on Twitter is more concentrated among the few top users than is the case on Wikipedia, even though Wikipedia is clearly not a communications tool. This implies that Twitter’s resembles more of a one-way, one-to-many publishing service more than a two-way, peer-to-peer communication network.

Bill Heil is a graduating MBA student at Harvard Business School, and will begin at Adobe Systems as a Product Manager in the fall. Mikolaj Jan Piskorski is an Assistant Professor of Strategy at HBS who teaches a Second Year elective entitled Competing with Social Networks. Bill undertook research for parts of this article in the context of that class.

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Starting a Movement, Learning to Lead

June 1st, 2009

In Iraq and Afghanistan, as an Army Captain, David Hughes flew combat helicopters and was responsible for coordinating hundreds of air missions. Before that, at Fort Riley in Kansas, he was Company Commander to a hundred soldiers. He graduated from West Point in 2001 and is heading back there this fall to teach. Suffice it to say, a lot of effort has already gone into honing his skills as a leader.

So when, as a graduate student at Stanford, he enrolled in a new d. school  course called Creating Infectious Action, he wasn’t looking for more leadership training. And the course’s creators, Diego Rodriguez and Bob Sutton, didn’t bill it as such. But when I heard about the final project David and his teammates put together, it sure sounded like a leadership exercise.

The assignment given by course instructors Michael Dearing and Perry Klebahn was to “kill gas”–that is, to find a way to change people’s behavior enough to meaningfully reduce fuel consumption. The five teams in the class (Hughes and his teammates called themselves “Wildfire”) had to come up with an idea for accomplishing that and get it to catch on–within a month.

Wildfire didn’t have to venture far to find a target of opportunity. University Avenue in Palo Alto, just down the street from Stanford, has a shopping district so choked with traffic that an 8-block drive takes 20 minutes. As Hughes observed, “someone walking could go faster.” Add to the idling the fact that air conditioners are running and the quantity of gas being guzzled is appalling.

How do four students go about changing that? Using what they learned in Creating Infectious Action, the team settled on a workable concept, and then drummed up support for it. They used good design processes to arrive at the right concept: interviewing stakeholders, prototyping alternative solutions, iterating based on feedback. The idea that got the most traction by far was to transform the most congested stretch of University Avenue into a pedestrian mall.

Next, David and his team tried to get the idea to spread like … well, like wildfire.

One of the course’s textbooks, Made to Stick by Chip and Dan Heath, taught them six attributes that help ideas stick in people’s minds: simplicity, unexpectedness, concreteness, credibility, emotions, and stories. Wildfire knew its idea was a simple one to communicate, given how many pedestrian malls had already been created in other cities. Puzzling over how to employ the unexpected to get merchants to go for it, they decided to focus on the biggest objection to the idea–and stressed that, surprisingly, only about 120 parking spaces would be lost. The scheme gained immense credibility when some high-profile civic leaders, like former mayor Yoriko Kishimoto, and a member of the Palo Alto Planning and Transportation Commission, got behind it.

All along, to strike an emotional chord, Wildfire got people reflecting on how bad the experience of being on University Avenue was.

At this writing, it’s still unclear that the idea will be implemented–but there’s no question that it’s creating action. Within two weeks, over 1,700 people responded to Wildfire’s call to action by joining the project’s Facebook group, far surpassing the team’s original goal. Going door to door to sell the idea to University Avenue businesses, the team set the street abuzz with debate. Press reports began to proliferate as Team Wildfire found network connections to journalists.

In short order, they found themselves on the agenda of the Palo Alto Planning and Transportation Commission, meeting with the Palo Alto Downtown Business and Professional organization, and invited to address City Council at City Hall. A movement was underway.

So you tell me: is Creating Infectious Action a course in leadership? To be sure, it doesn’t focus on individuals’ leadership journeys. There’s no competency model at its heart. But what is leadership all about if not creating a vision of something different and better, getting people excited about it, and mobilizing everyone to cooperate in accomplishing it? If you can go out there and create infectious action, I’m inclined to call you a leader. And if you can’t, you probably shouldn’t call yourself one.

I asked Captain Hughes what he’d do next with the toolkit he gained in Creating Infectious Action. Beyond Palo Alto and pedestrians, would the course have a lasting impact? “I’ve always said that if I ever get to be a General, I would definitely change a few things,” he mused. Like anyone down in an organization, there were some procedures and policies–like aspects of the Army Physical Fitness Test–he thought were downright silly. “But now I think maybe you don’t need to be a General,” he said. “You just have to get a little movement going. Then you begin getting people on board.”

