In a nutshell, this means prices on ebooks went up because the agreement with Apple made it so other sellers, like Amazon, couldn’t lower the price on ebooks.

Three of the seven publishers have already settled with the Department of Justice, but Apple, Penguin, and Macmillan rejected the offer. Now that we know the reasons behind the lawsuit, let’s see if any of this news is actually will have an effect on pricing.

Read the full article here.

Watch the video (and read MY thoughts) after the break:

When I first saw this commercial I was cheering!  You see, the largest contributor to greenhouse gases are the power generating plants–the ELECTRIC plants.  They contribute more than all the cars in the nation–combined.  So I saw the commercial as pointing out that, while we think we are “being green” using electronic devices.  I thought the message was, while we aren’t the “point source” of pollution, we are still polluting.

But NOOOOOooo.  The message is: Drive an electric car.  That somehow taking the cars off the road will be better.

The real message?  ”Out of Sight, Out of Mind.”

I couldn’t bring myself to buy a Toyota Prius like our good friend Fleshy. I am not sure if it is because I don’t like the “cramped” look of the car, or simply that Fleshy, and so many liberals, wear that car as a (tight fitting) badge of good liberalism.

I was clearly aware that some people drive the Prius simply to show that “they care.”  Recently Freakonomics Radio (brought to you by the same guys that brought you the books Freakonomics and SuperFreakonomics) discussed the concept of “Conspicuous Conservationism” — that is, people that try to enhance their status by showing that they are being “altruistic” — even if they aren’t really effective.  For instance, in the story they talk about how the “greens” in San Francisco are putting solar panels on their roofs, and regardless of which side of the house is best for the sunlight, they put them on the side facing the street.

But I wanted to discuss another quick area: Real Efficiency.

I am hearing more and more people push towards Hybrids in an almost “knee jerk” way.  They feel that a hybrid is simply better for the environment than a purely internal combustion engine.  But here’s the question:  If I have a vehicle that is extremely efficient and is solely gas powered, is it worse than a hybrid on the environment?  Let’s say they get equal fuel economy.  Is one “better” than the other?

This is an interesting question.  If they are both generating the same number of miles for every gallon of gas consumed, are they not both being efficient?  And even if the burning of the fuel is somehow slightly more polluting in dangerous gasses than the hybrid cars, what is the environmental impact of these heavy metal batteries that, once they fail, must be handled as hazardous waste?

As consumers, we need to take more time to  learn about the full environmental impact of our decisions, and make choices not only on the status our choices will convey but the actual improvement in our environment that we will receive.

Please, let’s all work to make real environmentally aware decisions, and not ‘made for appearances’ choices.

I actually presented a paper on the challenges of digital textbook pricing at the Western DSI (Decision Sciences Institute) conference in 2011.   You can read the paper here.  In that paper, I point out that by driving the logistics costs of moving, handling, and returning paper products out of the system, along with other costs such as maintaining a bookstore, one can drive the costs down to about (surprise!) $15.00 while maintaining the 2 year profits of the publisher. And by withdrawing the pressures of the resale market, the profits only go up from there.

First thoughts that led to that paper were written about here  and here.

Most recently I wrote about  consumer driven markets. Who should make the  choice? Digital textbooks are able separate the content from the medium, and allow flexibility–unless we are locked into a hardware platform.  I also wrote about this in this post.

I would welcome other thoughts on those posts and on the paper.

from the article:

For $24.95 a month, the service will give users unlimited access to its library of 11,000 audio books through its website and an HTML5 mobile app.

Though Amazon-owned competitor Audible has a monthly membership, it relies on a credit system that give users access to a certain number of books per month depending on the fee. Audiobooks is the first service we can find that is streaming books using a monthly model.

I am intrigued–and I started to wonder how many people actually listen.  Please take the time to fill out my survey, I would love to know what your preferences are!

(and, don’t forget to listen to our version of audiobooks–the Real Tech for Real People podcast!  Go visit http://rtfrp.com and get the latest episode!)

The first two were aimed to address the issues at the heart of the charges being levied against Penn State in the scandal–that there was a cover-up, and that leaders of Penn State perjured themselves–lying in court rather than allegedly tell of the evils revealed to them.  The last one? Transparency?  Where did that one come from?

Calls for transparency arise when people believe some one, or some organization, is perceived to be acting in secret, and that secrecy is assumed, rightly or wrongly, to be covering improper or even illegal behavior.  Often the charge of improper or illegal behavior is warranted, and often it is not.  Of course, we rarely remember those instances when things ended up perfectly but as humans we are “inclined to believe the very worst about anything and everything.” (see “Free: The Future of a Radical Price,” below).  Of one thing we can be sure–when an organization commits to transparency they are doing so because of a perception that they haven’t been, and they need to change. ¹

In this case, Penn State faced tough critics from around the nation that felt that a cloak of secrecy pervaded the actions of the University that at best hindered investigations into Sandusky, and at worst enabled his predatory behavior.  Then, as the crisis broke, the lights in Old Main were on, but the President of the University was no where to be seen.  Depending on who you follow he was either hiding, or he was being held back by the Board of Trustees.  Then, the Board began their activities in near silence allowing just enough light in to let us know they were “engaged.”  Many questioned how the whole Board could both remain silent at this critical juncture in Penn State history, and how they could all unanimously support what seems to many to be terribly wrong decisions.²

In response, we saw a promise from Erickson, the interim President of the University, to transparency.  He wrote:

Penn State is committed to transparency to the fullest extent possible, given the ongoing investigations.

• I commit to providing meaningful and timely updates as frequently as needed.
• I encourage dialogue with students, faculty, alumni, and other members of the Penn State community.(http://president.psu.edu/promise.html)

So we have here a practical application of how Penn State will be “transparent” but not much of a definition of what Transparency means.  We have an expectation to receive “timely” updates, and that they will be “meaningful.”  But no clear definition of what even “timely” means.  And updates on “what?”  Finally–who determines “frequency?”

To be clear then, what is the definition of “Transparency” that Penn State is using? According to Tactical Transparency (see below) there are traditionally two definitions of transparency that are already accepted–financial transparency, and governance transparency.  Publicly traded companies are already required to provide certain financial and governance information.  But we are seeing companies stepping beyond that simple definition.  But before we go much further on what this “new” or modern view of Transparency has become, let’s quickly review: once again, we have documentation on how the university’s governance has been anything but transparent, and those with any memory longer than 6 months will remember the significant battles Penn State has fought to keep from disclosing salaries and other financial information.  In fact, just last month the Philadelphia newspaper, the Philadelphia Inquirer wrote:

The school has long had a reputation for guarding its secrets closely and zealously, and when the state attorney general announced the charges against Sandusky, she said their investigation , by a grand jury with subpoena power , had been hampered by an uncooperative atmosphere among unnamed school officials.

In addition, the NY Times wrote concerning the unique ability that Penn State has to use a cloak of secrecy:

But the public’s access to e-mails, phone records and other potentially critical evidence is restricted because Penn State has a special exemption from having to disclose a host of information that state agencies and many other state universities are forced to divulge under Pennsylvania’s Right to Know Law.

So there you have it–Penn State has been reluctant to release information and in fact has engaged in legal battles to keep from releasing even those records usually expected from government and publicly traded companies.

These first two definitions of transparency, long held, and expected. And yet, Penn State hasn’t even met those expectations. But this is not the transparency Erickson was discussing.  It was clear he was talking about a new form of transparency–a transparency to the inner workings of the University.

This transparency is about the reputation of the University (or any organization).  It is one that builds credibility.  That instills trust. That, as a senior leader for a major retail firm recently told me, is “opening the Kimono” and letting the stakeholders see just how things are being done.  I don’t think anyone can argue that the comment from the President is one driven by a need to restore the reputation of the University.

In the case of Penn State I think they set themselves up for failure from the start.  First, they failed to define what they meant by transparency, creating a vacuum that is filled by whatever definitions the hearer expects.  (Not unlike “Change you can believe in…” led many to vote based on a blank check).  Second, their behavior didn’t change. I don’t think you can argue that you are “more transparent” when you do things essentially the same way you always have done things. [4. This is the essence of the article from StateCollege.com–that this is how things have always been done.)

Much of the background and thoughts on Transparency comes from the book Tactical Transparency: How Leaders Can Leverage Social Media to Maximize Value and Build their Brand as well as from Free: How Today’s Smartest Businesses Profit by Giving Something for Nothing

Does transparency mean that you tell everyone everything you do and why do it?  bust you violate all levels of confidentiality?

It seems to me when people an organization promise transparency, they are acknowledging a problem and suggesting they can no longer continue doing things the way they have always been done.  I realize this is not always the case, in that sometimes we’re just promising to foster an environment of trust, but that trust is based on the concept of sharing information.

reach leads me to ask these questions is the reality of organizations promising transparency while then defending your actions as being consistent with how things have always been done. If things have always been done this way how is that being more transparent?  Or to put it another way, if you have always been transparent why promise transparency as if it is something new?

I welcome your thoughts on these questions.

Please, take a minute and leave your story in the comment section!

Thanks!

On Veteran’s Day, Genesis10’s founder and CEO Harley Lippman and newly appointed Manager of Diversity and Veterans Relations, Richard Sanchez, were interviewed by MSNBC’s Dylan Ratigan about the challenges American Veterans face transitioning their careers from the military to corporate America. Watch the clip here:

Working with Genesis10 means working with a company that is dedicated to serving our community where and when we can. Veterans Outreach is our latest initiative whereby Genesis10 will partner with clients to identify opportunities for U.S. Veterans. Using training and mentoring programs in place internally and through external partners, Genesis10’s Veterans Outreach will prepare and support Veterans during their career transition from the military to the private sector.

If you know a Veteran who may benefit from this program, we want to know. You or the Veteran can send a message directly to G10Veterans@genesis10.com. Please share this message with your network. We ask you to help us spread the word – because by working together we can connect and support the men and women who served to protect our freedoms with new career opportunities in business and technology.

I would encourage everyone to share this post, the video link, and the email address with anyone who is either a veteran, or knows a veteran–or knows someone who knows… (you get it–tell everyone!)

The primary and secondary schools systems are selecting a specific device and the books are content to go on that device. In this case, the system purchases the devices and the content and then delivers that to the student. So who is the consumer in this case? Setting aside for the moment the argument that the taxpayer is always the consumer, let’s focus on whether the consumer is the school district or the student. We can all agree that there are many stakeholders in this arrangement: the school board, parents, teachers, students, taxpayers, and I’m sure many others. But when I consider the consumer, I am considering their role in consumer plays in shaping the marketplace. In this case, while the students consumed the content, the school board by virtue of the purse string is the consumer. We can hope they are making wise decisions as they select the best combination of hardware, software, and support infrastructure.

Given this scenario the selection of a specific hardware platform makes sense. As a consumer the school district is selecting an all encompassing solution for all to use. This approach will undoubtedly balance the educational needs with the technological abilities, and of course the fiscal reality is the school board faces. The district will be able to leverage their scarce taxpayer dollars to get the best benefit possible. Are there limitations to this approach? Perhaps. There might be better solutions that only run on a different platform. But those are the tradeoffs one makes when one selects a technological platform on which to base decisions. We must satisfice.

Not consider the higher education model. As professors and students alike start to look towards digital textbooks as a valuable and viable alternative to the costly new-used-new book cycle we find a new challenge. In the old paper based book paradigm each professor selected the content and the medium for delivery of the material for their class. As I wrote previously this whole paradigm the content and the medium are inextricably entwined. Each selection of a book was in and of itself the selection of the ecosystem combining the technology (paper) and the content, and quite frankly the support infrastructure. Digital course content (textbooks) separate those.

In the old paradigm the student as consumer handbook three choices. They could buy the book new, they could buy the book old were used, or quite frankly they could choose not to buy the book. They controlled the purchasing decisions and there were really no other considerations of value for them or their professor since all books were delivered in the same – way as complete units. Now, we have some separation between the content and the media.

So who is the consumer and how does that shape the market? Following the old model the professor will select the textbook and the student will be expected to buy that content. If we allow the old system to continue unchanged the faculty member may continue to select what they feel to be the best possible text for the class without regard to the delivery media they will be forcing upon the student. Of course, they are decision may well be driven by the technology they happen to own and not the technology the students own. A professor with an android tablet may well selected android specific text applications while another faculty member with an iPad may well selects iPad content applications. This becomes especially problematic when faculty are selecting multimedia are rich content that may only work in one operating system and not the other.

Purchasing decisions than shift from the student who controls their own purse strings and now can fall on the faculty member who is on constrained by the fiscal realities their students face. It is quite possible for students to need three separate portable digital devices to support three or more classes. The student, by my definition earlier, is the consumer who must make the purchasing decision but that decision has been taken from them.

Once again, we see the value of interface and interoperability standards that cross the various platform divides. Rather than develop operating system specific applications, textbook publishers should work to ensure that their content can be delivered across the wide spectrum of portable devices available. Certainly Amazon has provided that ability through their multiple instances of the kindle application. If a professor assigns a Kindle book a student can easily select that content to view on nearly any device. With the maturation of HTML5 hopefully we will see more and more experience-based course content available and not tide to specific platforms were operating systems.

This will then returned the student to the role of consumer allowing them to make the decision about which media device best fits their needs and wants, while allowing the faculty member to select the content that they believe best fits their course requirements.

I would love to learn your thoughts on the role of consumer in education, and not just in relation to textbooks but who the consumer really as in both primary and secondary education as well as higher education.

Tweak me @SCMprofessor with your thoughts or share them here.

For centuries our ability to gather content and disseminated wirh tide is not just to the content but to the media and the physical media that was used for delivery. If you wanted to read a book you would buy both the content and the delivery media simultaneously. The words in the paper on which they were printed or written were forever enmeshed. Even in recent decades with books on CD or tape you were still purchasing both the delivery media and the content as an inseparable unit.

We have an opportunity to day with the development of digital content and robust data exchange standards to forever separate the content from the media, or at least that will we use to receive the content. We’re at a crossroads. We can choose to follow the path of standards allowing users to decide on the delivery mechanism they prefer, or we can continue to develop content for delivery in specific devices and tools.

We’re currently entering a world where we have a wide variety of choices for the personal technology we use to access media. For instance, we have both been nearly ubiquitous iPad and now more and more android tablets on the market. We’re also seeing the early stages of windows eight tablets being previewed. If we take a device centric approach content will be developed and delivered as operating system specific applications. This will enable content creators to leverage the unique creative aspects of each of the operating systems and the devices. But it will limit the flexibility of the user and potentially limit the consumer base. Imagine if there is compelling content available for an android, and different yet equally compelling content available on the iPad. If you would like to consume the content available on both devices you’ll have to make an investment in each of the devices. If however the content creator focused on developing inside of existing content delivery standards the user will be free to choose the marriage of device and content that works best for them.

In the early days of conversations about developig media rich textbook on tablets, the discussions centered around the iPad and how to make compelling applications for that device. Once the android operating system began to get traction however the discussion we found devices competing not only for consumer selection but for the ability to consume content. This opens up a whole new avenue for the consumer where they get to choose both the delivery tool and the content that they to consume.

In the late 1980s and early 1990s the content standards movement focused on Standard Generalized Markup Language (SGML) as a platform and application agnostic means of sharing and transferring content. This then evolved into the heart of the world wide web with the transformation into HTML.  Now, some browser developers added unique features to their implementation of HTML but over time they all seem to have come to the realization that standardized interfaces and interactions are better for all. This has now evolved into HTML5 and the integration of multimedia and interactive content into the markup language.

So here is the call—content creators and publishers need to focus on platform and application agnostic means of delivering their content. If they have a creative and innovative multimedia presentation they wish to provide they would do well to follow the lead of Amazon and other eBook resellers and develop their content for delivery using HTML5.  There are significant benefits to the publisher and content creator to this approach. First, the creators and publishers will not need to develop separate approaches for each and every device available to consumers. They will be able to create once and distribute to many. In addition, by following this open approach to content delivery they will please their consumer by allowing their consumer to choose the tool that works best for them while opening the door to significant increases in sales by offering their content to the widest selection of consumers available.

