A Review of: Bounce

A Review of:
Bounce
The Art of Turning Tough Times into Triumph
Keith McFarland

Bounce is a story that covers the topic of dealing with change and challenge. Told as a narrative, its’ simplistic style is only a cover for the base concepts that are worthy of greater contemplation.

The first concept McFarland tries to convey is that going through difficult times is a requirement for creating a top performing entity. It is during these times that we learn what our strengths are, and what they are not. This is certainly not a new concept. Many great leaders and teams have attributed their fortitude in the face of adversity to struggles they faced earlier in life, similarly champions often state that facing these struggles were what made them able to take on their latest challenges.

The wonderful thing about Bounce is that where many books leave off stating that struggles reveal and create character, or where there are obstacles there are opportunities, McFarland picks up the discussion. Through his insightful narrative, McFarland takes the reader through a fun story depicting the elements that can determine a challenge’s outcome and how to shift the balance towards an opportunistic outlook.

A look at two of McFarland’s six principles:

Embrace the Bounce

Referred to in the story as a “sudden loss of altitude”, tough times are an inevitable fact of life.   “Drop a Christmas ornament and it shatters. Drop an orange and it bruises. Drop a rubber ball and it bounces right back.” This visual quote from the story is what Bounce is all about. It is the entities internal structure that determines how it deals with tough times, and that is something that we as managers can control. This simple and actionable view I found refreshing. While we can’t control the external forces that can cause a sudden loss of altitude, we can control the internal structures that let us bounce back. The fall is inevitable, how high we bounce depends on how well be planed before and during the fall.

Look at realities

Closely related to the first principle of embracing the bounce, looking at realities reaffirms the fact that people often ignore what they don’t want to see. It also brings to light the concept that once people are forced to take a hard look at what the realities are, they are better able to create an actionable plan. Psychologically, humans often fear the unknown and it is that unknown element that can stop a great team in their tracks. From this view, managers who try to fool their teams by avoiding unpleasant truths are only fooling themselves. Facing facts and making actionable plans are what separates a team that shatters, and one that bounces higher with every challenge.

While Bounce is unlikely to contain new material for most readers, its focus on fundamental concepts is worth reviewing from time to time. Perhaps as a gift to a team that loses its way.

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A Review of: amazon.com, Get Big Fast

            Amazon.com by Robert Spector, an account of the rise of Jeffrey Bezos and Amazon, is a depiction of the “Perfect Storm” of circumstances that created Amazon’s explosive growth.  From the founder and his initial goals, to the elements that heralded the incredible opportunities the company capitalized on, Amazon.com is a story that reads like the startup version of a celestial alignment.

The Founder and his Goals: Reaching the Stars

            Jeffrey Bezos was an accomplished visionary long before the conception of Amazon.  Spector’s account depicts Bezos as an inventive, focused, and precocious youth.  Graduating as valedictorian from high school with awards in math and science, summa cum laude from Princeton with a BSE in electrical engineering and computer science, successful engagement in early entrepreneurial endeavors, and a career path that lead to his seven figure position as senior vice president with D.E. Shaw; Bezos’s life is laid out like a prodigious tale of greatness.  Throw into the mix a charismatic and motivating personality, and Jeffrey Bezos by Spector’s account was born and breed to be a star.

            Spector accounts Bezos’s high school valedictory speech, where he argued for the colonization of space as a means to secure the future of the human race, as a demonstration of Bezos’s grandiose ambitions.  These ambitions were evident in the Amazon structures, which were designed to eventually grow into a billion dollar business from the start.  Virtually every aspect of the Amazon system was designed to handle an exponential expansion of capacity and adaptation.  The biggest miscalculation on his part was the rate at which Amazon would grow. 

            Bezos anticipated a startup phase requiring several years of training consumers to purchase books online.  With that caveat in mind, he had set out with a shoe string budget for Amazon which was self funded for the first six months.  Investing $10,000 as common stock and making interest-free loans to the company in the amount of $44,000, Bezos launched the company in 1994 from a converted garage in Seattle, Washington.  This oversight, while instilling a culture of frugality, had left the Amazon team scrambling for capital in 1995. 

Feeding the Growing Giant:  Capital Pains

            A critical growth point was reached in 1995 that could have prematurely ended Amazon’s journey.  Bezos was still in the process of beta testing the Amazon site, but was burning through capital despite his frugal spending habits.  Even after raising $100,020 and $145,553 in exchanged for equity from his father and mother respectively, Bezos was broke by the time the Amazon site launched that summer. 

             This time period is one of the few areas where Spector’s account of Amazon referenced significant difficulties.  Seattle was not the angle investor hot bed that Silicon Valley was, nor was Amazon a business model that investors were knowledgeable of or comfortable with.  However like the inevitability of fate, Bezos through his network with Nicholas Hanauer raised $981,000 by the end of 1995.

            The next infusion of capital occurred in the spring of 1996, after Amazon incited a bidding war like scenario to gain $8 million on a $60 million dollar valuation.  This represented a significant increase from their first venture capital offer of $1 million on a $10 million dollar valuation.  Not only did this give Amazon the leverage to grow without their prior capital concerns, they did it by gained the support of Kleiner Perkins Caufield & Byer which was the leading VC firm in Silicon Valley. 

