Category Archives: Uncategorized

The ecosystem dilemma

My latest column for Reuters compares the ecosystem approaches of Apple’s iPhone and Google’s Android mobile operating systems. My conclusion:

For an ecosystem to succeed it will need the best developers. Apple’s policy of near-tyrannical control ensures certain quality and standards, but it also risks scaring off the best talent.

I also wanted to include an absolutely perfect xkcd cartoon. Not sure why that didn’t pass muster, but here it is:


Why use McKinsey — or any of the other guys?

Jay Rosen has a plaintive tweet:

I don’t get why managers hire McKinsey. Aren’t they supposed to be able to manage? What am I missing?

Jay’s question comes on the heels of news that Rupert Murdoch’s News Corp has hired McKinsey & Company to run its slide rules over the operations of the Wall Street Journal. Magazine group Condé Nast and Time Warner have recently come under the gimlet eye of McKinsey consultants.

The question on why engage the very expensive services of McKinsey, Bain, BCG or any of the other big strategy consultants is a long-running one in corporate circles. It’s not particularly new in media either. In my Davos days I became friendly with Michael Wolf who ran McKinsey’s media practice in those days. He didn’t look like he was short of work even when media companies were thriving.

There’s not a simple answer, but I think companies hire McKinsey (let’s use them as a proxy for all the others) primarily for two reasons, one good, one not so good. The good reason is that there are plenty of management tasks that most companies face relatively rarely. Most companies don’t integrate new acquisitions all that often (there are exceptions, like Cisco, which become hugely expert at the task). A company wants to install a new ERP (Enterprise Resource Planning) system only once in a great while. And it may be relatively rare for a company to go through a brutal stripping out of inefficiencies and costs — even if it’s as hard-nosed as News Corp.

In those cases, a lot of companies turn to McKinsey because it has done it all before. The promise the well-suited McKinsey partner can make to Rupert Murdoch or any other corporate chieftain is, “We’ve seen this problem before dozens of times. We have procedures for dealing with it. We can do it efficiently.” For a very large sum of money.

The less good reason for using McKinsey is to deflect criticism. The ax comes down and a surviving executive can say to her shell-shocked employees: “My hands are tied. Those hot-shots from McKinsey came in and said we had 30% more editors than the industry norm. There was nothing I could do.” Or it could be that it’s a political ploy: “McKinsey said we should shut you down, but we decided to go with swingeing cuts instead.”

Murdoch has never seemed shy about wielding an ax, so I suspect the consultants are coming into the WSJ because they can do the analysis more quickly and efficiently than Rupe’s own bean counters.

Financial Times' new low

I’ve lamented the US political coverage by the Financial Times’ Edward Luce before. And the other day Felix Salmon picked up the theme. But I think today may mark a new low.

Luce provides political analysis on the award of the Nobel peace prize to president Obama. He takes the church of the savvy line that the prize will reinforce the view that Obama is all talk, no action. Given that Luce has never found a conservative take on conventional wisdom that he doesn’t like, that’s unsurprising. But he plumbs the depths with his language.

Rush Limbaugh, the talk radio host, spoke for a large number of conservatives when he described the award as a display of humour by God that was designed to “emasculate the United States”.

“This fully exposes the illusion that is Barack Obama,” Mr Limbaugh told Politico, the Washington news site. “They love a weakened, neutered US and this is their way of promoting that concept.” The “they” in Mr Limbaugh’s world view consists of effete Europeans and their ideological cousins living on each of America’s coastlines who believe in multilateralism, the UN and diplomacy.

Unsurprisingly, America’s Merlot-drinking classes were more respectful of the announcement. Ted Turner, head of the UN Foundation, a private group set up to defend an institution that is unpopular in the US, said: “This is an exciting time when global co-operation is recognised to be necessary for securing a peaceful and prosperous world.”

Strobe Talbott, head of the centrist Brookings Institution, told the Financial Times: “While some might see the prize as premature, Obama has already had an extraordinary and salutary effect on the view of the US in much of the world. But the progress in Geneva with the Iranians [on uranium enrichment talks last month] suggests that there is already some concrete benefit.”

Gosh, who would you rather be? A talk radio host who speaks for a “large number of conservatives” or part of “America’s Merlot-drinking classes”? Think Luce’s language expresses any preference?