One final note: there are other benefits as well including the encouragement of design innovation in the devices separate from the need to maintain compatibility with specific applications running an existing hardware and software designs.

Win. Win. Win.

To hear more on this topic, listen to our discussion on the upcoming Episode 97 of Real Tech for Real People.

While perusing Gina Trapani’s blog from Smarterware.org, I saw she too struggles with sharing her varied, yet often inter-related, interests.

She writes:

It’s a tough question to answer, especially when you’re not working on a single thing. Last weekend at Foo Camp I failed miserably at explaining myself and my slash careers and how they all intersect. But at that same conference, I had the pleasure of attending a session by David Eaves, who eloquently explained that his goal is to apply his experience and training in negotiation skills to open source community management. On his site, he published a map of his past, current, and future work, and how those activities all interrelated. Cool!

When I read this I had one of those “DUH!” moments. It’s a brilliantly simple idea.  I like the way it forces some things into reductionism (you have to determine a fixed set of spheres–how many do you REALLY have?).  In addition, this approach can even help one find relationships between work that seemed “intuitively” there, but were never explicitly stated, even to oneself.  And finally, the approach David and Gina have both taken is to show how they are seeking the “greater good” (or a “Better world”) through their work.

The Venn Diagram David Eaves created is below.  To see the one Gina put together about her interests and work, go visit the link (really–you should!)  To see mine…. well, that may take a while longer.

Feel free to share yours here, or just put a link to yours in the comments!

Ojime are hand-carved sculptures that originated in Japan.

From about 17^th century, the Japanese people (especially the men) carried a small compartmentalized box called an Inro. There was also a Netsuke to balance the Inro over the person’s sash and an Ojime to slide down the string and keep the Inro closed.  By the end of the 19^th Century, they had evolved into elaborately carved boxes with the accompanying Netsuke and Ojime. While many people are familiar with the larger 2” Netsuke; Ojime are typically between 3/4 inch to 1 inch – a perfect size for 1/12 scale miniatures. The Ojime are found in most of the same designs as the Netsuke.

Go visit her site, and check out the wide selection, ranging from cute bunnies to skulls, cats, monkeys, and large wild animals.

At $2.99 an image, how can you go wrong?

At least not until now!

Now, if you find a wiki page, or pages, that you would like to read you can now save the page, or pages, as a “book.” On the left hand side of the screen you will see “print/export” as an option. If you click on that, you can enable “book creator” and start adding pages to your “book.”

You can add pages as you find them, and then move them around to get them in the sequence that makes the most sense for you.  In addition, you can create “Chapters” that will help you, and others, understand the structure of your document and provide a sense of direction and flow.

Once you have added pages, sorted them, and added chapter headings you can then save the collection as a “PDF” book, or an Open Document format perfect for editing using the Open Office Writer tool.  I have created a mini-textbook dealing with Supply Chain Management.  I created this so that I could share this information in an accessible and structured way for my students in the Collaborative Supply Chain Management class.

In addition, you can print the collection of “pages” as a real paper book.  Wikipedia makes this possible through PediaPress with prices starting at $7.90.  They explain it this way:

PediaPress offers high-quality printed books based on wiki content and is an official partner of the Wikimedia Foundation.

Clicking the Order book from PediaPress button, will take you to the website of PediaPress. Once there you’ll get a quote for your individual printed book and see a preview how it would look like.

The price depends on the number of pages, starting with US$ 7.90 for books up to 100 pages. 10% of the gross sales price goes to the Wikimedia Foundation.

Books are perfect bound, printed in the dimensions 8.5 inch x 5.5 inch (216 mm x 140 mm) and contain a table of contents, your chapters and articles, licensing information next to an index.

More information on printed books can be found in the FAQ.

One more thing:  If you have a Wikipedia account, and if you have made at  least 10 “contributions” to the Wiki (including additions, changes, deletions or corrections) you can and share your book with others.  Very useful if you want to maintain the “digital, cloud-based” feel of the wiki but provide a guided experience for your friends, or students.

So does this mean that Flickr is as bad as Facebook, running rough-shod over our rights with our own photographs?

I don’t think so, and let me explain why.  In the case of Facebook, they (the Facebook Machine) declared that all our Photos belong to Them (and us.)  Actually, the Flickr action is meant to ensure that all my photos remain my photos.  If I take a photograph, and I am willing to show it to the world, then I don’t mind you sharing it (perhaps) but only if you keep my credit attached.  People have been going around, linking to others photographs without linking back to the original, or to Flickr.

That is changed.  Now you must provide a way to link back.

To demonstrate, I have included one of my photos taken using the iPhone in the local Walmart.  As you (most likely) know, I am a Supply Chain and Operations Management professor. One of the things I teach is “service” and facility layout and design.  This photograph shows how our local Wal*Mart positioned their inventory in the floorspace prior to stocking–blocking access to much of the store (forcing you to walk around) and in one case, keeping you from purchasing their more expensive (and most likely higher margin) electric razors.

*sigh*

The Razors

As I understand it, Twitter added “lists” because people wanted a simple way of grouping the people they follow according to some sort of structure that made sense to them.  Tweetdeck had added that capability through “groups” and I had even started using that feature.  I had built groups based on my major categories of interest:  Family. Close (real) friends.  Local people. Educators.  Twitter took that idea, allowed us to create lists through them, and then also offered the option to make the lists “public” and subscribe-able.  People can see your public lists, and if they like them–follow them!

Once Twitter released that option I had actually abandoned the notion of groups and lists.  I wasn’t so sure about what I wanted to use them for anyway.  I have since gone back, adding a private list of just family and friends.

So here is what I am wondering as I peruse the 35 lists that have listed my brother, and the lists that have added me:

Are they all really that different?  And if not, are they a “waste” of time?

In my lists, I see I am listed on a number of Supply Chain Management lists.  And educator lists.  My brother’s lists are understandably predominantly discipline related, and education related.  There are a few others, but those dominate–and that’s the point.  There appears, on a curory look, to be significant overlap on these lists.

The concept of “Wisdom of the Crowds” and “Crowd-sourcing” is that crowds, when gathered together, make better decisions, and are more creative.  Potentially (and grossly oversimplified).   By building lists of people that share common interests we can see the views of others who are thinking about the same things, and get a wide range of perspectives. ²

So here are the “research questions” (or “investigative questions”) that I have:

1.  How many groups have identical or very similar themes? (Like “supply Chain Managers”)

2.  On similar lists, what is the membership overlap?

3.  How much time is spent developing these similar, and perhaps redundant, lists?

4.  Is there a better way to “share” lists, so people aren’t always reinventing the lists (and taking time to do that?)

5.  Is there some psychological need that gets filled by creating one’s own lists, rather than following someone else’s list?  Control? Ownership?

I like the grocery store analogy, but he didn’t  go where I thought he would.

Original Image from http://www.joe-anybody.com/id47.html

I thought he was going to go with the “General Store” analogy where Mr Ike (remember the Waltons?) would be behind the counter. You would go the counter with your mom’s list and he would get everything for you. No real choice in manufacturer of flour, or sugar, or even fabric. You bought what he bought, and brought.

Then we had the advent of the supermarket. You, the consumer, could now peruse from a vast array of similar products, deciding which ones of the myriad choices was right for you. Let’s take my favorite example: tomato paste. You want Heinz? Hunts? Giant store brand? Great Value? You want 4 oz? 8? 16? 32? The killer 64 oz? The assortment just of tomato based products is staggering–yet all choices we have.

Our choices remain limited by that which Walmart, or Giant, or Wegman’s chooses to stock, but (at least in the 2 former cases) they are limited by fiscal and physical constraints, and not some artistic and aesthetic focus.

If you don’t like the choices at one grocery store, you can simply go to another.

Apple is somewhere between these. They aren’t limiting us to only one choice (but oh happy day if we only could be annoyed by one fart app instead of 300!)

Apple however does limit choice. They not only control the store, but they won’t let you go to another store (without forcing you to make ‘unauthorized changes” to your device. Now, I hear the response–”you can go to another store–get a different phone!” But that’s not really the same.

In the analogy of the grocery store I have a device that I use to consume a product (my stomach, and all pertinences attached thereto). I am able to choose between a selection of products that I consume, but the device of consumption stays the same.

In the Apple model, I am forced to forgo a consumption device (one that might have a large number of appealing factors) for the “option” to consume a different assortment of products.

I don’t see why it has to be “either, or.” This Cartesian Anxiety must stop. Tell us that we are “safest” if we shop in the company store. But let us choose (perhaps through an “opt in” feature that won’t cause nightmares with firmware updates) to choose a different store. Let the consumer decide on the risks of consumption, while allowing us to have the same consumption device.

Let us “choose.”

Does Apple not have the “Stomach” for that?

One author, however, worries that if we view the iPad as the path that Apple would rise up and exert censorship over the content, giving us the Jobs view of the world (much as many criticize Disney for giving us Walt’s sanitized view of how the world is.)  I could see  Apple doing that not only to sanitize content, but also to further whatever political agendas they may have given their apparent arbitrary, capricious and vindictive approaches to what is and isn’t approved.  (political in this sense in the larger meaning, not simply political as in government affairs.)

I mentioned this is an email, and in reply, I was told that we shouldn’t worry about that.  That Apple has demonstrated a willingness to not interfere in educational issues as shown through iTunesU and that Apple would probably never get enough market share for that to happen.

Perhaps.  But that led me to ponder further what really would it take to get digital texts  (or as my brother calls them “educational applications” to move from obscurity to ubiquity–and will proprietary get in the way?

First I wanted to address the interesting  notion that  iTunesU is the model of an Open Apple.  That might be true, but the textbook/educational applications that we are seeing discussed are positioned to be sold through the AppStore model, and  the App Store is a model of a closed Apple.  At times, a VERY closed Apple.   Recently we have seeen Apple exerting control not only on content but the tools to be used in developing that content.But let’s set aside for a moment the problems of if Apple were to control the market, and look at what it would take to get there.
Perhaps my correspondent is correct that Apple cannot garner enough market share to make them (and their iPad) a viable contender and competitor in the textbook space, but then we are left wondering:

• If Apple doesn’t control a significant share of the textbook “space” then what are the options for students?
• What incentive will students have to drop $500+ on a device that only a small fraction of faculty will have as the platform for their texts/instructional materials?

Will Apple work towards open standards so that the books/media will be able to be hosted on a wide range of platforms, or will Apple insist on a proprietary standard, working towards exclusivity for the instructional material they “host” on their platform.  This isn’t simply a red herring tossed out to direct attention from some “Greater Good.”  The fact is that right now students are able to choose from a variety of sources to purchase their texts (and thus a wide range of service/price combinations) and even between new and used books.  Faculty can choose between various textbook publishers/providers, which allows the professor to not only choose the best content, but the best value package for the students.

All that can disappear if one source controls the access to the media, and if there exist competing exclusive and proprietary sources for access to media, then students will be required to purchase not one, but several expensive readers/devices depending on the choices of the faculty member.  Or, alternatively the faculty will be hamstrung, “encouraged” by students or administration to only focus on those source-materials available and the dominant device.

So here we go–what is the decision making process that leads a faculty member to assign a “multi-media resource” as the course “text” rather than a regular textbook? What do you when the students are told that for my ONE class the book is no longer that big expense at $100-200 but rather the iPad becomes the big expense–costing 2-5 times that amount. AND there is no guarantee that any other faculty members will commit to a similar path? And of course the publishers don’t want to reduce the price of the “text” below 50% of the current price AND don’t want to make the “book” available permanently. And don’t forget, most technology has a life of 2-3 years when used regularly. Heavy use, along with ever increasing complexity of the applications/software, may well shorten the lifespan of the product that students must purchase, shifting them from a 1 time outlay to 2, or 3 times in the span of a college career–assuming of course that enough faculty adopt these “books” to make it worth their while.

At a time when the pressures from students AND the federal government is to lower the costs of education (and specifically texts) what professor wants to be the one to step up and insist that students get a high priced device that is designed for obsolescence?

So we are faced with an interesting challenge.  At a time when technology is holding out such promise we find at least one company who has the technical ability to break down the cost walls while simultaneously catapulting the technology of learning well beyond anything we have experienced.  And we find that the same company is tighting the grips on their “ecosystem” arguing that they can control their own little corner of the world.

This is one of those pivotal moments–we can see proprietary walls go up, and little gardens of creative learning spread slowly.  Or we can encourage open architectures that will enable creativity and learning to spread quickly, and widely.

Ubiquity? Or Proprietary? Which way do you think things will go?

So now we face  the BIG PROBLEM.

By shifting to a policy where everyone is now to be insured, we open the floodgates of demand (okay, a bit much. But we certainly will allow millions more in.) Demand for services will increase. So it would make sense that prices would increase to balance out the demand (remember Econ 101, all else equal, in the near term an increase in demand will result in an increase in price. In the long term it should result in an increase in supply, as the market responds to the increased demand for the product).

Will we see prices increase? Not for the consumer–they are capped at the Co-pay. And now we are seeing pressures to not raise prices from the supply side (and the insurance companies will be SHOT if they raise rates significantly).

So what happens now? If prices cannot go up, then demand will remain (unrealisticly) high. Unrealistic in that demand is acting free of the market place.

With demand high, and the inability to increase prices we will see no real “benefit” to more providers entering the marketplace.

More to the point, even if we could see more providers enter the market there are significant barriers to entry. Consider the medical field:

1. Doctors must go through extensive training, and then licensing (not to mention the fact that they never really get it right–so must keep “practicing”)

2. medicines must be approved after rigorous testing, and their labs must be approved, and so forth.

3. Various other licensing and authorizing are in place for therapists, assistants, nurses, and the like.

Supply cannot respond quickly, and with a rising demand and supply unable to keep up, and with no pricing mechanism to regulate the demand we will face:

Shortages of service resulting in long waiting lines/delays.

And how do you deal with shortages? Since the market forces are not allowed to work, we are left with the government stepping in, once again, to fix the mess of it’s own making. They will have to “ration” care.

Sorry–it’s a fact. In every nation that has shifted to “socialized” they have faced shortages, lines and rationing.

It’s not something we can “do better.”

It’s economics.

The whole initiative is predicated on a few arguments:

1. Costs (prices) are too high.
2. Insurance companies are “making too much money”
3. Millions of people don’t have access to care
4. The Health Care people are receiving is poor (oh, wait, it’s not about the actual care…)

So let’s tackle this. The basic problem now comes down to a discussion of supply and demand/economics.

As the system currently works we have two sets of perverse incentives fighting against the consumer (and one of these incentives takes place with the willing, yet unknowing, assistance of the patient)

First, the perverse incentives of the patient:

Currently, the “cost of entry” into the health care system is high (monthly “Insurance” rates) but thanks to low, or no, co-pays, the marginal costs of most health care transactions are quite low.

Given the low costs incurred per visit, and the high “sunk” costs incurred to enter the system, the insureds (patients) who HAVE insurance are incented to go to the doctors more frequently, and to go ahead and get the prescriptions (Hey, it’s only $3 copay at Wal*Mart!)

Of course, this is a mirage. The actual costs of each visit and each prescription are borne by the insurance companies, which then have to recover their costs through increased premiums, which of course has everyone screaming that the insurance companies are “gouging” the customers.

On the other hand, we have a set of pricing incentives that also conspire against the consumer. The ‘care providers” are aware that the patient/customer doesn’t see the actual costs–they only pay the co-pay. So given this we have a series of perversions that are at play:

1. Doctors are more able to prescribe tests/medicines, and the like, since they will receive little if any push-back from the patients because of costs. More services with a low marginal cost to the consumer/patient, but a higher total cost, paid by the insurance companies.
2. Insurance companies work to lower their costs by negotiating to pay health care providers a fraction (some value less than 1) of the billable rate. Thus the providers are incented to increase their prices the maintain their revenue stream. This increases the costs once again.