Finance News

Job 1 at GM

June 1st, 2009

With the declaration of Chapter 11, GM is poised to enter a new era. Deciding to place a big bet that a massive, tax-payer funded restructuring will truly turn the company around, the Obama Administration is forcing changes that should have occurred a decade or more ago.

The core of the transformation strategy is a separation of “New GM” from “Old GM.” essentially the company will be split in two with the assets of the old being sold or otherwise liquidated. So far, we know that several smaller units such as Hummer and Saturn will be disposed of, as well as one long-time GM brand — Pontiac. Up to 20 factories also will be sold or closed. More than a 1000 dealerships are likely to shut their doors.

In the auto industry the term “Job 1” is used to denote the first car of a new model that comes off the assembly line. It’s a time when all the work to create the right product and the right process either comes together or doesn’t.

So it appears fitting to use the idea of Job 1 as a metaphor for what the new leadership team at GM needs to get right during the transition period. What is Job 1 at GM? They need the right brand and platform architecture to drive the company forward. Because what has hobbled GM for a decade or more was an outdated architecture that was the legacy of the founding and growth of the company.

When GM was founded in 1908, it was a beginup seeking to compete with a behemoth, the Ford Motor Company. Ford had changed the game in automobile manufacturing by introducing mass production techniques, notably the assembly line, supported by a fully integrated supply chain (Ford owned forests and coal mines). But Ford lacked the desire to customize its products to meet the needs of its customers, offering the Model T in, as Henry Ford famously put it, “any color as long as it’s black.”

Following a near collapse during the 1921 recession, GM was reorganized under CEO Alfred Sloan in 1923. Rather than meet Ford head on, Alfred Sloan and his team created a brand architecture, a five-model product line that ranged from the inexpensive Chevrolet to the premium Cadillac. Customers that bought a Chevy as their first car commerced up as they became more affluent. To support this strategy, GM focused on styling and increased apparent customization through trim options that kept the core platform the same, but made the varieties built on it appear very different. (They also out-sourced much more component production to suppliers than did Ford and built dealer networks).

By the late 1920’s, GM had become the dominant automaker in the US, forcing Ford to completely change the way it did business. GM became so successful that it virtually had to begin competing with itself, ultimately leading to a proliferation of brands and a separation of the production networks and dealer networks for the company’s various offerings.

And therein lies the heart of the problem that has laid GM low today — lack of a rational brand and platform architecture that would allow the company to compete with the likes of Toyota and Honda. The success of Toyota is founded on many factors, notably, its excellence in product design and manufacturing. But the heart of its success really rests on its simple brand architecture. You have Toyota cars for the masses, Scion for the young-and-hip, and Lexus for luxury buyers. And that’s it. Toyota vehicles are built on a relatively small number of “platforms” — the chassis, suspension and drive train on which the shell is placed — that permit the company to offer a wide array of appearingly “different” vehicles. And the company pays a lot of attention to sharing parts between platforms to keep production volumes up and costs down.

The upshot? Brand and platform architecture are Job 1 for the new leadership team. Unless the New GM emerges with a simple, rational brand architecture, supported by the right approach to platform design and parts sharing, the company simply will not be able to compete with world class competitors, and we will continue to witness the decline and fall of a Giant.

Readers interested in learning more about how GM got to this point can email me at mwatkins@genesisadvisers.com and I will send you a monograph that Nathan Simon and I wrote on Innovation and the Evolution of the U.S. Automobile Industry, 1900-1975.

Finance News

Presidential Prompting: Obstacle or Opportunity?

June 1st, 2009

Even the Vice President is joining in, or more accurately, piling on. The other day when Joe biden was delivering the commencement address at the United States Air Force Academy, a gust of wind blew over one of the teleprompter screens. To which biden — never at a loss for words — quipped in reference to the downed screen, “I’m gonna tell [the President] the teleprompter is broken. What will he do…?” The audience broke into laughter and cheers.

A teleprompter is a computer-aided instrument that allows words to be projected onto a screen that can be read by the presenter as he looks to the audience. Since becoming President, Barack Obama has made frequent use of it, even for press convention openers and town hall-style gatherings. As a result, the President has drawn criticism and snickers from both sides of the aisle.

The real issue is not that Obama is scripted; it is the appearance of being scripted, which the use of prompter highlights, that elevates concern. After all, most senior leaders have key messages scripted for them. It makes good sense to think about what you are going to say, write it out, and deliver it. But the decision to put those remarks into teleprompter — which accents artificiality — makes one of the most gifted orators of our time appear less spontaneous, less connected, and less genuine.

Politics aside, a teleprompter does have its benefits. I have recommended its usage for many speakers many times. The challenge is to learn when, why and how to use it. Here are a few pointers.