Success Factors: The “Perfect Storm” of Amazon’s creation.

            Any seasoned entrepreneur, or investor in entrepreneurial companies, will tell you that a truly successful venture requires a complicated mix of key elements.  These include a strong founder and team, access to knowledge and capital, and a genuine market of interested customers in a growing industry.  Additionally, it all has to be integrated together through a common vision, determination, and sense of urgency.  For Amazon, the magnitude of these elements was on a celestial scale and came into alignment at just the right time. 

Founder and Team

            Jeffrey Bezos’s prior established credibility and his ability to inspire support for his vision were crucial in his task of recruiting skilled team members.  Beyond being well versed in the technical requirements of what needed to be done, Bezos assembled a winning team and listened to their input.  By giving his team the voice and inspiration to do what was needed, he created a high-energy can-do culture in Amazon.  A leader by example and of productive informality, Bezos was known for rolling up his sleeves and packing books with the rest of the team.  He was also subsequently known for being a formidable opponent during the spontaneous rubber-band fights that were known to break out.

            The whole Amazon team was carefully selected, as a team effort, with Bezos making the final hiring decisions.  Seeking the very best talent, a practice which was partly instilled at the insistence of the self proclaimed “glorified recruiter” John Doerr, was only one side of the coin. Bezos was looking for people that were truly inspired and wanted to do things that mattered.  

Open Book, Open Wallet

            An extremely critical element to Amazon was its access to knowledge and capital.  The decision to start an internet book company in an area that some consider the Mecca of programming talent, and only hours from the largest book distribution center in the U.S., was certainly no accident.  Bezos had meticulously weighed his options before setting up shop, and was subsequently a stringent enforcer of hiring only the best talent.  The recruiting process at Amazon was as meticulous as the platform on which the whole company was based.  Candidates had to endure a gauntlet of screeners, background and reference checks, and interviews, with the slightest error eliminating them.  As many as a hundred pages of documents were assembled on each candidate and reviewed by the interviewers.

            To offset any informational or experiential deficiencies the Amazon team faced, Bezos had a high quality network of experienced business professionals to tap for guidance and support.  The capital requirements of Amazon were covered by Bezos himself, whom already had a successful career, his relatively wealthy parents, and investors gained through his network.  Nicholas Hanauer, who was an early addition to Amazon’s trove of resources, was a pivotal asset to their financial solvency.  Not only was he a significant influence in getting Bezos in front of potential angle investors, he wrote the initial check that got that round of funding started.  Without the backing of Hanauer during that time, Amazon’s chances would have been seriously crippled. 

The Internet, Customers, and the Book Industry

            Having extensively researched the internet-book-store opportunity as part of his employment at D.E. Shaw, Bezos understood the potential of his vision despite D.E. Shaw’s decision to not pursue it.   The Internet was growing at 2,300% a year with a customer base filled with intellectual early adopters, making it the ideal business channel, while the $30 billion book industry proved to be the perfect product compliment to this exploding business conduit. 

            In the early days of the internet, online consumers were a pre-segmented cross section of intellectual early adopters.  The internet was still in its infancy and navigating it generally required a high level of technical acumen.  Those on it at this time were consumers who were eager to try new things, including online book purchasing, technically savvy and affluent.  Subsequently this consumer set was also a high rate consumer of books.  This, advantageously, meant that all current internet consumers were likely target customers and no additional segmentation was required. 

            The book industry was fragmented, capital intensive with a long average-operating-cycle of 79 days, and books were a well know product.  Their cataloging methods with ISBN#’s and extensive databases made searching for them simplistic compared to other product types.  Especially important were the numerous limitations that traditional brick-and-mortar book stores had that could be eliminated by an internet based model. 

            By contrast to traditional stores, Amazon would have a negative operating cycle of 33 days, making it extremely capital efficient, as well as allowing customers to access a database of  over a million book titles.  The massive 60,000 square foot Barns & Noble superstores only carried up to 175,000 titles.  This gave the Amazon business model a considerable advantage in terms of perceived consumer value and re-investable cash flow. 

            To learn more about the book selling industry, Bezos attended a four day book-industry course before launching Amazon.  Through this he not only gained valuable insight into what it took to actually sell a book, he made contacts within the industry and found customer service inspiration.  During that four day course Richard Howorth, President of the American Booksellers Association, gave a speech about the importance of customer service.  Recounting a tail of going well above and beyond the normal call of duty, Howorth inspired Bezos to make customer service a cornerstone of Amazon’s business model.  Something that subsequently helped propel Amazon to excellence. 

            A final element that pushed Amazon to grow and improve was that much of what they were doing was being done for the first time.  The Amazon team knew they didn’t know the best way to do things initially, so a mentality and process of constant improvement was established.  Amazon was continually looking for better ways of doing things and making sure they were doing at least as good a job, if not better, than their competitors.  This drive and flexibility was what allowed them to stay ahead of emerging competitors.