So these two twists to the problem work once again to force the insurance companies to have to raise the rates (really on everyone) to cover the payments they are having to make.

Now–as consumers, we see that we are paying a high “sunk cost” as a monthly fee and, rather than view this as traditional insurance (where I am betting against myself) the consumer wants to try to get at least that benefit back out of the “system” (and is encouraged to do so, by “low co-pays”)

Sadly, the whole mess was brought on by our desire to protect everyone and provide some level planning to health care. The “free market” actually would provide better incentives here, placing limits/governors not only on how much people are willing to spend on services, but the prices that people would have to pay. If service providers want to stay in business then they would be forced to price competitively based on the market, and the market would be making the decisions based on the consumers. As it stands now, with the “same co-pay regardless” the consumer has no indication of value, and the market cannot respond. Viagra is as valued as Interferon and as Motrin.

What to do when everything costs the same?

I am not alone in my expectation that the Health Care (insurance) reform will not improve Health Care (it won’t make bad doctors good ones, for instance) and it won’t improve access since lower prices have that pesky effect of increasing demand–in a field where the barriers to entry for suppliers are significant.

I will say this:  Welcome to the new “Grand Experiment.”  If it succeeds, then by all means celebrate (but could we get a good solid definition of success on which we can all agree?)  But (and this is significant) if it fails, how many will have died as part of the experiment, and will we ever be able to recover?

One final note:  As researchers we have to seek, and get, informed consent from human subjects before we can experiment on them.  Did you get the forms?

I am not writing this as a “hater” or critic of the iPad.  I just would love to see if the demand spiked on the first day and dropped precipitously, or whether the demand over the 21 days prior to shipping stayed relatively constant, or even ramped up as we approached the 3rd of April.

Here’s what I wonder:  people who are early adopters, and the first to get in line and wait for days for a new product, are by all anecdotal evidence I have heard the ones who pre-order, and pre-ordered on the first day they could.  And in the case of my brother, ordered it as soon as the Apple Store made it available.

If my supposition is true, then the demand for pre-ordered items would have been heavily front-loaded.  Conversely,  I would find it quite interesting if demand for the iPad through pre-ordering had any sort of ramping to the demand pattern.  If the demand was increasing, then the big question of the day would be:  Why?

The next question is are the people who would normally stand in line to get the next “really cool product” the same who would want to pre-order right away (and thus reduce or eliminate lines at the stores) or is the psychology of waiting in line for a “cool new product” palpably different from the psychology of “getting” it?

Anyone have any thoughts or insights into this?

I wanted to tackle this for a minute.¹  I would have to agree that the NEXUS is not selling as well as, well, most other smart phones on the market right now, but on the other hand let’s balance the assessment by pointing out a couple things contained in the short post above.

1.  The forecast anticipates selling 1 million units by the end of 2010.   This is actually quite a  significant figure for a phone that really only works best (for now) with T-Mobile.

2.  The Nexus is only “sold directly by Google.”  In fact, let’s be more pointed with this: it’s only sold by Google, through an online purchase.  Imagine if the only way to get an iPhone was through the Apple Store site.  Would they still have sold millions? Yes, undoubtedly, but one cannot discount the tremendous boost Apple received by having their products in the hands of thousands of people nationwide, simultaneously.  Not to mention the tremendous press coverage of the “long lines waiting to get their hands on their first iPhone” that we saw in every news media market.

Now, a million units sold in 1 year is relatively trivial compared to the numbers of even the iPhone 1st generation phone.  That said, consider the deck that Google has elected to stack against itself.

T-Mobile is a good and worthy network, so I am told.  But more often than not, people talk about it as if it is the little sibling of the  ”big 3″ when people talk about their cell-carriers.  I think I can count on one hand (without resorting to binary)  the number of friends and colleagues that use T-Mobile.  Selling a million units for a phone that is, out of the box, tied to a company with http://en.wikipedia.org/wiki/T-Mobile_USA is “not too shabby.”  (This compares right now with AT&T having approximately 85 million wireless customers.)  Given the large numbers of people who are locked in to their existing contracts, I don’t see many people switching carriers, especially since they are not afforded the opportunity to “try before they buy.”  (See next point)

Additionally, the decision by Google to only sell the Nexus online, through their website, has to hamstring their sales.  I may like tech, but when it comes to dropping $500 or more on a phone (and/or getting a long term contract) I want to be able to touch it first, see how it feels and responds in my hands, and feel like I was an informed consumer when  I make  my decision.  I suspect I am not alone.  More than once I have driven past our local T-Mobile store thinking that, if only they had a Nexus in the store, I would stop and at least test the waters.  I suspect that, if I could go in to a T-Mobile and not only play with the phone a bit, but talk with them about the affordability of switching from AT&T to T-Mobile, I would make the switch.  And again, I suspect I am not alone.

Finally, early reports of lack-luster customer support by Google has most likely scared off a number of would-be consumers.  Take away the store front/salesperson access, and market your phone on a network that would require me to switch carriers, and I am going to want, nay expect, a rather significant online and “on phone” support structure.   Unfortunately, Google has grown a culture based around offering “free” and “Beta” services.  Expectations of support for “free” services are far lower than expectations when one spends a significant amount of cash.

And make no mistake–$500 is significant.

In the final (as of today) analysis, I would say that 1 million units sold is actually a remarkable number given that Google has left the confines of their “core competency” (which I will describe as creating free and innovative software-based experiences) and ventured in to the world of offering “for sale” hardware products.²  Additionally, they seem to be wanting to “play by the rules” of traditional retailing instead of breaking new ground in the cellphone industry (as was speculated prior to the offering of the Nexus).

What does the future really hold for the Nexus line?  It is now a waiting game, I suppose.  Imagine Google addressing even 1 of the issues above. An expansion to another network (such as a Verizon or AT&T) or even the opening of sales at T-Mobile stores could make a significant difference for the phone.  Or, perhaps they utimately will rewrite the rules for cell-phones, offering free phones to those that actively use Google services, extending the Ad Revenue model to a whole new domain.

Considering the mis-steps one can only conclude that the Nexus succeeds, despite itself.

But could he have lost his touch? Could Steve Jobs and Apple not only missed it this time, but could they be responsible for bringing down a whole nascent industry with them?

On the heels of the introduction of the Apple iPad (and their announcement that books would cost between $13 and $15) we saw an emboldened Macmillan publishing house pressing their case against Amazon.  For a brief moment Amazon seemed to be fighting the good fight for consumers, and went so far as to ban direct sales of Macmillan books.

Macmillan was simply “acting out” what Steve Jobs told to Walt Mossberg when he said that the prices would end up being the same (between Apple and Amazon), because the publishers are not happy (with Amazon) and are going to pull their books from there.  It appears that Steve Jobs is doing the work of the Publishers, pushing the price points up, rather than down.  Rather than being a champion of the individual, does this make Steve Jobs simply a big business “hack?”

The bottom line here really is that Amazon knew 2 years ago what Steve Jobs should know now. Verso Direct has conducted a book buyers behavioral study/survey, in which they discover that the magic price-point for digital books seems to be right at $9.99.  According to the article “Amazon Flanks…” when Verso presented their study and broke down their findings, they reported that 3 out of 5 people will consider buying an ebook at or below $9.99.  Raise the price, and that drops to 1 out of 5.

The article then goes on to identify the real “winners” as pirates.

Is it possible that, in his rush to kill Amazon, Steve Jobs may have instead spell the death of eBooks?¹

Jump forward nearly 4 years and many MegaDecibles of hype later, and you can see the lack of creativity still abounds.  Most prognosticators are predicting “a larger iPhone” with some of the images shown (purportedly “legitimate from inside sources”) showing exactly the same layout–to include a speaker where there is currently an ear piece.

Give me a break.  We won’t have to hold this up to our ears so why should Apple be captive to that design?

I see no reason for the device to look “like a larger iPhone” except in the broad brushes of Steve Job’s design Ken.  Remember, Jobs likes simplicity, and we were “told” after the release of the iPhone that he wasn’t happy with the concessions they had to make for the few buttons that exist on the iPhone.

What can we expect to see? (and check back in 16 hours for my Mea Culpa.)

• All Glass Front
• Touch Interface
• No buttons on the front
• In fact, no buttons.  Except power.
• Pencil thin
• limited physical connections, if any. Yup, no Firewire, no USB. Maybe not even an iPod connector. WiFi/3G only.
• Power connector? (can you say “no–inductive charging?”)

So, if the rumored names are true, expect exactly that-a slate.  A blank slate.

My thoughts? Apple will surprise us again.  And that should be no surprise.

My wife is an insulin dependent diabetic, and has been using the Medtronic “pump” for several years now.  In addition, she has the “continuous glucose monitoring” (CGM) sensors, that talk with the pump, and allow her to get information far more quickly about changes in her glucose levels.  ¹

As part of that treatment regimen she has to order supplies on a regular basis.  Of course, these supplies are only available from the manufacturer.   Our insurance company picks up the tab for much of the supply cost, and as part of the typical healthcare regimen, we pay our portion of the bill as well.  I typically call  Medtronic, or at least their billing contractor, and make the payment over the phone with a credit card.

In December I called, and quickly dispatched with the task, paying the balance owed on the bill, and writing down the confirmation number.  Then, in January, we received another bill, for the next set of supplies received, and I called back.  This time, they told me I owed for the new supplies, and that I still owed the (now late) payment for the prior supplies.

Here is where things could have gone terribly wrong, with accusations, recriminations, and the like being passed back and forth.  But instead, things went terribly RIGHT. (um… is that possible?)

I dug around, and found my copy of the previous bill, with the confirmation number written on there (in traditional, Air Force “Memo for Record” fashion.  Old habits die hard.)  I read the customer service representative the number, and she looked it up.  And then she gasped! “I was the person who took the payment!”

She immediately sprang into action, verifying that they had, indeed, taken my call on that day, and that I had indeed paid my bill.  She went to her supervisor whom I was told was “as we speak” taking the paperwork to the accounting office to straighten them out.  We then proceeded to take care of the rest of the business, and process the payment for the balance owed.

At the end of the call, I asked if she wouldn’t mind sharing her name with me, just in case I had any other issues.  She was very gracious and agreed to that.

So, Esther, thank you for your gracious and attentive support to your customers.  It is very appreciated!

Jeff Bezos, CEO of Amazon, said essentially that the reading of Kindle books, and the hardware that we know as the Kindle are separate businesses.  In that article Bezos specifically described the competitive environment inside the Kindle world:

The device team has the job of making the most remarkable purpose-built reading device in the world,” Mr. Bezos said. “We are going to give the device team competition. We will make Kindle books, at the same $9.99 price points, available on the iPhone, and other mobile devices and other computing devices.

Jeff Bezos saw the need to create a competitive environment inside Amazon for the Kindle device design team.  As we all know, there are now more outside competitors, with the Barnes and Noble Nook making a strong run towards toppling the Kindle as the preferred eReader.  Many have called it “Kindle killing,” or a Kindle incinerator (cute play on words there) and suggest Nook will “eat Kindle’s lunch.”  All strong words, and so far most of the reviews seem to indicate the Nook lives up to the hype.

One interesting feature of the Nook is that it runs on the Google Android platform.  So what, you might ask?  Good question.

So far we have noted that Kindle books are able to be read not only on Kindles but on iPhones and Windows PCs (and soon the Mac).  Clearly Amazon has developed a strong skill set at writing software to run on other platforms that can buy and read their eBooks.

The Nook runs the Google Android and the President of B&N has suggested that they may release an SDK (software development kit) for the Nook.  An interesting move, and one that the author of the article noted above thinks might spell trouble for Amazon’s Kindle.  I disagree.

Opening up the Nook with an SDK could mean that Amazon can slide in with another software based eReader, allowing Nook owners to choose between bookstores and selecting the copy of the book that provides the price and features they want most.  (“Features” you make ask?  Yes, some may trade a higher price in exchange for no copy protection, for instance.  Just one of the “features” that could added as competition increases.

I see this as a great opportunity for consumers.  Competition now exists on price-points for books between digital and paper.  Add the possibility to choose between book retailers for digital versions and possibly to choose between features including DRM-free books, and a whole new world opens for avid readers.

Read On!

The biggest downside?  That this doesn’t help the Kindle 1 owners at all.  Needless to say, those of us that weren’t convinced that the few features added to the Kindle 2 were worth the full purchase price for the upgrade are not too pleased with the lack of support (read the comments in the above link.)

On the other hand, perhaps this is a good reason to consider the Barnes and Noble Nook (if they can keep them in stock.)

So for those that have been listening to our podcast Real Tech for Real People, we have talked quite a bit about the numbers of people that don’t have high speed (broadband) internet access.  We have been reporting the numbers we had previously read that had anywhere from 40-45% of the population does not have access.

Okay, I am confused. FCC says 96% of households have, or have access to, broadband.

“No less than 96 percent of households either subscribe to or have access to broadband service, according to an F.C.C. task force, which presented a status report to the commission last month.” (see commission report here)

The article reports that the task force goes on to report that:

• median speed is 3 megabit/second ¹
• 1/3 of households “choose” to not subscribe

The seem to be dumbfounded that so many households would choose to not get high-speed internet.

“The most interesting question here is the one that the F.C.C. can’t answer: Why have 33 percent of American households that have access to broadband elected not to subscribe? The reasons “are not well understood,” the report says. A survey focusing on the nonadopters is under way.” (see Pew survey for breakdown of demographics)

The astute reader will note a few things here:

• 33% of “households” does not equal %33 of population.
• “have access to” is not clearly defined.  Does this mean “can drive to Panera?” Or are sitting under a satellite?
• The assumption that these households “elect” ( or choose) to not subscribe is a poor assumption
• There exists a Pew survey (see link above) that actually gives strong hints as to why they don’t have it–so why aren’t they “well understood”?

I have sat through many presentations where the demographics have been dissected ad nauseum, along with conclusions!  Usually it revolves around the high cost of delivery of low quality service to rural areas, $50-$80/month for .5, to 1.5 megbit/second.  Think about that.  If you pay $50 for FIOS for 15 mb/sec service, you are paying the same price for 30 TIMES more speed/capability than the same price for satellite internet, without the latency (lag) issues associated with satellite.  And the satellite internet puts a 17 GB download/month cap on your use! Oh, and with FIOS you can also get TV service, and phone service.

Of course, there are other issues as well, including the fact that some segments of the population prefer to live their “first life” rather than a “Second Life” interacting in a real rather than a virtual world.

But I cannot get past the simple, obvious fact that “access” that is over-priced and under-capable is not really access at all, but political double-speak.

Do you know people without a “broadband subscription” (let’s say, for this discussion, broadband at home)?  Why do you think they have “elected” not to subscribe? Or if they have told you–please share!

Tell me–what do YOU think?  I would like to share your thoughts in our next Podcast that we record Tuesday night, 20 October 2009.

Now, I won’t make any bones about it–I am not attending all of them.  Heck, I am trying my best to attend the few that I think I can get the most from for either Supply Chain discussions, or (yes, surprise) Social Networking analysis.

Why Social Networking? Setting aside for the moment that I think it is simply “cool” I am also quite interested in what we can collectively learn from these networks.  But apparently my interest is not the same as the interest of those doing the research.

Each and every presentation I have attended has focused on the math.  How many connections are there?  How often do those connections share something?  Can we come up with a measure that shows the diffusion of (music/pictures/videos/ideas)? Or, to put it in the language of the Operations Researchers and the Management Science folks, they are “interested in the connections between nodes.”

I think we are missing a golden opportunity here.  I am not interested in the connections, but the content and the context of the information being diffused, shared or otherwise “networked.”  I think there is much we can learn if we can somehow take this Great Discussion and somehow contextualize the chats.

Let me explain:  I was enjoying reading the Twitter stream for Penn State’s Teaching and Learning with Technology Symposium back in March 2009. They were using the hashtag #TLT09 so we could easily mark, and track, comments made about, for and at the Symposium.  There were quite a lot of great ideas bouncing back and forth as some reported on what was being said in the sessions, others commented on those thoughts, and still others added new ideas into the stream that otherwise would have been lost.  Mixed in was the occasional “I need to get a bagel” or “This reminds me, I need to update my blog.”