When? For big occasions. If you are an executive delivering a keynote event at a convention or commerce show, or speaking in front of franchises, you should radiate confidence, that is, look as if you know what you are talking about. Therefore, it is desirable to appear to be looking at your audience as you speak without the hassle of memorizing your words. This is where prompter is useful. Also, if you want to stroll the stage, you can use strategically placed monitors on the floor and back of the room that allow you to view your speech from multiple angles.

Why? For key messages. When a CEO is delivering an important address to shareholders, analysts or the media, the message should be carefully prepared and scripted. Putting it into prompter allows the speaker to appear more in command of the message. It imparts a sense of authority as well as control. It enables the speaker to look more statesmanlike.

How? With practice. Using a teleprompter is not a matter of reading, it is a matter of delivering. There is a difference. When you read, you are processing for understanding. When you deliver, you are imparting meaning. You need to know the rhythm and flow of your remarks. Rehearsal with the prompter operator who matches the flow of the text with the speaker’s cadence is critical.

appearances matter, especially for senior leaders. If the use of prompter detracts from a leader’s ability to connect effectively with her audience, she should not use it. Better to read the script and look up at the audience periodically than appear stiff and stilted by reading words on the teleprompter. The issue is not in scripting remarks — that’s a good thing. The problem is looking scripted with bad delivery — that’s a bad thing.

As the President’s example indicates, speakers may rely on teleprompters too much. Doing so may deprive them of radiating authenticity. So reserve teleprompter usage for the big moments when precise wording, impact and occasion deserve the statesmanlike address. For other occasions, deliver from a script or notes. Your audience will love you for it.

Finance News

Are MBAs a Good Fit for Nonprofits?

June 1st, 2009

I argue for freeing nonprofits to pay whatever they must to compete for talent with the for-profit sector; legitimate talent, mind you — not inflated-salary crony-capitalism pseudo talent. Critics of my argument say that those who work in the nonprofit sector are unique in their willingness to sacrifice for a cause greater than themselves, and that people who are interested in material gain are not a good fit for the sector. They say that people self-select their way into this work, i.e. they choose it — they’re not forced into it — and that the right people find their way in and the wrong people don’t. They also say that my argument is offensive — it implies that the nonprofit sector doesn’t have the best and the brightest already.

On the first point, I find it ironic that anyone would think that people who have an interest in personal economic gain are not a good fit for employment in the sector, but are a perfect fit for funding the employment of others in the sector. Bill Gates, Warren Buffet, Oprah Winfrey, Bono, Carnegie, Ford, Rockefeller, MacArthur, Hewlett — the whole lot of them — fail the critics’ moral purity test for a nonprofit sector career, even as their contributions — past and present — make nonprofit sector careers possible. These same holier-than-thou critics often decry the soullessness of the MBA crowd — “we’re better off without them if they want to earn half a million dollars a year,” they tell me all the time — yet are all too happy to put those same MBAs on their boards of directors, ask them to chair their annual fund drive, and solicit their MBA friends to fund the operations of the very organizations that are better off without them. Studies show that 90% of Harvard MBAs serve on the boards of nonprofit organizations, and polls of HBS classes suggest that the overwhelming majority of students stay meaningfully involved with nonprofits after graduation.

On the second point, it takes a shocking indifference toward the needs of the suffering and the indigent to put one’s own offense at the notion that you might not be the best or the brightest above the possibility that there are others out there who might have something unique to offer. The nonprofit sector has people who are extremely good and exceptionally bright, but are we ready, simply to avoid offending anyone, to concede that there is no one outside the sector with proven multi-million-dollar annual earning potential and talent who might be able to make a significant contribution to social progress? And then on the basis of that concession place philosophical limits on compensation inside the nonprofit sector to ensure that they never do? There are two kinds of greed in this world — greed for money, and greed for sanctimony, and I’m not sure the latter isn’t far more dangerous.

It is time we made concessions of a different sort — first, that the presence of personal economic aspiration does not mean a person has no love in their hearts; second, that we don’t know what great contributions could be made to this world by allowing people who have such aspirations to pursue them while they simultaneously pursue the work of social transformation; and last, that before we go unilaterally building litmus tests for moral fitness, we ought to ask those we are trying to assist who they think fits, and what concessions they are prepared to make, as they look into the voids of extreme poverty, breast cancer, AIDS, and the other things.

Finance News

Why I Don’t Want to Own General Motors

June 1st, 2009

If I had wanted to buy General Motors stock, I would have talked to my financial manager. Now I am forced to own it, along with other American taxpayers, because of the federal government’s bankruptcy deal.

It is hard to see what good will come of this, and it sets a dangerous precedent. If the U.S. needs a major auto company, we have one already in Ford. Ford has proven to be nimbler, more innovative, more globally-integrated, and more competitive than GM. It saw the need to change earlier, changed faster, and did not need a government bailout. Ford’s advertising is trying to make the most out of its accomplishments, but I fear that Ford will be dragged down by the GM situation and be forced to cut too deeply into its own flesh as GM is cut to the bone.

