Housing market woes reflect slow jobs and underlyng slow income as US home based call center outsourcing takes off

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With the stock market barely above 10,000 pundits are pointing to the 27.2% decline in existing home sales and the 12.4% decline in new homes. The root cause, in the US  is the slow job market and the underlying slow income. All this has resulted in a new phenomenon.

Home based call center outsourcing s taking off. Compared to India  total costs are not that much  more in the US as wages decline and as wages increase in countries like India.

When you consider the ramp up costs, monitoring and control costs and the risk and uncertainty it's not that bad of a deal, if you think about it from the new contract point of view. Culturally it is probably much easier to implement home based call centers in the US at low cost. Both infrastructure and the US worker productivity should give something to think about for global outsourcers who have viewed their only competitive strength as cost arbitrage.

Egg Supply Chain – 192 large companies own 95% of laying hens

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Friends tell me that they continue to have eggs – just avoiding poached ones ever since the salmonella issue came up. But this was before the Washington Post article which reports that just 192 large companies own 95% of all laying hens in the US. This number was 2500 companies in 1987. All the brands (or 95 % at least) you see in the supermarket are just re-branded and distributed but originate from just 192 companies that are the consolidated industry.

Economy of scale is great in agriculture but the salmonella recall of over half a billion eggs highlight the problems of large scale agriculture. Just like a huge factory – large farms set up processes and need ERP systems to keep everything in order !

There is just one problem – the hen is a living machine and minor variations in some hen among millions might just  show up later in the distribution channel right  at your plate or stomach! The egg become exposed to ambient temperatures only after it leaves your refrigerator and bugs start waking up.

Things become real complicated when there are thousands of retail brands including liquid bulk packs flowing from these 192 companies. Tracing out which eggs are tainted in the market is tough work and there is now talk of splitting up these mega companies and I am sure there will be a closer look at which brands get distributed where. Meanwhile, consumers will feel wary eating eggs till the whole thing is sorted out.  See Happy Easter Egg Roll and Egg Safety.

Groupon taps into social media to get new customers for small businesses

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Groupon is one brilliant idea to actually make social media work for small business. The way it works is that you sign up for "Groupons" and you get them in your email for small businesses in your city. The coupon is activated only when a certain number of people sign up. Only when the pre-announced number of folks sign up your credit card is charged and the Groupon is emailed to you. You print it and use it like cash. You can gift a Groupon and now there is a secondary market for selling your Groupon or exchanging them.

Small businesses like restaurants,spas and salons determine the cap of customers that they want to attract. In the initial days some small businesses did not set a cap and sold 700 coupons when they could physically handle only 70 customers  ! Now Groupon Founder Andrew Mason is thinking of going real local at the neighborhood level so that there is a better capacity match between the small business  and customer demand,

A good deal from a small business activates interest and social media kicks in as people tell their friends via Facebook,Twitter etc. The motivation for the interested individual customer to go "social" is because the coupon activates only when a certain number sign up- this number is now reported at about a hundred.The small business gets new customers to try,  while customers get a great deal and might  even become long term customers of the business.

The concept of “good enough”- Gen Petraeus”We’re not trying to turn Afghanistan into Switzerland in 5 years or less,”

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Gen Petraeus made a great comment about what the expectation is for Afghanistan. Gen Petraeus said "We're not trying to turn Afghanistan into Switzerland in 5 years or less." I guess, for Afghanistan some basic governance goals like law and order, peace and lesser corruption would be "good enough" for the medium term -say 5 years.

The concept of "good enough" is not Six Sigma perfection ( turning Afghanistan to Switzerland !) and it is certainly not low quality "anything goes." It is that tipping point which provides value to all stakeholders at an acceptable cost.Seth Godin calls this "shipping" in his book Linchpin.

We all tend to get into the "perfectionist" mode and in the process are not able to produce or deliver. In fact, we tend to get frozen into inaction! 