All in all hundreds, if not thousands, of “tweets” were created during the event.  The ETS folks at Penn State created a “word cloud” from the Tweeting, so we could quickly see which words were being used the most, and thus we could get a sense of what the major thought drivers were throughout the day.  But I didn’t think that was enough.  I wasn’t just interested in the content I was interested in the context.

So I started thinking about what it was that I was seeking.  I would love a tool that we could point to a #stream (a stream based on a hashtag, like #TLT09 or #INFORMS09 ) and let a tool go through, analyzing the hundreds or thousands of tweets, and then tell us not only what was said, but what relationships existed between the words.  BLOG might be the number one word, but a collection of words such as “ereader” and “kindle” and “Digital textbooks” and “ebooks” may as a group have dominated the discussion.  And inside that group we may find that themes emerged, such as “ease of use” or “notetaking” or “portability.”

So here I am, at a “meeting” where over 3 thousand presentations are being given, and I have yet to find anyone here that is interested in the content or, more importantly, the context of the network.  When I have asked a few people about the topic, their response is unfortunately typical:

“That’s too hard. The data is hard to access.  We don’t know how to do that yet.”

I am not sure I buy that, but then again, if it was simple, I suppose I would have already done it.

So let me put out the call to anyone that knows a “Quant Jock” (quantitative analyst) that would like to tackle this problem with me, please, contact me.  I am ready to go!

The purpose of social networks is to be social, sharing ideas, let explore our content and our context, that all of us may grow!

What ultimately caught my eye, though was the argument, buried deep in the article, that for such a pervasive and deadly action to be occurring  so frequently (the article reports “at any given moment the drivers of 812,000 cars are in mid-conversation on the nation’s highways”) we are not seeing a comparable increase in accidents/deaths.

What Does It Take to Get Texting Off Roads? (Wash Post)

“Given those findings and vast cellphone use, the experts are puzzled by the fact that overall crash rates haven’t increased dramatically, too. Without statistics to show that, persuading drivers — and legislators — not to use cellphones becomes more problematic, even considering the current impact.

“If it’s not causing additional crashes, then banning it isn’t going to reduce crashes,” Lund said. “The risk of talking on a cellphone is real, but it’s entirely possible that it’s replacing some other risky behavior.”"

I am not seeking to defend (or condemn) texting while driving in this blog post.  I am, however, wondering when we are going to see the return to objective analysis of data.  Wasn’t that what the new Administration was going to bring?  A removal of political motivations from science, and a return to objectivity?

Just a thought.

Want to hear my thoughts more fully on this, and other tech topics that “Real People” have to deal with?  Come listen, as Tony Pittman and I discuss Real Tech for Real People–a weekly podcast talking about tech where we all live.  (Don’t have iTunes?  Go listen at Tony’s site: Get The Next___)

Listen, join in, and let us know how you use technology, and what you would like us to talk about each week.  We are already lining up guest speakers, so tell us who you want to hear!

If the other link doesn’t work, listen here

Well, TUAW and Apple apparently agree:

Apple goes on to agree with AT&T that the carrier did not engage on any level regarding the GV apps.

Question 4. Please explain any differences between the Google Voice iPhone application and any Voice over Internet Protocol (VoIP) applications that Apple has approved for the iPhone. Are any of the approved VoIP applications allowed to operate on AT&T’s 3G network?

Apple does not know if there is a VoIP element in the way the Google Voice application routes calls and messages, and whether VoIP technology is used over the 3G network by the application. Apple has approved numerous standard VoIP applications (such as Skype, Nimbuzz and iCall) for use over WiFi, but not over AT&T’s 3G network.

As we noted in some of our original coverage of the GV controversy, Google Voice is not a VoIP service in the same way that Skype or Gizmo are, since it continues to use the cell network for voice connectivity to the device. Apple’s response to the FCC inquiry shows that they are on the same page.

So there you have it.

As you know, I am a critic of airlines and their (lack of) customer service.  But usually my response is to blog, or perhaps ocassionally call or write an email hoping to have someone at least feel guilt.  But this–this actually takes the cake.

When an airline breaks a guitar, and even admits they were at fault, you would think they would make good.  But no.  So the artists, Sons of Maxwell, dealt with it the only way they know how–in song:

So I promised the last person to finally say no to compensation (Ms. Irlweg) that I would write and produce three songs about my experience with United Airlines and make videos for each to be viewed online by anyone in the world.

I wouldn’t ever mishandle a guitar after this–especially if I was “Ms. Irlweg” the woman who finally said no.

So here you go.

This can make for a very interesting future.  I can imagine a very fluid world with digital books, using much of the technology already existing.  Let’s discuss briefly the existing tech (in the Kindle) and the look at how we can imagine a new reading world.

Ease of Delivery First, the Kindle allows the purchase of books through the Sprint cellular network (a service Amazon has called “Whispernet.“)  Books are delivered relatively quickly (in my experience in less than a minute) and are ready to read.  I actually ordered, and was reading, a book for our Sunday School class before the sign up sheet to order the hard copy of the book even made it to my row.  So here we have the first component to the future.

Fluid Movement Between Devices For those readers that are unaware, Amazon has released a Kindle app for the iPhone that lets users read Kindle books on their phone.  As with any book that you read, when one goes from one device to another (or pick up a different copy of the same book) one must search for where they left off.  A different copy means no obvious book marks.  Amazon makes this simple–they synchronize where you were in one device when you pick up the other.  It tells you that you have read further ahead, and asks if you want to move to that spot.  Pretty “cool” in my book.

Devices for Different Settings As noted above, the Kindle is no longer just the “device” but it is the operating and reading application.  One can not only read on the “Kindle” that you purchase through Amazon (see the link on the right column of this page) but you can choose two different size Kindles.  In addition, you can also read using the free application for the iPhone.   As you move through the day, you can read using the devices that best fit your lifstyle at that time.

Currently books, magazines and papers are sent to “Devices” and are thus tied to the device.  You can move easily between those devices, but cannot pick up a different device.  But imagine a different world.

Imagine a world where the books,magazines and papers are associated with the person rather than the device.  As you move through the day, you pick up a “Whispernet capable” device (iPhone, Kindle, or something new) and “log in” to the Kindle.  You are presented with a list of items you have purchased, and you select which one you want to read.  Quietly, and quickly, the book or paper is downloaded to that device, and it picks up right where you left off when you were last reading.  In this way, you are able to read your books, without being tied to a device.

But what could this mean?

• Libraries can have “digital reading rooms” where people (especially students) can sign out a device, log on, and read their books simply, and easily.
• One could have several devices in the house and work place, shared between family members or co-workers.  Just grab the closest device, log on, and start reading.
• With the digital voice technology (available in the Kindle2) we can even imagine a device that, when we log on, will read to us as we drive.  Satellite Radio replaced by books!

Reading can become what we do, when we want to, not when we remember to bring our books, or our devices.

The possibilities seem almost endless.  How could you imagine this world?

Part of my argument hinged on the elimination of the resale market in large part due to the robust DRM (copy protection) afforded by the digital books.  Unfortunately, when I presented this argument a few weeks ago, someone pointed me to a site that shared the (convoluted) steps necessary to break the DRM on the Kindle.  So much for secure. ¹

This forced me to think a bit further.

In this post, I hope to make a case for reasonably priced digital textbooks in an era of “cracked DRM” that can still result in a win-win.

If students can copy textbooks and share them, will they?  Perhaps I have a more optimistic view of the world, but I think that, when given a choice to do the right thing, students will.  That is, if they think they are being treated as adults, and not being unjustly charged.  Let me explain.

I believe that students will buy the textbooks rather than steal them, if the books are affordable.  and by affordable I mean, as one student put it when asked on Twitter “@ steep discount.”  Probably $30 for a textbook that in print sells for $150.  Remember from my previous post that publishers aren’t selling to every student as it is.  Capturing a significantly larger piece of the market, semester over semester, will result in significant revenue increases–without any additional overhead or variable costs.

I also believe that students will buy a reasonably priced textbook if, along with the book, they receive other types of “digital” support.  That support will be available, but may require them to have a “licensed” copy of the book.  Simple enough.  Your digital reader has a serial number/PID, so the licensed copy can access additional licensed material.   The additional materials could include podcasts, video lectures, or video/audio tutorials on working through homework problems.

I also believe students will pay for books, because the system supports the buying of books.  Loans cover tuition and expenses, to include books. Parents buy books.  My students have reminded me that there is a significant amount of “outside” money that comes their way for book purchases.  But that alone won’t be enough to get them to buy the books. What will?

How about providing a way for students to continue to “resell” their books?  Another common criticism from students is that they get pennies on the dollar when they go back to resell the book.  They are more incensed when they see the mark-up the bookstore then places on the book they sold back!² Students currently fight back by selling (and buying) their used books on sites such as half.com, a used book online marketplace.

I think that a technological solution to book resales, that allows the students to transfer digital ownership to another student, will result in more students buying legitimate copies.  Why? In the paragraph above I mention that students get “outside” money for book purchases.  More than a few students pointed out to me that, at the end of the semester, they sell those book back and that money then becomes “theirs.”  A few call it “Beer money” but I am sure there are other uses as well.  Given that this is digital, this doesn’t have to be seen as a competitor to the publisher, but rather as another opportunity for the publisher to “add value.”

Imagine this:  the publisher, who controls the DRM accounts, sets up a clearing house where the student who purchased the book can make the book (and the license to read/use that book) available for resale, setting the sale price themselves.  At the end of the sale, the seller essentially will turn over the digital rights to the book to the new purchaser.  This is half.com made simpler.  There are no shipping costs.  The transfer can be automatic and nearly instantaneous.  And if the publisher manages the site, the publisher can charge a “reasonable” handling fee, just like half.com.  And we know students are willing to pay it–because they already do!

So, in summary, the hacking of the DRM doesn’t have to spell the doom of affordable digital textbooks.  Despite what RIAA and the MPAA may say, we aren’t all criminals.  When provided with affordable content, and a reasonable way to re-sell the content when the semester is over, students will continue to buy books from the publishers, and the publishers can continue to make revenue–even in the resale market!

Win! Win! Win!

¹ For the record, I tried it, and it works.  I broke the protection of a book I bought, and read it in another device that I own. After that, I deleted them.

² (For example, a $180 book was “bought back” at $15. Resold at $80. Yes, that is an extreme example, but it is a true one!)

• Text books have a limited audience, resulting in smaller volumes of sales and prin runs (10′s not 100s, of thousands).  Limited runs mean that the overhead and setup costs of printing a run are spread across a fewer number of books. Historically to make a book cheaper they either had to reduce the quality of the materials, automate the process, or produce larger production runs hoping to sell more of the books.
• The costs associated with distributing books are high (packaging, warehousing, and shipping to name a few key ones)
• The inability to accurately forecast demand for “new” editions at locations, because of the…
• Strong used  book market that publishers compete against

My support for digital textbooks has emphasized that digital textbooks drive out  out the costs associated with physical books, and thus allow for both a reduction in price, and an increased margin for the publisher.  This can be seen because:

1.  Publishers no longer need the overhead necessary to design the packaging (including the covers), presses to print the books, warehouses to store the books, or distribution systems to ship the books.   Oh, and they don’t need the management to manage all of that.  This drives costs out of the process. (hint–what could this do for prices?)

2.  Because the books are delivered, directly to the student through digital means, there is no need to keep safety stocks of book inventories to cover the sales of the books.  No physical inventory drives costs out because it means there is:

• No capital outlay for bookstores to buy a “forecasted” amount of books
• No shelves required for the books
• No possibility of stockouts (I had a class where there were only enough books for 10% of my students well into the second week of class!)
• No need to ship back the unsold books, because the forecast was “wrong” (due to used book sales, borrowed books, or just students “dropping” the class.)

3.  The digital rights management (DRM, or “copy protection”) of digital books appears to be rock solid, so students are not likely to “give” copies to their friends.  Publishers would be guaranteed sales², allowing them to lower prices. This would mean that:

• Publishers don’t compete with a ‘re-sale’ market. Think about this.  Part of the reason the costs are so high for the textbooks is that the publishers know that they will only “fully” sell out in the first semester the book is available.  Every semester after that they are competing with a (rather robust) resale market.
• Publishers won’t have to release new editions every two years “simply” to refresh the sales.  With strong DRM publishers can expect to make sales to nearly every student, every semester.
• New editions will be developed for the right reasons–new, improved content and new knowledge.

Given the above, my argument really focused on the need for publishers to pass on the savings to the consumer (the student) making textbook pricing reasonable again.   The major criticism of students (the high prices of textbooks) could all but disappear.

Affordable textbooks for students, and increased (and guaranteed) revenue for publishers!

One of the key points in my argument had been (yes, had) that the DRM on the Kindle and Sony readers was secure, and thus students wouldn’t hack the books and “share” (illegally give copies) to other students.  That is essential to keeping the revenue model moving forward for publishers and is why the RIAA and MPAA are working so hard to protect their intellectual property.  But alas, sometimes things change, and we know that if anyone can hack a DRM it will most likely be motivated college students.

Thus, I have been spending time thinking about how we can still achieve a win-win, even if students “crack” the DRM market.

Stay tuned! More on this to come!

¹ Unfortunately, there will be near term losers, including the people working at the printing presses, the local bookstores, and the supply chain partners that normally deliver, store, and reship textbooks. More on these folks later.

² Think about it. In a class of 30 students, in the first semester a new book is offered, all the students will buy the book. Let’s say the book costs $100. That is $3000 in sales for the publisher. (Not profit. Remember the high costs of physical books.) Now let’s assume that half of the students with new books decide to resell their books each semester. If in the next semester half of the next class purchases “used: books that reduces the revenue for the publisher to just $1500. If we follow this through, then the 3rd semester, 3/4^ths of the books in the class are used books cutting revenue to $750. by the end of the second academic year the publishers revenue is cut to about $400. In two years, with 120 students going through the class, the publisher would make $5650. If there was no used book market, the publisher could make the same revenue selling the books at $47/book. And that is assuming there was no savings in costs by shipping digitally!

When making a choice between two options, only consider what’s going to happen in the future, not which investments you’ve made in the past. The past investments are over, lost, gone forever. They are irrelevant to the future.

He (quite properly) deals with the monetary aspect of the sunk cost (it is called a “cost” after all). In his final example he points to the sign in the photograph on his blog, and reminds the reader that, regardless of the cost of the sign, having the largest word on the sign spelled correctly is, as they would say in the Visa commercial, “Priceless.”

But another point worthy of consideration is the emotional investment.  Quite often we fail to let go of efforts gone awry for emotional reasons.  How often have you been so wrapped up in a project that you haven’t been able to step back, take a deep breath, and see the “forest for the trees”?

When we are engaged in projects we need to be able to step back, as an outside observer for advice, and change.  We need to be able to realize that, no matter how vested we feel about a project, no matter how emotionally entangled we are, it is time to ignore the “sunk costs” of emotional investment and cut the ties.

Am I arguing that we should always just “walk away?”  Not necessarily.  If the “outcome” you want to achieve is still worth achieving then strive for that outcome.  But don’t continue to spend time heading down a fruitless path.  Don’t walk down a road heading away from your destination, simply because you have paid for that road, either emotionally or with cash.

Move on. Chart a new course.

UPDATE 2: I have the image wrong–the  one below is the rumored reader from Plastic Logic

UPDATE 3: As you are by now aware, they announced.  And it is PRICEY!

Early morning readers of the newsfeeds may notice that many news sources are writing about the possible pending release, perhaps as early as this week, of a larger (8 1/2″ x 11″?) Amazon Kindle.  This may well be the rumored “student version” but according to the article from which all others are based, the one from the New York Times, this Kindle is seen as the savior of the newspaper industry.