Conclusion: Closing thought on Get Big Fast

            In Amazon.com Get Big Fast, Robert Spector depicts an inspiring tale of how to launch a company the right way.  Well planed, executed, and adapted for changing conditions, Bezos’s vision for Amazon was brilliant and well timed.  However, Spector makes it too neat and tidy of a story.  The challenges of managing a company undergoing such explosive growth must have been enormous.  The recount of these trials, particularly in the first few years, seems to be glossed over to a large extent.  Regardless of the down played challenges, Spector’s book clearly shows that when the right elements are brought together at the right time a tremendous business can be forged.

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The Super Bowl Commercial

The Super Bowl has once again come and gone, taking with it the famous high-budget Super Bowl commercials. Now I am not much of a football fan, I only tuned in for the last five minutes of the game. I did however; go online to watch all of the associated commercials. I also know I am not the only one. It is interesting that in an age when consumer avoidance and apparent abhorrence of advertizing is so significant; consumers can still view Super Bowl commercials as if they were entertainment. To some like me, the commercials during the game are the draw.

Companies, by creatively pushing ads on consumers and generating hype around the event year after year, have achieved substantial marketing pull. Consumers are actually seeking out the commercials. How often do average consumers normally sit down just to watch advertisements? What is most impressive is that this is traditional advertizing, being done on a mainstream scale. We have all seen clips of consumer created content that has gone “viral”, and reached millions of viewers. But these are standard commercially-produced, wide audience focused advertisements. Not the normal fair for viral epidemics. So even with all the focus and buzz today being about social marketing, the Super Bowl commercial still remains an interesting marketing phenomenon.

Consequently, one of the humorous side-effects of viewing the commercials online is that, while I was watching the Super Bowl commercials I had to sit through commercials. Streaming media advertisements had been inserted into every one of the clips. I naturally got annoyed, as I do with most commercial interruptions. Here I was, trying to watch Super Bowl commercials, and I was being subjected to… a commercial…

Isn’t psychology interesting? The fact that it wasn’t one of the commercials I had intended to watch made it an annoyance and not entertainment. Additionally, and internet advertisers should take note of this, it might not have been so obvious that the inserted ads were of non-Super Bowl nature had they not played the same one every time. Is there anything more annoying than having to watch the same 30 second commercial every time one tries to view, of all things, a 30 second commercial?

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A look at Starbucks

March of 2011 will symbolically mark the next phase of evolution for the Starbucks Corporation.  Celebrating their 40th year of business, Starbucks will commemorate the event with an updated brand logo.  I read through their press release statements and watched the nifty video featuring CEO, Howard Schultz.  It all sounded very nice and I can agree with their intended vision for the companies’ future.  Having a design background I loved their use of the new logo as a concept sketch on their annual report.  However, I couldn’t help but be reminded of my days as a design student. 

Inevitably there was always one person in class that would talk for an hour, or hours, describing the meaning behind a design.  The story was often well executed and made sense while looking at the work.  The problem often was that the design needed the story to support it.  It wasn’t self evident and fell flat as a standalone element.  I can’t help but feel the same way about the new Starbuck logo.  Don’t get me wrong I think it is well crafted, but the fluffy symbolism behind it just feels empty and inaccurate. 

The Starbucks siren is now supposed to be liberated from the outer ring, which was a dominate feature of the old logo, symbolizing the transition of the company from a small coffee shop to the multifaceted global corporation it is now. 

…Really?  A prior statement on their web page given by Mike P., senior creative manager, notes that the new Starbucks’s logo “still uses the same vibrant green circle that is so well recognized by our customers around the world.”  I have to agree with Mike.  The eye naturally completes the circle around the siren, still incasing her.  So is she really liberated, and from what? 

The most recognizable Starbucks element in my mind has always been that “encompassing” outer ring of green with the iconic bold STARBUCKS lettering.  I never really got the siren graphic.  I didn’t even know what it was supposed to be for a very long time, and so I ignored it.  Starbucks for me was that outer green ring with the bold lettering. 

I agree completely with their decision to drop the word coffee however.  They moved beyond just coffee a long time ago.  But dropping their name leaves me with the question: what benefit does it serve?  Now that it no longer identifies the name of the company it can’t spread brand awareness to those who are unfamiliar with Starbucks.  We are still heavily reliant on text based search methods, thus how does one who doesn’t know the name of a company search?  “Coffee cup with green lady on it”? 

Not to say that a graphic only logo is bad, but not everyone has the benefit of being called apple.  Apple Inc has a self reinforcing graphic for their logo.  Almost anyone can recognize Apple’s logo to be that of an apple, and hay, their name is Apple.  Brilliant. 

What is Starbucks’ image name?   Not so evident by the logo.  No name connection, no product connection, and I personally don’t get the emotional connection the CEO claims there to be, not that it would be searchable on a browser. 

Someone at Starbucks must have felt the same because the name does appear on the opposite side of their new coffee cup.  The new cup design is very nice I must admit.  It is obvious that Starbucks’ has a significant talent pool at their command, but if you want to start analyzing the symbolism behind having the logo on one side and the name on the other you could write a book.  Something to the tune of “Starbucks: A company divided” perhaps?

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