The government’s rationale for its involvement with GM falls in the “too big to fail” branch. I know that the current administration is dedicated to ending the recession with as few human costs as possible in lost jobs and lost wages. Yes, the auto industry’s woes coincided with the financial meltdown creating a liquidity crisis which left the federal government with the only pockets deep enough to invest in the bail-out and buy-out. But the macro-management of the economy at the federal level begins to look like micro-management when they get into the details of owning (or running) specific companies.

Is this a productive new use of assets? No. Is this a move toward transforming transportation? No. Is there a significant national security interest? No. Will this save more jobs than it kills? No. Will this promote innovation and industries of the future? No.

Okay, maybe there is some prospect of a leaner, more competitive company being created in the restructuring that will make me proud to own it and maybe to consider buying a GM car – if the name GM even survives. But the indicators make this look unlikely, for example: GM’s lag in producing energy-efficient models; falling auto sales in general plaguing even world-leader Toyota; new business models such as Zipcar encouraging people to see cars as shared utilities rather than must-have personal possessions; and low-cost innovations such as the Tata Nano coming from the developing world. So I stick with my string of No’s.

Where others see merely bankruptcy, I see a bankruptcy of ideas. The issue for GM is not just financial failure, it is a failure of imagination. Even Ford has a long way to go to be the Company of the Future.

The signs of GM’s imminent failure were there well before the weak plan presented to Congress in November, which I criticized in detail in a Wall Street Journal interview. It would have been better to let the company fail on its own and then assist affected workers, dealers, and communities directly with transition support to begin new businesses and create new jobs. We will have to assist them anyway, because the GM that emerges from bankruptcy will be a shrunken, hollow version of its former self, perhaps competitive but not viable in the long term without even greater change. This move smacks of preservation more than innovation.

I would advise the Obama administration to to help innovative new companies emerge from the ashes of GM. The entrepreneurial spirit will restore the American economy more effectively than propping up falling giants.

And if the administration wants to make bold moves, I suggest that what America needs is a big national innovation initiative, equivalent to the space program, to reinvent transportation. Not just to make it greener and more energy-efficient, but to make it radically different.

Finance News

Loving the Low End: Innovation Inventory #8

June 1st, 2009

This article is part of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. The Silver Lining is available now.

8. Does your organization have a plan to “love the low end” in existing and emerging markets?

Customers in established markets are becoming increasingly value conscious. Competitors are growing increasingly fierce. Eighty percent of the world’s population and 40 percent of the world’s economy (adjusting for purchasing power parity) constitutes just 10 percent of revenues for S&P 500 companies.

Companies around the world have to figure out ways to love the low end, or they will fail to deflect looming threats and miss promising growth opportunities. Loving the low-end requires doing more than stripping out features and costs. It requires that companies build business models that deliver what low-end customers value.

begin by identifying market tiers where your existing solution provides too much performance, or customers that should consume your offering, but can’t afford it or access it.

For example, in the early 2000s, a low-end attacker appeared on the radar screen of General Electric’s healthcare division. The company, SonoSite, had pioneered an ultrasound device that was small enough and affordable enough to enable general practitioners to take “quick looks.” Instead of ignoring the threat, GE created a competitive solution, took over market leadership, and created a 0 million business.

Further Resources: The Silver Lining, Chapter 7; The Silver Lining website; The Fortune at the Bottom of the Pyramid by C.K. Prahalad; “Innovation vs. Poverty” by Clayton M. Christensen, Stephen Wunker and Hari Nair; “A Playbook for Moving Down-Market” by Scott D. Anthony

Finance News

Canada says GM aid biggest part of deficit increase

June 1st, 2009

Reuters – TORONTO (Reuters) – Canada’s aid to General Motors Corp will constitute the biggest part of a enormous increase in the federal deficit this year, but failure to help GM would have been catastrophic, Prime Minister Stephen Harper said on Monday.

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Oil jumps 3 percent, factory data spurs recovery hope

June 1st, 2009

Reuters – NEW YORK (Reuters) – Oil jumped more than 3 percent on Monday, touching a near seven-month high over $68 a barrel as improving global factory activity bolstered expectations of an economic recovery.

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Microsoft to buy bio software operation

June 1st, 2009

Reuters – SEATTLE (Reuters) – Microsoft Corp said on Monday it would buy some of the assets of Rosetta Biosoftware, part of a Merck & Co Inc unit which makes data management software for medical researchers, furthering Microsoft’s push into the expanding healthcare technology business.

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