Brad Stone in his NYT article writes:

Unlike tiny mobile phones and devices like the Kindle that are made to display text from books, these new gadgets, with screens roughly the size of a standard sheet of paper, could present much of the editorial and advertising content of traditional periodicals in generally the same format as they appear in print. And they might be a way to get readers to pay for those periodicals — something they have been reluctant to do on the Web.Image from the NYT of the rumored larger Kindle.

This article understandably has a few missing tidbits.  Will this new Kindle be the same price as the existing Kindles (over $300?) or will the price of these larger Kindles be subsidized (similar to the cell-phone model) by subscription plans to newspapers and magazines?  In addition, will this larger Kindle also display Kindle books, or will it be only a device for reading periodicals?

These questions are quite interesting, especially since (if the rumor is true) they are releasing a new Kindle only months after the introduction of the Kindle2.

Hopefully we will know–this week!

In reading her post, however, I find that while I agree that when it comes to “how” content is delivered a “professor is a scribe” may be correct, I believe that is unfortunately a rather narrow view of the role of the professor.

Back when the printing presses were gaining ascendancy, they replaced the scribe, because they were doing what the scribe was doing–copying someone’s words for others to read.  Scribes had to be worried, since printing presses ostensibly would make fewer *random* errors than scribes would. (That said, the printing presses could easily replicate the same error by the hundreds, and now millions.)

The people who at the time should have (and probably were) most excited by this revolution were the authors.  Those people who spent time thinking, researching, and writing the texts that were now being made available at a far faster rate.

Professors are not mere scribes.  Professors are experts in their field of study, who are contributing to that body of knowledge through that research, and then share that “research informed knowledge” with the world.  One way they share that knowledge is through publications, another through presentations and talks, and finally (and perhaps most importantly) professors share it by educating the next generation.

So professors are not scribes.

Who should be worried that they can be considered scribes?  Instructors.  Those people hired to teach materials developed by someone else, without having a rigorous, peer reviewed research stream of their own.  They are simply vessels through which others speak.  THAT can be easily replaced by well-designed technology.

That said, professors are certainly worried.  Rightly so.  Not that they will be replaced, but that people seem to think they can be.

As I have written before, I thoroughly enjoyed reading Andrew Keen‘s book “Cult of the Amateur.”  He argues that experts are essentially being pushed out of the arena and replaced by those whom I will call the “dabblers.”  These are people that some would say “know enough to be dangerous” but are not well-versed in the detailed specifics to be experts, and therefore unable to deal with the nuances.  In fact professors, as an integral part of their earning their terminal degree, learn the research methods necessary to truly understand the data they are viewing.  Regardless of whether one is a Hebrew Literature scholar or a theoretical physicist, the opinions of the Professor are informed by their understanding of how to interpret their data. Without such a background all interpretations are considered valid, and truth becomes subjective.

I am anything but a technophobe, but I am concerned that, as we start touting the role of youtube, facebook, twitter, and Wikipedia as ways for students to share their knowledge about materials, we fail the students.  We allow them to elevate their views, their perspectives, and their understanding of the material while simultaneously dev0lving the role of professor as mentor, guide and expert.

Let’s all work to enable better ways of helping students grasp material, but please, let’s not make the mistake of thinking that professors are “just scribes.”

Enjoy!

Jason

First thank you for all your newsletters and emails that you share with the world.  As a business professor at Penn State, I find it refreshing and useful to see a business person not only being successful and touting their success, but sharing the inner-workings of their decision processes.  Certainly this most recent email with the Twitter/$500K explanation is great to show students how to actually conduct an analysis for a business decision.

I did want to answer your three questions, and then as for what amounts to a “favor” from you (to someone you don’t know.)

First, the questions:

1. Am I crazy, or crazy like fox?

Crazy?  Well I would say not–but if the choice is simply either/or, then crazy like a fox.  I actually believe you are far from crazy.  You have conducted a detailed analysis of the situation, evaluated what history has shown, and made a deliberate and informed decision.  All decisions have risk, but it appears you have worked to limit the risk (or at least understand it.)

2. What’s the value of a Twitter follower?

This one, honestly, is a “it depends on the follower.”  Of course, you have accounted for the “it depends” piece by eliminating group after group, and working down to just how many out of a million followers with be “valuable.”  I have found that followers, AND following, are quite valuable for the ways I use Twitter–and I use Twitter in different ways for different groups.  I use Twitter to connect with at least 3 (sometimes overlapping) groups.  First, there are the “supply chain” professionals actively engaged in my profession and field of study.  Then there are the educators, specifically those that are using technology to reach students.  Finally, there is the geo-specific group of folks here in Central PA, that I reach out and touch to stay connected with my community.  ed: (Of course there always exists that 3rd group–actual friends and family!)

Each has value, but in different ways.  Can I monetize this? Perhaps–but that’s not quite what I am about in a direct sense.  Although I would like to think that, as we all improve our skill sets, learning from one another, we all enhance our earnings, potential and kinetic (to steal from Physics).

3. What’s the value of of being one of “The Suggested?”

This is an interesting one.  I think being one of “The Suggested” is great in your type of area, where you are offering services that are of value to nearly the full range of Twitter users.  I suspect if I were to show up on the list, I would end up with a large number of followers with whom I have little in common, and that “twitter-stream” would cloud the engagement with the communities I have worked to develop.
This discussion is actually what I like most about Twitter–it allows us to develop our own communities, meeting nearly an infinite set of needs and desires truly providing a platform for community.  The communities are no longer bound by time, or space, and can grow organically as people connect with what is of interest to them.

The “Requests”

//**requests deleted–for I hope obvious reasons**//

Thanks for perhaps reading this far down–I realize your time is far more valuable than mine.

Best wishes.

While I haven’t heard back from Mr Calacanis I wanted to at least share these thoughts with you, my reader.

S

One of Reagan’s favorite stories concerned a man who goes to the Soviet bureau of transportation to order an automobile. He is informed that he will have to put down his money now, but there is a 10-year wait. The man fills out all the various forms, has them processed through the various agencies, and finally he gets to the last agency. He pays them his money and they say, ‘Come back in 10 years and get your car.’ He asks, ‘Morning or afternoon?’ The man in the agency says, ‘We’re talking about 10 years from now. What difference does it make?’ He replies, ‘The plumber is coming in the morning.’

Thanks, Historynet.com for making this available to us.

I have to wonder–are we heading down the road not only to socialism (which most people thought Barack would bring) but also towards the miserable life we saw in the Soviet Union?  As rumors are starting to circulate that the White House is forcing the CEO of GM to step down, and putting further direct guidance attached to the loans the government is providing. one cannot help but wonder who in the White House has the background, and the skills, necessary to make decisions–business decisions–to dictate how a major auto manufacturer should operate.

Don’t misunderstand me–I am in favor of accountability for those who spend government dollars.  I believe that when the government loans money there should be a viable plan in place to demonstrate that the money will be repaid.  I just am not convinced that government is best suited to manage business.  Certainly not “private” business.

I am left to wonder if the government has not only exceeeded their authority, but exceeded their ability.

Hulu appeared “sorrowful” but apparently couldn’t convince their content providers that content is meant to be viewed.

What is most odd (and disturbing) is that Hulu has not only not shared which content providers strong-armed them, but they have also not share any rationale for why these content providers wanted Boxee stopped.  Remember, it was just streaming to a “full screen” shows exactly as they would be viewed on your computer.  The only real difference is that I am more comfortable and watching (in my case) on a larger screen.

I left a comment on Hulu’s site:

Okay–I too bought an Apple TV specifically to watch Hulu (and CBS) on my TV. I even made the decision to canceling cable TV.

Of course let me say that, while I thought Hulu was cool, I didn’t watch on my computer.  Sorry–the chair isn’t comfortable for WORK, why sit in it for pleasure?

So what has this decision done for me?  Made me realize that perhaps I watch too much TV.

Fox.  NBC.  Any other providers.

HEAR THIS:  I will not watch you on Hulu.  AND I will not be going back to Network TV to watch you either.

Bu-bye!

Do I expect anything close to the response we saw from Facebook?  Nope.  Of course not.  The old media establishment is far too entrenched to let something like viewers get in the way of their decisions.

But this does once again bring to the fore the discussion questions:

1. Who are the customers for a business (such as hulu)?
2. Do you have responsibilities to your users/viewers if they are not directly paying you?
3. Are “advertisers” really the customer since they are paying directly?
4. How does one measure the fact that viewers/users are the indirect sources of revenue since they are the target of the advertisers?

Any and all thoughts are appreciated.

You will recall they resell government reports to you for which you have already paid as a taxpayer.  They do this, and provide no remuneration to the authors, even when those authors were not government employees. Well, that said, they pride themselves on “speedy and courteous service” which I suppose is a good thing.

I had to chuckle though.  I went to view their contact information, and saw this note at the bottom:

Please note that our phone numbers have changed unexpectedly due to serious incompetence and hostility towards customers by Verizon. We apologize for the inconvenience and would encourage others to try to avoid doing business with Verizon and other companies that take such a hostile attitude toward customers. We pride ourselves on treating customers much better.

I had to step back, and say “wow.” I understand we all have our customer service problems.  And many of us will write about them publicly.  Usually on blogs, or if we are journalists, in our editorial pages and commentaries.  But this is quite an unusual step.  They are, as a business, calling out Verizon.

I can imagine conversations about Verizon’s bad treatment of customers when one gets home from work.  Or perhaps sharing it in my Service Operations Management class, where we dissect business service experiences to better learn.  Perhaps even sharing stories over a beer at a restaurant, or party.

But on your business website?

So let me ask you, dear reader, the following questions:

1.  Would you put something like this on your professional business site?

2.  Do you believe that Storming Media was without blame in the issue?

3.  How would you have handled this?

Storming Media is fast becoming the place to go to PURCHASE public domain government documents.  Yup, that’s right.  They are selling documents to you that your tax dollars have already purchased.  How do they get away with this?  They do it by providing the added value of having already done the search, and if you want, printing and binding the document.  Well, here it is in their own words:

Storming Media is a private, independent reseller of Pentagon and other US federal government reports on many subjects. Whether you are interested in biochemistry or military strategy, weapons or noise pollution, or anything in between, Storming Media delivers the information you need with speedy and courteous service and with our money-back guarantee that you will be satisfied. You may order any of our government reports in printed and/or downloadable PDF formats.

They also sell copies of research conducted by students at government schoools, to include my former school, AFIT–the Air Force’s Graduate School.   You can imagine the conversations that took place with students when they found their work being sold by this company.  “But it’s mine, how can they make money off it?”

The answer gets a bit convoluted (and actually echoes back to some conversations on Twitter about cheating and ownership.)   No, it is not “yours.”  You wrote it.  Your name is on it.  But since (for the military students) the government paid you to conduct this research, the research and the report are owned by the taxpayers, through the US Government.  They bought it.

Of course, there are perhaps a few wrinkles here.  What if the student actually wasn’t a government employee?  What if, as happens at AFIT through the DAGSI program and others, the student was a civilian, attending and paying tuition?  (And perhaps on a DAGSI scholarship, but that is NOT the same as being paid to attend school.)  Who owns the rights to that document? The author should–but that hasn’t been tested yet.

So back to Storming Media.  They take the works of others already available through electronic means, and will sell you the electronic copy, or will print and bind a copy for you.  And just to be clear, they do not give any royalties to the authors.  Not a penny.  This is legal, but I am not sure it is ethical.

So I ask you, dear reader–do YOU think what they are doing is ethical?  Leave a comment and tell us your thoughts.

According to this story in the New York Times, Facebook has once again made a change, angered their users, and then have to backtrack.

===========

The word choices are interesting.  Facebook talks about the “feedback” they received.  How about: canceled accounts, deleted files, and angry emails.  I suppose that’s “feedback.”

What is really interesting though is that they have reverted back to the old TOS “…while we resolve the issues that people have raised.”  Just what does that mean?  Does that mean they will not go back? They will more clearly state that they will only keep material that is cross-linked to other people’s accounts? Or does it mean that they will try again when no one is looking?

Given that I asked the question about “Outcome Focused Performance” a few posts back, I can’t help but wonder what “outcome” Facebook (the corporation) has in mind with their decisions.  Obviously every business has financial success as their goal, but that is usually achieved through a mix of product, service, and value that attracts customers.

Facebook doesn’t really generate revenue directly from the users.  We pay no fee to join, no monthly account maintenance fee, and no data storage fee.  One could argue they have no obligation to us, and that there is no “contract” since no money changes hands.  Therefore they should be able to do whatever they wish.  The revenue that Facebook generates is a direct result of our being there, but is derived from our presence, and our activity.  Given this, Facebook’s action in changing the TOS could be viewed as a business simply hoping to extend their opportunities for revenue through the users.

Of course, I think they are losing sight of one important fact–we are guests.  Now, some would remind us that guests should “behave themselves” when in someone else’s house.  True enough.

But Facebook should remember that they need to be gracious hosts.

====

n.b.:The link identified in the article excerpt above is here.

One of the first issues we had to grapple with, however, was our task. We were tasked initially to look at this with the title “Performance Driven Outcomes. (PDO)” I was convinced that the phrase was wrong. It wasn’t a simple disagreement of semantics. It was a fundamental way of viewing the problem. It seemed to me that the PDO approach focused on what you do, and that the outcomes derive from that. If we let our performance drive the outcomes we achieve, we will have high marks but may not ever be successful.

At the time, I wrote (in discussing the DoD):

…we see clearly why we have this disconnect. The politicians and the media are looking for outcomes, and we are actively measuring and providing outputs. Congress wants to read about enemy forces overtaken and a war won. We want to talk about sorties flown, numbers of bombs dropped, and parts avail-able on the shelf.

This is, of course, not a problem limited to DoD.  It’s a problem that faces every organization (and dare I say it, even our personal lives.)  The problem is that often we use surrogates for the outcomes (dollars spent, dollars earned, customers served, students enrolled) and we don’t focus on the Outcome.

Generally, the outcome tends to be amorphous, and thus harder to nail down. That doesn’t mean we SHOULDN’T nail it down–just that it is more work.  For instance, Nike is conducting an overall review/restructuring of their operations, and apparently they have the “outcome” in sight:

“In light of the current economic climate, it is more essential than ever to sharpen our focus on the consumer to maximize opportunities for product innovation and brand management in the marketplace,” he said. “The decision to reduce our workforce is a difficult one, but it will put our business in the strongest position possible to continue to deliver long-term profitability and growth.”

Of course, the devil is in the details–specifically how they operationally define “focus on the consumer.”  In fact, if you read carefully the quote, you will read that they are focused on the customer to “maximize opportunities for product innovation and brand management.” Do you think they will “get it right?”

I am actively seeking your thoughts on this.  specifically in three areas:

1.  What do you see as the difference between these two phrases (or do you even see a difference?)

2.  Does your organization focus on the “Outcome” or are they distracted by measuring outputs?

3.  Do you think in a time of economic crisis it is more, or less, important to focus on “Outcomes?”

So-go to the comments, and let us know your story!

Steve:

You forgot one important point: “Your employer, who is about to close BECAUSE YOU EXTORTED MONEY OUT OF THEM THAT YOU WERE NOT ENTITLED TO RECEIVE IN THE FIRST PLACE, was unable to meet your unreasonable and unconscionable demands for ill-gotten gains . . . ”

Yeah, I used to belong to the machinists union. The sole purpose of the union is to drive the PRICE OF LABOR ABOVE ITS MARKET VALUE.

How does the concept of “SUSTAINABLE” apply to unionism?

Dear UE Local 1110 Members,

I empathize with your plight, I really do. But I wonder if you thought through all of this.

The company, your company, just didn’t have the money. They couldn’t pay you. As they say, you can’t get blood from a turnip. They were unable to secure the loan that would be necessary to keep their business going, and to pay you.

They really had no choice. They had to close.

Bank of America determined that a company that only had 3 days of reserves was not a good candidate for a loan. They chose not to “throw good money after bad” and denied the loan request.

In response, you… sat down?