Aiming for "good enough" at least keeps projects moving in the right direction at good speed. Things tend to get done…

Net-neutrality is important and the Google-Verizon proposal is unlikely

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The Net-neutrality issue is center stage again with the discussion about the Google-Verizon deal. If you have been to an Apple store recently and looked at the iPad you begin to realize how powerful the wireless provider can be.

The net neutrality idea is conceptually simple. Think of your electricity  company and imagine that they could some how control what brand of TV you plugged in. Some brands of TV's say worked and some did not. Sounds ridiculous? Well net neutrality means that your cable provider cannot interfere with your use of the Internet and see this video for a quick idea.Now Google-Verizon is teaming up and saying that they would decide what flows to you when you use the Verizon wireless system to access the Internet. Here the control will be by the wireless carrier Verizon unlike the Apple system where AT&T supplies the wireless and you are sort of constrained by what the Apple apps show you. Think of the mobile ad market and a multitude of other revenue generating routes. In other words the Apple-AT&T  model is about control at the downstream point of wireless use at the equipment and the Google-Verizon proposal seems to be about control upstream at the wireless delivery point.

While these companies have to make money and proprietary channels are a sure way of making money but this would sure stifle innovation. You could be using a wireless provider and they might be able to restrict your access,guide your choices because they control the pipe.

Given the imperative of an open Internet it is unlikely that the Google Verizon proposal will go through. Meanwhile new revenue ideas in the wireless space  that create user value,without potentially stifling Internet access will need to emerge.

Drug recalls up three times in 2009- Generic OTC’s have a store brand but prescription generics are brand-less

In 2009 drug recalls are up over three times the rate in 2008. While one generic maker/re packager Advantage Dose  accounts for about two and half times of the increase – it still appears that there is a 50% increase of recalls.Here’s what seems to be playing out for prescription generics.

  • As the great recession continues patients and doctors go for generics that are cheaper for prescription drugs.
  • Generic prescription drug  manufacturers ,on the other hand, are rushing with manufacturing  to get into the market as soon as patents expire.
  • There are some reports of shortcuts,imported content or outsourced production that might be affecting product quality as the intense pressure to cut costs continue.
  • The generic makers really do not have a brand name or equity to build or protect ( you remember your pharmacy but do you know the name of the manufacturer of the generic prescription drug that you bought?)

While the OTC drug (see the FDA Orange Book  here) , say equivalent of Tylenol or Advil can be seen on the shelves at Wal-Mart there is a great deal of brand responsibility (Equate is the store brand of Wal-Mart) that Pharmacy retailers like Wal-Mart  or CVS take by monitoring and controlling  their OTC generic suppliers.

Pharmacy retailers  do not need or have any oversight on prescription generic drug makers. They don’t own these generic prescription brands which are brand-less  in the consumers mind. So it is between the drug maker and the FDA, and the FDA seems t o have its hands full …..

About StratoServe.

Eat,Pray and Love author’s book “Committed” and Buyer-Seller Relationships

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The movie Eat,Pray and Love opens tomorrow. The author Elizabeth Gilbert has another book out called "Committed- A skeptic makes peace with marriage". It might be recalled that the definition of marketing began to have buyer-seller relationships as its central construct in 2004. The thinking of the move to a relationships centered view has changed now (2007) to a value based definition.

But let me step back a bit to the relationships (2004) version of marketing and the seminal piece of work based on the theory of human marriage – a 1987 article by Dwyer, Schurr and Oh which drew upon sociology of marriage. Hey but that was the pre-globalized eighties!

With globalization, the Eat,Pray and Love author Elizabeth Gilbert spends  a year in Italy (Eat),Pray(India), Love (Bali,Indonesia) to recover from a divorce swearing never to get married again. Things change and her new book "Committed" is an engaging summary of the history of marriage. Although she puts out a disclaimer that she's not a marriage scholar but she does a great and insightful historical study of the institution of marriage. A surprising   insight, that was new to me ,was that in early America, slaves were not allowed to marry. Hence the institution of marriage and family was seriously affected  and the negative effects continue among African American communities to this day.