Brad DeLong often laments the inadequacies of The Washington Post and The New York Times. The FT is in a different league and it does a remarkable job of covering the world. But they do a piss poor job in Washington.

Venture capital harms your wealth

My latest column for Reuters has been published. I argue that the venture capital industry in the US will be forced to shrink as institutional investors pull back from all except the most successful funds:

Everyone believes they are investing in the children of Lake Wobegon, who are all above average. But institutional investors won’t play the fool for long and the response from potential LPs is bound to get stonier for all but the most accomplished funds. So what, if anything, will save venture capital?

There will need to be fewer, smaller funds, making smaller bets with their investors’ money. Fewer exits won’t be such a problem, because fewer exits will be needed. It will be something that looks, in fact, a lot like the VC world pre-dotcom. That will be a wholly good thing, for venture capital, for investors and for entrepreneurs.

A smaller industry will have fewer hangers on who invest with the latest trend, and there will be less dumb money buoying poorly formed, unrealistic dreams.

The death of magazines

Manplan 2

For most of my professional life, I worked on magazines. So when knowledgeable observers who I respect sound the death knell for magazines, I find it sad. Jeff Jarvis writes, “What’s the point of emotions? It’s economics.” I don’t think economics necessarily invalidates the emotions.

My own magazine history reflects the truth the death of individual titles has always been reality. Look at the magazines I worked on (I’ve only included ones where I played a major role):

Five magazines, two deaths. I have no idea whether the others are on life support or are thriving.

More important, I look at my own magazine consumption. Like Jarvis, I used to buy magazines by the bushel (unlike him, I never put it on an expense account). I just loved the feel, form, structure and content of magazines. Now? I subscribe to two: The New Yorker and the New York Review of Books. If I have a long-haul flight, I will probably buy a couple of magazines at the airport.

If magazines have lost the fanatics like me, there’s probably not much hope for them.

It may be, as Jarvis points out, that just as the music business has had to find a way to move from the album to the song, publishing is figuring out a way to navigate from the issue to the article to the post. That will necessarily be online, not in print.

I think, however, there will still be some limited space for some magazines that deliver more than individual articles. The two titles I subscribe to provide that for me. I just re-upped with The New Yorker today, in fact. I can’t imagine not getting it every week — there’s too much I want to page through and read for the online experience to compete. Ditto for NYRB, not least because of the length of most of the articles. The other category I can see surviving, and perhaps even thriving, are magazines that rely heavily on visual impact. My old stamping ground, The Architectural Review, could be one of those survivors. And my friends who produce the world’s most stunning magazine, Eye, may also find a path to the promised land. They certainly deserve it.

Photo from Flickr by Eversion

Unemployment — yikes

I’ve been listening and reading a lot about what might constitute the “new normal” — the nature of our economy and society as we climb out of the economic crisis. But the new report from two economists at Rutgers makes graphic how far we have to climb:

Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010, it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the jobs deficit!

I don’t usually approve of exclamation marks in serious reports (or just about anywhere, in fact), but that statement deserves the extra emphasis.

My town's foreign policy

I love living in Berkeley, but sometimes I can understand why it’s the object of Fox News outrage. Take tonight’s city council meeting. One of the agenda items is a proposal from the city’s Peace and Justice Commission (what, your city doesn’t have a Peace and Justice Commission?) to have Berkeley comply with UN treaties on torture, racial discrimination and human rights.

I’ve written about this absurdity on InBerkeley, but I thought it deserved a non-Berkeley audience as well. It’s astounding to me that in hard economic times, when there are plenty of real city problems to deal with, there is still a constituency for gesture politics.

Out of touch?

I was in the midst of a business conversation today, speaking to someone about the clever technology their company has developed, when he tried to give me an example. “It’s like the video of the skateboarding dog.” I said I’ve never seen the video of the skateboarding dog.

If you want a definition of stunned silence, that’s what confronted me. It was like that scene in David Lodge’s Small World when Philip Swallow admits he has never read Hamlet.

I don’t think being ignorant about the skateboarding dog puts me in the category of fuddy-duddy high court judges — “What is this Beatles of which you speak?” — or the first president Bush who was amazed by a supermarket bar code scanner. But perhaps I’m wrong. Am I now disqualified from being in touch with the technology zeitgeist?

By the way, after our conversation I was sent a link to the skateboarding dog. I haven’t watched it, hoping my ignorance gives me a certain cachet.