As a result, BoA has now given a “loan” to your company. A loan that they will most likely use to give you what you have demanded, and then they will in all likelihood still close. Just after 60 days.

So you won. You have forced BoA to give a loan to a company that by every indication has no intention of paying it back. A company that in all likelihood will be declaring bankruptcy in less than 60 days.

Assuming that the BoA “bailout” was used to fund this, all you have done is take money from your fellow tax-payers (and presumably yourselves, once you regain employment.)

So where, again, was the victory here?

The premise of the book is that life is “random” or at least in large partt driven by likelihoods and probabilities.  Those of you that actually know me, know that I appreciate the random nature of life, and that I believe no outcome is “certain.”  Even knowing that, intellectually, I find myself reflecting on the various lessons in this book, particularly after my recent automobile accident.  In that accident, I started second guessing my decisions.  What if I had gone to Home Depot first?  What if I had decided to go back to the main road to get between stores?  What if I had waited a few seconds before leaving Lowe’s?  What if I hadn’t asked for help, and had left Lowe’s 2 minutes earlier?

The timing of receiving the book (and reading it) helped my put all this in perspective.  All those decision points, and actions arising from those points, are what quatum physicists would call “alternative realities” (and some would tell you they all occured, in parallel universes!)  But there is little one can do to control the outcome.

According to this book (at least, up to my current point in reading it) we see patterns in most things, after the fact.  We play an elaborate game of connect the dots, to make “sense” out of what happened.  We ignore the role of chance, the importance of sheer “randomness” in the events.  The author writes:

Past events will always look less random than they  were (it is called the hindsight bias). I would listen to  someone’s discussion of his own past realizing that  much of what he was saying was just backfit  explanations concocted ex post by his deluded mind.

I realize that, in some way, (perhaps some warped way) I am taking solice in the fact that the accident was just a statistical probability that for some reason, on Thursday, decided to “realize” itself on the side of my car. BAM!

Now, that said, the book also plays a role in explaining the importance of “managing” randomness.  In the book, the author discusses a man, Nero who, as a trader in Chicago, learned early on to play the “game” of moderation.  Nero (being a statistician by education) understood the role of probability even in the market, and understood even better the impact of the “statistically rare event” or what the author calls “The Black Swan.” (He then later writes a longer book on this topic “The Black Swan: The Impact of the Highly Improbable — This one is on my shelf and will be next in my reading queue).

According to Taleb, Nero chose to limit his gains by not seeking the high rewards, because those carry with them the greatest risk, in the event of the “statistically unlikely” black swan. In my accident, Honda helped moderate the risks by providing side curtain and seat-embedded airbags.  We were t-boned, but my wife (sitting on the side that got hit) doesn’t have a single scratch and given the extent of the damage to the door, we believe the airbags protected her.

These are the sorts of things that we teach our students in decision analysis.  Assess the probable outcomes, and the likelihood of the event.  Understand the possible gains and losses.  Then make your decisions based not on the certainty of your ability (flawed) but on your knowledge of the impact of randomness.

This book arrives at just the right time to console me, to remind me that sometimes “stuff happens” and it’s just random.  Accept it, acknowledge it, and plan as best you can.  It’s a great read, and I highly recommend it to all.  But it leaves me with this question:  If it’s arrival was truly at “just the right time” –

Was it’s arrival… Random?

Take the GE commercials, for instance.  They have laid out clearly, in several commercials, how they are actively engaged in alternative energy projects.  GM touting their lower consumption and hybrid and electric vehicles.  Boeing and their lighter and less fuel consuming aircraft.  The list goes on.

As I see it, they are telling us the things that are already going on. Steps that are being done today, based on research and development conducted for at least the past 8 years (and more likely 20-30 years.)  Clearly, we are seeing today the fruits of labor and investments made in the past decades.

On the other hand, we have Obama’s commercial.  In his commercial (hey, he approved it!) he points out that the hands that do many every day things can also things to put in place alternative energy programs.  Like wind power. Alternative fuel cars.  Solar power. All noble thoughts.  And he is right, our hands can do those things.  In fact, as evidenced by not just the other ads, but our own experience (and the fact that the video used shows locations already doing these things).

So just what will Obama bring to the table? How will he enable our hands? Hmmm?

It seems to me that the Democrats are the ones playing off the fears of the American public.  Not the fear of terrorists, but fear of energy failures.  And they are promising…. um… wait, I had the memo right here…

Oh, yeah. Change.

Now, if we could just hear what that change is, and how it will be different.

I’m still waiting.

One more thing:  the last time this was done, under Carter, the expected revenues just didn’t materialize.  According to the report published in 2006 by the Congressional Research Service (CRS), “The $80 billion in gross revenues generated by the WPT between 1980 and 1988 was significantly less than the $393 billion projected. Due to the deductibility of the WPT against the income tax, cumulative net WPT revenues were about $38 billion, significantly less than the $175 billion projected.”

That got me thinking.  What people are really saying is not that they want to tax “windfall profits” (defined at the Financial Dictionary as “A sudden unexpected profit uncontrolled by the profiting party.”) but rather people are upset that the oil companies are making money by charging the consumer a higher price than they used to. Yup.  It apparently is unfair to charge a price that the market will bear.

Hillary Clinton, on May 1st is quoted as saying “The oil companies have made out like bandits, and there is no basis for them to have these huge profits.”

That said, I started to look around and see what other companies are earning these sort of “obscene” profits, during what has been described by Obama as “a recession, or worse.” So, first, I looked at the percentage profits earned by Exxon the most-oft used target of opportunity by the left.  For that past three years, Exxon has earned between 9 and 10 % profits (computed by dividing their “net income” into “total Revenue”–all data from http://finance.yahoo.com the hotlinks on the company names will take you to those pages)

Exxon
Net Income    Total Revenue    ”% Profit”
2005 36130              370680           9.75%
2006 39500              377635         10.46%
2007 40610              404552         10.04%

So, that doesn’t seem unreasonable to me, but perhaps I missed something.  Perhaps that 10% return in unmatched by any other company.  So, I decided to look at another company.  Yes, I had a biased selection.  I chose Apple, Inc, for two reasons.  First, Apple has had strong success making in-roads into several markets (computers, cell-phones, music), and secondly, because it seems Apple tends to be the computer platform of choice by those on the left. 

Well, it turns out Apple has performed comparably to Exxon in the first two years, while beginning to signficantly outperform Exxon in 2007.

Apple
Net Income    Total Revenue    “% Profit”
2005 1335                  13931           9.58%
2006 1989                   19315         10.30%
2007 3496                   24006         14.56%

Now, it was pointed out to me that people don’t need and iPhone, or an iPod, or even a Mac, so that comparison is flawed.  People apparently do need to consume gasoline however (I point to my previous discussion about the gas tax for why many do not need, or even consume, gasoline.)  I conceded this point.  I would, however, argue that computers have become ubiquitous, and no operating system is more prevalent than Microsoft’s Windows. So, it makes sense to look at Microsoft’s profits.

Microsoft
Net Income    Total Revenue    “% Profit”
2005 12254                39788           30.80%
2006 12599                44282           28.45%
2007 14065                51122           27.51%

Amazing.  If Exxon’s 10% profit is evil, I can only imagine what must be thought about Microsoft.

But, in all fairness, this doesn’t tell the most recent story. I can hear your critique now “but the oil prices only started really ramping up last fall, and didn’t really approach $4/gallon until the Spring 2008.”  Good point.  So what happens if we look at the quarterly numbers for these three companies, instead? (there will be some missing data, since not all companies report on the same dates.)

Exxon Apple Microsoft
6/30/2007 10.43%                          22.70%
9/30/2007 9.20%      14.54%         31.17%
12/31/2007 10.00%     16.46%         28.76%
3/31/2008 9.32%     13.91%         30.36%
6/28/2008 14.36%

So, even when Exxon was under attack from Senators Clinton and Obama, their quarterly earnings, though large, were still smaller than either Apple’s or Microsoft’s as a percent profit.  (And remember, if their total revenues were much larger than Apple’s so were there costs.)

The question then is:

Are we upset that oil, as Senator Clinton said ‘have made out like bandits, and … have these huge profits.”  Or are we upset at the price we must pay, and we lash out, without reason, at the oil companies because they are the most visible target?

——————————————————————————

n.b.: While I started this analysis back in May, It turns out the Wall Street Journal has recently undertaken a similar analysis, and arrived at similar conclusions, at least with respect to Exxon’s obscene profits of 10%.  They compared industries:

If that’s what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery — both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

There are some remarkable success stories, but there doesn’t seem to be a groundswell of adoption for much of the technological opportunities the are proposed.  I suspect that there is a disconnect between the “art of the possible” and the wants, desires, and needs of the faculty.

Perhaps the most successful tech solution has been the Course Management System (ANGEL here at Penn State.)  This is a system that allows faculty to communicate electronically with students, make slides and readings available, and even host synchronous and asychronous discussions.  I suspect, through anecdotal evidence, the most used features are the delivery of documents, and the least used are the more interactive features of discussion groups and chat.

In addition, we have blog initiatives, podcasts, and wiki initiatives ongoing at the University. All great stuff, and “spaces” in which I also play.  But each of these comes at a cost. (And often several costs.)

So what keeps faculty from using these technologies?  Are most faculty simply “Luddites” unwilling to step into the 21st Century?  Or is there something else at work here? I suspect that, while some faculty are reluctant to move outside their technological comfort zones, there is something else at play here.

I posit that there are three forces at work here.  Time, ownership, and uncertainty.

I believe that faculty are focused on their disciplines, and pursuing the development of knowledge in those areas, and view these not as technological “solutions” but rather as “technological distractions” that would steal time away from their other honorable pursuits.  TIme is a precious commodity for us all, and for newly hired faculty seeking tenure, nothing is more critical than publishing scholarly research as we “build our bones” and work towards tenure.  This often means that as faculty, when faced with the trade-off of innovating in the course-ware or conducting research, we make the understandable personal choice to maximize our long-term standing with the University (and improve our income earning potential) by focusing on the publishing aspect of academia.

The second issue is just as inward focused, but understandable as well.  As faculty members, we do spend time developing our course content.  That content is derived from our expert knowledge of our field of study, and the materials reflect both our time-commitment, and our intellectual property.  Making that material available in easily-shared media (podcasts, images/videos on flickr.com and elsewhere, lectures written in blogs) leaves the faculty with the sense that others can “steal” their work.  Even before the advent of all this “tech” faculty members were often incensed over the downtown businesses that would publish notes taken by the “good” students.  Why? Because that was publishing their materials without permision!

Finally, faculty members (rightly, or wrongly) believe that making the materials available to students outside the classroom will result in rampant absenteeism.  In this case, faculty members often believe that part of the learning experience is derived from the personal interactions one gets in the classroom, and that learning goes both ways (well, actually many ways).

• The students have a more direct opportunity to question the faculty member, and explore more fullly thoughts and ideas in a socratic give-and-take.  And while we can argue that such exchanges can take place in discussion boards and chats, I think we all must agree that only the most advanced typist can type as fast as we speak, and think.
• Other students learn from the exchanges mentioned above.  In fact, some of my most interesting “Aha!” moments came as a result of pursuing thoughts generated by classmates.  These thoughts often result in follow-up questions, but also in discussions amongst students as they leave the lecture hall, go to lunch, and so forth.
• In addition, the faculty member learns from the students.  More than once I have found (and seen other faculty who also have found) that a question posed by a student opened up a thought-process not yet explored. In fact, those questions often lead to new and potentially exciting research opportunities.

So, faculty members are reluctant to provide any excuse for students to “leave” the classroom, and instead get most of the materials through digital and technical means.  That said, I personally have found no drop in attendance in my classes even when using podcasts, and other technology, but I certainly understand the fear from the faculty in this regard.

The question is now, how can one make an argument to faculty members, a “business case” if you will, that addresses these needs, and concerns?  Certainly one could present research showing that students retain more information when bombarded (oops, exposed) to multiple media.  But we are left with a disconnect between the current system that rewards research and publication while expecting “adequate” teaching, and one that focuses on improving the quality of instruction while sacrificing (at least in the faculy members’ eyes) the research.

So, short of changing the reward system to place less emphasis on research, how can we convince faculty that it is in their interest as academics to integrate more technology into their instruction? (And remember, this is to be a persuasive argument–that is, one that is persuasive to the faculty, so must appeal to their wants/needs/desires)

That is the question I toss open for discussion.

I had to chuckle.  Really.  Remember way back when, when I wrote that the iPhone was a bit over-priced, in my opinion?  It was funny at the time, really, considering that Scott Bourne, over at The Apple Phone Show was talking about how great a deal it was, to get an 8gb phone for $599.  He even bought, I heard recently, 11 phones at that price.

The iPhone has gone through one price reduction, and even lower prices with the introduction of the new “iPhone 3G” model.  So do we applaud the new affordability of the iPhone?  Well, some do. Others, however, choose to attack AT&T for making the iPhone “more expensive.”  And not just any “others.”  Scott Bourne himself!

I have been slowly catching up on listening to podcasts, and happened to listen to the Mac Break Weekly number 96, titled “iReady.” In that episode the MBW gang rants against AT&T, led by Scott Bourne, because the data plan has gone from $20/month to $30/month.  Of course, AT&T argues that they are doing this because the data plan now supports 3G, but for some reason, many view this as a sort of “breach of trust.” What’s worse, Leo LaPorte leads the pack in ridiculing AT&T for actually trying to reach people with a video, helping them prepare for purchasing an iPhone.  Seems like a nice, good-faith effort on AT&T’s part, but apparently their hatred of AT&T gets in the way, yet again. (Funny, given my previous past post: AT&T trying to get customers ready to buy iPhones, and then Apple slow-rolls the delivery of units to AT&T stores…)

It turns out that over at “The Apple Phone Show” in their podcast #61 the APS gang ranted again about the evil AT&T.  It turns out their hatred of AT&T is because AT&T is treating the iPhone as a cell phone.  Seriously.  Here’s the quote:  “The worst news is that it’s almost as if the iPhone is some sort of cellular telephone.” Gasp!

Why do they think AT&T is evil here?  two reasons.  The APS and MBW folks (generally the same gang) are upset that the SMS (text messaging) plans are sold separately, and that to get the “push” features for the business world they will have to pay an additional $15/month.  Well, honestly, that’s no different than other customers with smart-phones.  Have you looked at the additional fees charged to support the Blackberry?  That’s really the only other “push” platform out there.

Despite all of this, there remains a voice of reason among the Mac/Apple-fandom crowd.  Andy Ihnatko, owner of the Celestial Waste of Bandwidth, did his own analysis and found that the AT&T pricing plans are reasonable.  His analysis is that the 3G iPhone plan is comparable to other plans for other 3G phones.

I would agree with him, but then extend the point.  In my case, the data plan (without the “corporate push” for email) was costing me $40/month.  By switching to the iPhone, I reduced my plan by $10 each month–a savings of $240 over the life of the two year contract.  (Imagine my surprise, when I realized this means I almost paid for the  16gb phone simply through data-plan savings!)

So let’s take a look at the text messaging.  Sure, I might be upset at losing the “free” 200 txt messages. If that was all I used.  but honestly, with AT&T I have found that the “unlimited family plan” for $30/month is quite economical.

Sure, it’s easy to rant about how evil AT&T is.  After all, we have hated the phone company ever since they sent refunds back paid in postage stamps.  But let’s be honest here.  Apple iPhone fans seem to want to be treated as “Special” somehow.

iPhone owners aren’t “special.”  Trust me.  I am one.  A happy iPhone owner who has realized that sometimes a good deal exists, even with AT&T.

Order Fulfillment

Apparently, though, I was one of the lucky few.  According to one source close to AT&T, Apple fills the purchase orders for the Apple Stores first, and then fills the ones for the AT&T stores.  On top of that, they will be satisfying the AT&T direct-fulfillment orders first, before sending any to the AT&T stores for general (walk-in) sales.