I particularly liked Gilbert's scoping of work in her new book to stay only with the Western marriage because her Eat,Pray and Love experience made her decidedly aware of very contrasting world views on life and its institutions like marriage.

Let's see how the Eat,Pray and Love movie goes. For those interested in the  marriage based philosophy of CRM and SRM the book "Committed" is definitely  worth a read.

Jet Blue Slater incident and co-creation of the service experience in the Internet age, fixing the baggage problem upstream

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The Jet Blue Steven Slater incident resonates hugely with the public on several counts:

  • We all get frustrated on flights as passengers, recently more so as airlines now charge for check in baggage so you'd rather carry more cabin baggage. Surprisingly Jet Blue does'nt seem to charge for the first check in bag and the cabin bag requirements are reasonable.
  • We have all either been rude to flight attendants or have seen others being rude, somewhat unnecessarily
  • Above all doing a "Slater" style exit from abusive employment situations is a dream for just too many American workers, more so in the current economy.In fact, one web comment from a Slater fan is that the bar for a stylish exit from dealing with impossible customers has been raised too high by Slater. Not many professions have the grand opportunity of grabbing beers and sliding down the plane's emergency chute!

After some pretty typical last century ( ie 1990's)  responses,  like criminal charges etc. there seems to be realization by prosecutors, according to Dan Abrams , that there is no way that a jury will convict  Slater if the case did go to trial. Accordingly, Jet Blue is now trying to convert the Slater incident into a public relations plus.

Yes flying has become more stressful in the past decade with delays in security checks etc. but before the Internet Steven Slater would be in real serious trouble with the law,his company etc.

The Internet age is again really exponentially magnifying an incident and the public is directly weighing in. Let us hope that the airlines will try to resolve stress points upstream in the service chain  like  dealing with baggage which caused the altercation with Slater and the passenger in the first place. Also customers will be kinder to front line service employees who just happen to be the customer facing part of organizations.

Muffin know-how is as important to bakery industry as scalable processors is to computer industry

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Remember the "nooks and crannies" in the Thomas's English Muffins? Apparently the know-how of getting these during the baking process is a huge trade secret no less than Coca Cola's secret formula ! One report suggests that the baking secret of "nooks and crannies"  is known only to 7 people in the company and Chris Boticella is being legally prevented from walking away to a job with Twinkie makers Hostess Brands.

For some reason we tend to unfairly dismiss low-tech industries like food as   not having great know-how. The only thing low-tech about any industry is the pace of change. It's just that for a while industries like computing  and biotech have have been changing rapidly. R&D happens quickly in these industries and generally the scientists have a very specific advanced research background as do the managers. For example IBM and Apple had similar issues regarding scalable processors when iPhone 4 lead Mark Papermaster had moved to Apple.

Low tech industries involve slow change as individual customers really don't want to try a different random type of muffin or bagel every day.  It takes years to get everything right . And to arrive at that winning  muffin or twinkie is not easy and is very very valuable for the company that has got its product,marketing and distribution all finely tuned.

iPhone4 antenna problems missed by the lack of situated knowledge?

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It seems that situated knowledge went missing at the iPhone4 development with a new manager for an old team.

Fortune is reporting that Mark  Papermaster the manager in-charge of the iPhone4 development is leaving Apple and will be replaced by classmate and old Apple hand Robert Mansfield. There is speculation that Papermaster's exit has to do with the highly  (for Apple ) uncharacteristic antenna problems of iPhone4.

Apple has been facing a great deal of criticism for the iPhone4 antenna problems and naturally the managers are being individually blamed. One can only speculate why the iPhone4 antenna problems were missed in development. Here are some initial thoughts and questions:

  • 2008 was the year that Papermaster was brought in from a different IBM culture.
  • Did existing folks at Apple really have a formal product use testing process? (A formal product use testing process can't really miss the antenna problem).
  • Or did they depend on the "informal" team work of people who had worked together for several years?
  • If the product use testing process was informal – did Papermaster miss out as he was only 2 years at Apple ?

The iPhone4 antenna problem is so uncharacteristic of Apple that the "why" question will continue to engage public interest for some time.