This is an interesting situation, because it is a conflict with selling one product through two different distribution channels.  Apple has two retail distribution channels–the AT&T channel, and the Apple channel (and admittedly, but have online and storefront channels.)  Apple will sell phones through both, but I suspect they sell to AT&T at a “wholesale” price, and they sell through their stores at the higher retail price.  (Yes, I realize there is the AT&T subsidy involved.)  It is understandable that a manufacturer would prefer to sell their product at a higher rate of return through their own channels.

Of course, this approach isn’t without problems.  The fact that the Apple Stores have iPhones in stock, and the AT&T stores do not, leaves customers (especially the Apple-fan types) being hyper-critical of AT&T while applauding how good Apple is at satisfying demand.  Really?  Not that hard, when you control the stock.

You see, according to my source, Apple provided up to 10 times as many iPhones to their stores as they did to the AT&T stores.  And, as mentioned above, they are still sending iPhones to Apple Stores for store-front sales, while they are forcing AT&T customers into a 21 day wait for their “direct fulfillment” orders.

So who is to blame?  Wrong question, really. I hate the “blame game.”

But–I do believe we must acknowledge that the end result is because of Apple’s decisions, and NOT AT&Ts’.

(see next post for part 2)

Okay, I did it. I bought a 3G iPhone.  And I like it.  I really do.  But it would be nice it if would also charge using the existing iPod/iPhone accessories.  I have several, including a car charger that works with all my previous versions of iPod/iPhones, but find that when I connect the 3G phone to them I am presented with a message that the new phone will not charge with that accessory.  (The players will still play music, however.)

It seems odd to me.  The connector still fits.  Old USB cables still work with the computer for data and power.  The older accessories can still play the music.  It’s just this darned power problem.

I will have more reviews later, especially of my favorite free apps, including Apple’s “Remote.”  Until then, I anxiously await ideas for chargers.

In addition, Obama’s attacks McCain’s proposal to offer a $300M prize for battery development

“to improve battery technology for full commercial development of plug-in hybrid and fully electric automobiles” to leapfrog currently available batteries and would have to build “more than one” advanced battery at 30 percent of current costs.

(In fact, in that same article Michigan Sen. Debbie Stabenow, D-Lansing, is quoted as saying “We don’t need a game show,” which, while making a great sound bite, seems to ignore the tremendous innovation currently seen through the use of prizes even at government expense, such as the X-Prize.  See here, here, here, and here.)

In several other stories we see the McCain has proposed immediate, near, mid and long term solutions.  Generally speaking, what Obama is calling gimmicks, we call a strategy.  He is working to alleviate (or at least reduce) the immediate pain at the pump, while seeking to ameliorate the overall energy situation through investing, and rewarding, innovation.

Obama’s plan?  Well, he really doesn’t seem to have a targeted one.  He supports a second round of stimulus tax rebates.  He also supports taxing “big oil” for making their record profits (which, by the way, are a far lower percentage of revenue than the much beloved Apple Inc.  If you don’t trust me, just challenge me.  I did the math…)  He also has called for higher fuel efficiency standards to double fuel economy by 2027!  (is that a near term solution?) And he supports alternative sources, such as solar, wind, and biofuels.

So does this add up to a coherent strategic plan that addresses the immediate needs, as well as the mid- to long-term needs?  What does Obama himself have to say about this:

Obama admitted that his own plan will not immediately affect gas prices but said his proposal for a second stimulus package will offer overall financial relief. “I wish I could wave a magic wand and make gas prices go down, but I can’t,” he said. “What I can do – and what I will do – is push for a second stimulus package that will send out another round of rebate checks to the American people.”

So, what is Obama’s plan for today?  He and McCain seem to agree on the long-term.  And the need for change.  But Senator Obama, do we really have 10 to 20 years to wait?

So, readers, I ask this.  If you were putting together a comprehensive strategy, what would be your:

• immediate term solution for lowering the price at the pumps today
• near/mid term solution for keeping costs down
• long term solution for weaning Americans off a dependence not just on foreign oil, but oil.

Hello, Gurulib.com! 

At Gurulib you can enter books from a web interface, which moves you away from a specific OS, and allows for that whole “open community sharing” idea.  This free site not only lets you enter books into the online database by scanning the ISBN (or entering by hand, or searching on the title, or… you get the hint.)  It also allows you to share, if you wish, your library with others.  Both virtually (a “hey, check out what I like to read” sort of sharing) or literally, by allowing others to request to borrow a book, and allowing for a real exchange.  This is another great way to have some “social networks” that connects people with like interests, and enables you to share those interests.

But that’s not all.  How about entering other things.  Videos.  Games.  Software packages. Yup, you can do that too!  You can even put the items on different shelves.  Some actually create virtual shelves that mimic their real ones making physical search and retrieval possible.  Others create “different” linkages that make sense for their arrangement.

As I mentioned, it works right off their website.  If you have a webcam that can be focused to within a few inches, it will use a flash plugin to read your ISBN/UPC codes right from the page.  Heck, you can even send a photo of an ISBN using a cellphone, and it will scan that and include it in your “Wishlist.”  Imagine that, you are at a library or a bookstore, and see a few books you are interested in.  You snap a shot, send it to the site, and when you get home you can read reviews and order from Amazon.com directly (most likely saving a significant amount of money as well!)

So what sort of other magic does this site do?  Well, once you enter the book ISBN (or title) the site then uses that to pull down all the information available (usually from Amazon) for that item, and includes that.  This means that you have access to reviews, summaries, and even current “used prices” for these items.  Hey–it even will tell you what your library was worth new, and used!  Care to learn how much money you have spent on DVDs, or how much you could get in that “get rich quick” liquidation?

I could go on forever, but let me just mention one other “cool” feature.  You can build a wishlist right there on the site, and your friends and family can work off of there for those big “gift giving” events.  (You know the ones.. that come around every year… and you always have to ask for a list…)  Just put those items right into the wishlist and there you have it. In fact, you can order right from the wishlist using Amazon.com (I suspect that is the way http://gurulib.com is able to remain a free resource–they make money by providing us with this great way to purchase more cool things–similiar to my amazon ads here on this blog.)

I have loaded many, many items already.  I love the site.  Go check it out–and find my library.

“I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills,” the Illinois senator said.

He of course hasn’t stated at what point profits become “windfall profits.” So off to the definer place I went (you know, a dictionary!) According to The Free Dictionary, windfall profits is: “profit that occurs unexpectedly as a consequence of some event not controlled by those who profit from it”

This has me wondering what (or who else) has profited unexpectedly and therefore should be taxed on th eir “windfall.” I have a few thoughts:

The federal government should be “punished” because of the “windfall profits” they have earned because of the failure to index the Alternative Minimum Tax. Of course, when this particular creeping tax is brought up the Democrats “won’t move unless Congress finds ways to replace lost revenues.” (Perhaps the oil companies should insist that Congress extend them the same courtesy? Only tax “windfall profits” if they provide another way to make up the lost profits?)

Auto Manufacturers of fuel efficient vehicles seem to be reaping “windfall profits” according to this definition. This one, directly related to higher oil prices, is interesting because it hits other manufacturers of the less efficient trucks and SUVs. Perhaps the former manufacturers should be taxed, and subsidies be given to the latter? After all, it’s not “fair” that they are able to earn so much money.

In fact, how about those oft-maligned farmers. We are seeing record prices in corn and rice, in part due to the increased demand for ethanol. Of course, now we are seeing additional upward pressure due to the flooding in the midwest, again forces outside the control of the farmers (the definition of windfall.) Should these farmers now face a “windfall profit” tax? After all, they are earning this money on the backs of everyone who eats.

Seriously though, the point of this post isn’t to defend “big oil” but to point out that “windfall profits” makes a good sound bite, but there needs to be some serious thought, and definitions applied, before we start punishing.

One more thing:  the last time this was done, under Carter, the expected revenues just didn’t materialize.  According to the report published in 2006 by the Congressional Research Service (CRS), “The $80 billion in gross revenues generated by the WPT between 1980 and 1988 was significantly less than the $393 billion projected. Due to the deductibility of the WPT against the income tax, cumulative net WPT revenues were about $38 billion, significantly less than the $175 billion projected.”

Perhaps even more importantly, the CRS report goes on to say that any return of a “windfall profits tax” would be ineffectual, at best

Reinstating the windfall profit tax would reduce recent oil industry windfalls due to high crude and petroleum prices but could have several adverse economic effects. If imposed as an excise tax, the WPT would increase marginal production costs and be expected to reduce domestic oil production and increase the level of oil imports, which today is at nearly 60% of demand. Crude prices would not tend to increase. Some have proposed an excise tax on both domestically produced and imported oil as a way of mitigating the negative effects on petroleum import dependence. Such a broad-based WPT would tend to reduce import dependence, but it would lead to higher crude oil prices and likely to oil industry profits, potentially undermining its original goals. Because the pure corporate profits tax is relatively neutral in the short run — few, if any, price and output effects occur because marginal production costs are unchanged in the short run — a possible option would be a corporate income surtax on the upstream operations of crude oil producers. Such a tax that would recoup any recent windfalls with less adverse economic effects; imports would not increase because domestic production would remain unchanged. In the long run, such a tax is a tax on capital; it reduces the rate of return, thus reducing the supply of capital to the oil industry.

Joseph Thorndike, director of the Tax History Project at TaxAnalysts.com, spoke with Joe Segal about the history of “windfall taxes” on NPR.  For further information, go check out his blog, as well.

So today, Apple announces the advent of the much awaited “Jesus Phone 2.0″ sporting 3G and GPS.  And–the new iPhone is $199 for an 8 gb model.  Quite the drop in price AND an improvement in feature sets.  I like what the Wall Street Journal had to say about the new phone, relative to price

The moves are an acknowledgement by the Cupertino, Calif., company that the original iPhone was too pricey for the mass audience, especially in a weakening economy…  Mr. Jobs told the audience that Apple surveyed people who hadn’t bought iPhones and more than half of them said their decision was based on the price of the device. “We need to make iPhone more affordable,” Mr. Jobs said.

So does this mean I am “negative” on the iPhone?  Not at all.  I have two in the family!  My son and my wife both have iPhones, and love them.  I get jealous when driving down the road, looking over and watching them surf the web, and commenting on blogs.  Some day, I will have to get me some of that iPhone for myself.

And that day may just be soon.

So, when I wrote that that the babyboomers were the ones “who argued to ‘never trust anyone over 30.’ Seems they now are being asked to ‘eat their own dogfood’” I may have been mistaken. You see, Dean Dad was essentially arguing that the current crop of Adminstrators need to move along (ref his first line “Reason #456 we need to hire the next generation of administrators”). Thus I felt that asking them (the boomers) to move along and get out of the way, was essentially reminding them not to trust anyone their own age.
But the question I have is whether it is “eating your own dog food.” It certainly is “having to take your own medicine.” And perhaps it is asking for one to “follow one’s own advice.” But is it the same as using your own product?

I argue that in this context it is. You see, Dean Dad is talking about how a service organization is run. Services are different from “goods” in that there is no tangible asset, nothing to, well, eat. So one must stretch the metaphor a bit. But in this case, I believe it works, since one is being asked to follow the management principles they at one time preached. To continue down the road of “old saws” one could say for the Boomers their “Chickens have come home to roost.”

Perhaps it is time for Boomers to acknowledge that they were wrong about something. And for the Gen X’ers to realize that their parents aren’t always wrong–and perhaps should be allowed to continue to work, and lead.

To answer that question, I have this post. But this post is the first in what may be a long series about moving new-media social networking disruptive technologies out of the echo-chamber.

I found myself at a conference this weekend arguing for the importance of social networks and, at the end of it, I realized the challenge we face is taking social networking and new media out of the hands of the techno-saavy, and put these tools, “embed” them, if you will, into the lives of the every day practitioner.

So what do I mean by practitioners? What practice do you think of when I write that? Doctors? Lawyers? Bartenders? How about almost anybody that does something. Now, in my specific instance I was first thinking of researchers, and then extended that to a discussion about connecting textbook authors to their customers (both faculty and students!) The lesson I am taking from this however is that this goes further. We need to take the various lessons of social networking and apply them where we are.

So for this first post of the series, let me share the discussion about researchers. I sat on a panel discussing how to get research (and funding) from the “public sector.” Once we reminded the audience that the public sector includes more than just the Federal Government, we talked about the various ways of “finding” the requests for proposal, and we even talked about the importance of “contacts.” One of my colleagues even jokingly commented that “once you can fake sincerity you have it made!”

Then it hit me–it’s really about developing social networks!

I first asked how many in the audience were using Linked-in or some other social networking tool. Not surprisingly, less than 10% in the room were members, and of those who weren’t literally NONE had even heard of it. I then used that as an example of how one can build networks (professional social networks) with people who not only have similar interests, but hopefully a network of people who sincerely want to help others succeed.

And what was the big secret I brought to them? No secret, really, but just something that I think has often been lost in these communities. As I mentioned in my talk on Social Networks the success lies in the development of relationships. These relationships are best when everyone brings something of value. If one wants to succeed, then develop these networks, and ensure that you are a “giver.” if you honestly seek to help those in your network, you will find that others will come to you, and often come to you with funding.

I ended up recommending a very good, very easy reading book, Love is the Killer App. This book talks about the importance of sincere sincerity, and the importance of truly putting others well being ahead of your own. What I really like about the book is his emphasis on improving yourself so that you have something of value to offer. It’s about being ready to give, not being ready to take. Now, some would say it is the application of the Golden Rule, others would say it’s just Karma, but the reality is you will find that caring about others, and helping them make the important connections in life, really does work–for them and for you!

So far, there’s nothing “new media” here. Stand by for other posts. In the meantime, please, share with us how you have successfully made “the connection” with people.

I would like to think I am rather “tech saavy.” I do podcasts. I run two WordPress blogs and a content management site (go visit Supply Chain Innovations Today!) but I have to say, online meetings are frustrating simply and completely because of the techonlogy.

It seems that I end up spending more time configuring, reconfiguring, and tweaking, than I do having the meeting. I just went through 20 minutes of set up and troubleshooting so that eLluminate would work–and now I wonder if any time I change any of my configuration I will have to go through it again. And changing my configuration can mean something as simple as “rebooting the machine” or opening another audio using program.

But online meetings save time, allowing us to be more “productive” right? Perhaps, but perhaps not!

I know how to drive. For regular (face to face) meetings I show up with a pad of paper, and am ready to go. I am able to use my car time to prepare my thoughts, and/or listen to podcasts, and as one commenter wrote at Cole’s blog, if I take public transportation I can catch up on reading, be it RSS feeds, blogs, or books. (Gotta love the Sony eReader!) So instead of getting frustrated with technology, I am being productive.

I long for the day when I can tell my computer “I want a meeting with Cole and Dean Brady (go visit his blog) and I want to share a powerpoint, while working on a word document” and it will turn on all the right software, connect to the right addresses, and let me focus on participating and taking notes (using my pad of paper, of course!) Ideally, one of us should be able to just say “make into podcast” and it will take the whole meeting (which it dutifully, already recorded) and send it to an appropriate RSS feed! (Dave Winer, are you listening??)

Let’s go back to the car for a moment. While I can’t (yet) tell it where I want to go, and have it take me there, I don’t have to tweak it to get it moving. I get in, I buckle my seatbelt (you all do that, right?) start the car, and drive. I may talk to the GPS (see–cool!) and let it talk back (again, analog, human interaction.) I don’t have to tweak the spark plugs, adjust the carburetor, align the tires. For the most part, if I have done routine maintenance, it is ready to go!

Bottom Line: Tech should make things easier–and the tech stuff should be opaque (decidedly not transparent] since I don’t want to even have to KNOW what is going on with the tech.

For the four years preceding Reagan (better known as the “Carter Years”) there was a deficit run each and every year. Reagan did not inherit a Balanced budget. Not even close. I always thought it an interesting bit of history that prior to 1999, the last “balanced budget was in 1969, and that was only after “using” the Social Security surplus to balance the books.

Just thought you might want to know.

And now, having dispensed with that myth, let’s look at some other economic indicators from the Carter Era.

In addition, Reagan started with double digit inflation (12.5% for 1980), double digit interest rates (the federal reserve, or PRIME was at 13.35 in 1980), and unemployment was at a more “reasonable” 7.1% level.

So, since Drew opened this, let’s take a look, shall we, at how our current “bad economy” compares to the one Jimmy Carter handed to Reagan.

Inflation:12.5% Carter, 4.1% Bush

Prime Interest Rates: 13.35% Carter, 5.02% Bush (and have dropped more since the final ’07 figures)

Unemployment: 7.1% Carter, 4.6% Bush

So. what lessons can we draw from this? Well, certainly we can learn that we should check facts before making statements like “Just like Reagan, Bush II has taken a balanced budget and screwed it up.”

But we should also learn from this that we should place our current economic situation in historical perspective. While we are flirting with a recession (defined as 2 consecutive quarters of “negative growth” in the GDP), we have, by many measures a strong economy. Some would argue that it is built on a deck of cards, and that all these indicators are simply castles in the sand. Perhaps. Or perhaps economies always have troubles, and challenges, and growing and declining markets.

Perhaps we have had it so good, for so long, that we lose sight of how good we still are doing today, compared to even 30 years ago.

I was reading the blog over at “Imperfect Mommy” where I read, and at first accepted without questioning her comment “I read yesterday that suspending the gas tax would save the average American $30 over the course of the summer. $30.” Of course, then I felt rather guilty for not questioning the number. Not because I don’t trust her, but because it just seemed a bit “off.” At first I just figured “well, with almost 5 drivers in the family we are certainly not ‘average’” but then I realized–no one is.

My first thoughts, as a good researcher where:

• Who did the research that determined $30 per average American?
• How did the structure the demographic of the analysis?
• Did they consider that a significant percentage of “Americans” don’t drive? (And I don’t mean just those too young to drive.)
• What percent of the population lives in cities and doesn’t drive? Doesn’t even have a license?
• How many people would it take to have an every man woman and child each get “$30″?

So let’s look at some numbers.

• If the tax is $0.18 per gallon (for gasoline), then a $30 savings is the equivalent of purchasing 166.67 gallons of gas. In a typical 20 gal tank, that equates to 8.3 fill-ups. I know many people that fill up their tank at least once per week. The summer is 12 weeks long. If “most” people fill up only 12 times, that savings is really $45.
• According to the Washington Post, the revenue the government will lose will be $10 Billion dollars. That’s a hefty sum! If you divide 10 billion by 30, we can determine just how many Americans will be receiving this benefit. The answer? 333,333,333.3. Yup. 333 MILLION Americans each will save $30.
• According to the US Census Bureau, there are only 255,103,151 people in America.
• According to Senator Obama 78,230,182 more people will save $30 than are actually in the US. That’s right apparently we have 78 MILLION more people in the country than we think!

Now, these “quick and dirty” numbers are just that. I haven’t figured in the greater savings that the trucking industry would see, since they have a higher per gallon tax and a higher consumption rate. I also haven’t factored in the interplay between changes in gas prices, and changes in consumption. While it is argued that demand for gasoline is inelastic (that is, does not change much with changes in prices) there is some elasticity if people cancel longer driving vacations in the summer.¹

While the caveats I noted above could lessen the benefits of the tax “holiday” there are other issues to consider that would increase the impact for those that actually drive. To get to the $30 per average American, you have to ignore that most households are made up of more than 1 American (thus increasing the household savings), and that many Americans don’t drive, and most likely don’t even own a car. It would be interesting to figure how many people in large cities such as New York City rarely, if ever, drive.

The bottom line is this: The savings for people who actually drive in the summer is most likely larger, and potentially by a significant amount. Don’t just “repeat what you hear.”

Think about it.

Question it.

Challenge it!

¹ Interestingly, the demand for diesel fuel should be even more “inelastic” relative to fuel prices since that demand is driven more by demand for products delivered by truck. That demand is impacted perhaps only inasmuch as higher fuel prices leave less disposable income. A more “derived” demand elasticity.

Alas, all is not as clear when assessing the economy. In fact, a “weak dollar” has some significant benefits–especially for the “average” American.  And, for those readers here for Supply Chain information, the impacts of the dollar are felt throughout.

When the dollar is weak, it means that a dollar can buy less of a good or service produced in a foreign nation. BMWs and Computers can be more expensive. The costs to produce haven’t gone up, but rather the relative cost to produce when exchanging currencies. The result is we pay more (and buy less) imported items. keep in mind this also means the price of oil increases. This not only impacts us at the pumps but also increases the cost to transport goods. if the cost to transport goods goes up, consumers are more likely to purchase locally. (And this can mean locally produced since the cost to transport is most likely included in the price.)

But, it also means that goods and services produced in the United States are now more affordable in markets overseas. This means that, assuming we produce goods/services that people want, we start to export more.

Result? Imports–down. Exports–up.

What else does this mean? It means that here at home “American made” once again becomes a sign not only of (we hope) quality but perhaps affordability. Consumers may be paying more for everything, but if “American made” products are once again affordable (relative to the no longer “cheap” imports) then demand for these products should increase at home, as well as abroad.

Win! If demand for US made products goes up, we will find that production will increase. When production increases, employment increases. To top it all off, if energy prices continue to climb, the benefits of “off-shoring” (low labor costs, lessened regulations, among others) starts to be off-set by the increasing costs making “re-shoring” more plausible. Jobs come home.

One final note. I mentioned a few times the increasing costs of oil, and the impact on the pump. What would the silver lining be here? Think “Green.” Market forces (the “invisible hand” of Adam Smith) tend to be the best shaper of policy. Better than government, and far more successful that any promises of any politician seeking to create “Change.” I won’t speak for you, dear reader, but as you know I have started to look for alternative energy sources in my daily life, starting with a hybrid automobile. As petroleum prices increase¹
consumers start clamoring for alternatives. This creates markets² for alternatives.  Once the demand for alternatives reaches a point where the demand makes production viable, we will see alternatives flourish.  We are already seeing this with hybrid autos.  We are seeing the early signs of this in other energy sources as well, including solar and wind. But these discussions belong in another post.

Is it all buttercups and roses?  No.  There are disadvantages to a weak dollar.  Overall prices do go up.  Trips overseas become more expensive. I never argued that there weren’t disadvantages.  It just seemed that it was time to point out that there are some significant advantages to this shift in the dollar.

“Reading Rainbow Moment” To read more about strong, and weak, dollar performance, check out the Federal Reserve Bank of Chicago’s site and specifically their page discussing this very topic.

^1. note, I don’t say fossil fuels. Read more here)

^2. market refers to the group of consumers or organizations that is interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product.

To review the bidding, socio-politico-economic forces led us into a situation where pretty much everyone was happy with people buying homes they couldn’t afford, at terms they couldn’t meet, for properties that were carried on the books at more than they were worth [speculators, flippers, builders, race hustlers, municipalities, and regulators all joined in the fun].

This went on for several years, and everyone was happy. People got to live in better houses than they could afford, and pay very little for them. Builders sold properties (and built even more!). Banks and mortgage companies shifted risk into the future, secured by value that didn’t exist. Borrowers who wouldn’t normally get loans did. TV shows actually showed us how to buy homes on “interest only” notes as long as we could sell them before the ARM ballooned and make money on the artificial value increases. Prioperty tax revenues flowed into municipalities like rivers of milk and honey. Fund categories were created to continue the illusion; look, The Share Price Just Went Up!

The problem (as with *all* pyramid schemes) is that eventually we run out of new suckers to buy into the scam. At that point, the underlying value of what is being traded becomes important. If the “paper” value of the assets greatly exceeds the “actual” value of the assets (hmmm what happens to the value of a product when supply outstrips demand?). After decades of overbuilding, the “air was let out of the balloon” in many markets.

The same people who “made” $$$ all of a sudden “lost” $$$.

So here we are.

1. Experts are urging people to live in their foreclosed properties for up to a year and “slow roll” the eviction process [note: At least 8 months is possible in just about every state. Apparently, the key is to just stop making payments to your lender, and not acknowledge that anything is amiss. You don't even need a laywer in every case. It takes that long before someone with a gun actually shows up at your door.] ; and

2. An alarming trend of ex-homeowners trashing the homes on their way out has developed. Recent WSJ article noted that several banks/mortgage lenders are now hiring agents to go from home to home offering thousands of dollars to tenants to not trash the property while leaving.

So you simply sieze the property for up to a year and then demand a bribe so as to not reduce it’s value further.

AND WE WANT TO GIVE A BAILOUT TO THESE PEOPLE?!?!

the other steve

One would expect to read that Boeing lost the contract despite being the better aircraft.  That, somehow, the AF overlooked key performance characteristics of the aircraft.  That, perhaps, politics came in to play to select an inferior product.  But no.

According to the NYT, in the article titled “In Tanker Bid, It Was Boeing vs. Bold Ideas” from March 10th, Boeing (and its supporters in Congress) are instead making the nationalistic arguments about job loss and a loss of a national asset.

The company and its allies in Washington have already made a number of arguments. Among them are that too many American jobs are being lost overseas, and that sensitive military contracts should not be in the hands of a foreign company.

The debate about the impact on American jobs is a murky one, because large manufacturing projects typically involve operations in many parts of the world, regardless of which company has a contract.

Yes, the debate is murky, but not simply because of the potential loss of American jobs.  (Let’s ignore, for the moment, that Northrup-Grumman is an American company and that reports are the aircraft will have final assembly in the US making this a Washington State job loss, not a US one.)  This comes down, unfortunately, to politics over policy.

As the NYT also writes

 On Capitol Hill, the blow to Boeing has set off a protectionist furor among many lawmakers. And on the campaign trail, the Democratic candidates for president, Senators Hillary Rodham Clinton and Barack Obama, suggest that the Boeing loss reflects other Bush administration policies that have resulted in jobs moving offshore.

But the hot rhetoric could sound overly nationalistic, and even hypocritical, once the real implications for jobs and national security become clear. Boeing, for example, would have made many of its own tanker parts overseas, and some experts say that claims of job losses to a foreign company seem exaggerated.

For now, though, the pro-Boeing, pro-America talk is showing no signs of letting up.

“We really have to wake up the country,” said Senator Patty Murray, Democrat of Washington State, where Boeing is a significant employer. “We are at risk of losing a major part of our aerospace industry to the Europeans forever.”

Representative Todd Tiahrt, Republican of Kansas, said: “It’s outsourcing our national security. An American tanker should be built by an American company with American workers.” Boeing would have done some of its tanker assembly in Kansas.

So we have National Democrats  on the stage arguing that this is another “Bush screw-up.”  And yet this is the same set of politicians who strongly argue we are fighting a war we shouldn’t have started, with troops ill-equipped to meet this challenges of the new battlefield.  Are they blind to the fact that it is just this sort of politics that has led to the failures to properly equip our troops?  Oversight of weapons system acquisitions that places a priority on location of sub-assembly manufacture over capability. (The B-1B aircraft had parts manufactured in nearly all of the 435 Congressional districts.)  As far back ask 1990 researchers and critics have argued that politicians have focused more on maintaining their districts at the expense of national interest.  According to Kennth Mayer, in his 1993 Public Administration Review article entitled “Policy Disputes as a Source of Administrative Controls: Congressional Micromanagement of the Department of Defense”

Critics argue that these interventions result in inefficiency because they are not based on any “rational” conception of overall defense strategy. Members are accused of examining the defense budget “in terms of how it promotes their own electoral prospects” instead of on the basis of national interest (Lindsay 1990, p. 7). Members are accused of attacking the Pentagon to create publicity, or even to achieve influence within Congress. DoD argues that the pork barrel incentive drives many congressional interventions, as members use their power over the budget to deliver programs and contracts to constituents (OSD, 1990, p. 19). Critics claim that the result is a defense budget choked with regulations and bloated with pork.

So why bring this up?  Because at this point in time, with our nation at war, politicians on both sides of the aisle are positioning for their constituents rather than for the security of our nation.    There are significant questions that could be asked, and perhaps should be asked.  Questions that would cut to the heart of issue of the adequacy of the aircraft to meet our military’s requirements.  But these seem to get lost in the rush to score points with the electorate.

Perhaps Congress would best serve the nation if they asked these questions:

1. What criteria did you use when evaluating one aircraft design over the other?
2. What impact will the larger aircraft (a “widebody” by designation) have on ramp space?
3. Will their be a reduction in “MOG” (or, “Maximum on Ground” ) due to the larger aircraft size?
4. Does a reduced MOG reduce the numbers of combat and airlift aircraft that can be co-located?
5. Will this aircraft type/size necessitate a change in the infra-structure to support it? (fueling stanchions, parking plans, hangars and doors, etc?)

These questions are external to the capabilities of the aircraft itself, but address the important aspects of total operating costs, and impact on mission operations.
¹ Boeing manufactured the veteran KC-135 aircraft (a 707 variant.) That aircraft first production aircraft saw service in 1957 and KC-135s are still flying today. The new tanker is intended to replace this aging airframe.

*As many of you know, part of my “history” includes working on weapon systems’ acquisitions.  I worked

Let’s start with the credibility.  I wondered about the credibility of the author of the article. So I read the credentials listed at the end of the article “Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com” He lives in Washington STATE! Yes–of course, How could I miss that credential! I should listen/pay attention to him. (And does anyone else find it, um… odd, that Mike’s email address is “FERGIE?”)

Now, I would like to take a brief moment to encourage everyone to do something called “research.” You may recall, as regular readers to this site, that I often encourage one to practice academic and intellectual honesty. Stop. Check the data. Question the sources. Challenge the techniques.

First, and most simply, I found that clicking on the source link for the article (http://www.counterpunch.org/whitney/02222008.html) results in a “connection timed out” error. (as of 2/25/08, 1118hr EST) That could mean that everyone is going there and resulted in the site being overloaded, or it could mean that the article on the site has been “pulled.” Either way, the credibility of the source is now questioned. Especially since the main site, Counterpunch.org is also returning a “connection has timed out” error.

Second: There are statements that should be easily verifiable in the article. For instance, the author (Mike? Fergie?) writes: “The $330 billion ARS market has dried up overnight pushing up rates as high as 20 per cent on some bonds…” which is quite a bit of news! Did anyone see this high bond rate reported? Can anyone find a news source that reported this? I would think that, if Fergie/Mike was able to find the information, then it should be “findable” right? I am not saying that the information isn’t there–but I am wondering why sources aren’t given.

Now, actually, it wasn’t that hard to do. I did find this snippet:

The Port Authority of New York and New Jersey, for instance, is paying $390,000 in interest this week on one $100 million bond that cost just over $83,000 last week, before a failed auction pushed the rate on the bonds to 20 percent from 4.2 percent.

Now, I also found numerous other sites that actually state, verbatim, what Mike/Fergie wrote. For instance, the Free Market News reports:

The credit storm which began in July when two Bear Stearns hedge funds were forced to liquidate, has continued to intensify. Last week the noose tightened around auction-rate securities, a little-known part of the market that requires short-term funding to set rates for long-term municipal bonds. The $330 billion ARS market has dried up overnight pushing up rates as high as 20 per cent on some bonds — a new benchmark for short term debt.

That should count, right? Well, one might think so, except it really is a summary of the article written by Mike/Fergie, and points back to the (unavailable) site. Move along. Nothing to see here.

And, while I could continue, I will end with this: given that the document written by Mike/Fergie is posted on a website, and created for electronic distribution, he/she should have taken the time to provide links to the actual sources for his/her information. “Good” bloggers at least hold themselves to that standard. Heck, even bad/poor bloggers (like good ol’ Eric over at A Liberal Dose) link to sources where they get the information they then distort. This may well be a maelstrom that consumes all in the fiery demise of the world economy. But then again, without sources (reputable or otherwise) this is simply another pundit, among the many, touting gloom and doom.

• Runs on compressed air
• Seats 5
• Will cost about $5,000 (that’s £2,500, imagine what it will be like if the dollar gets stronger!)
• Will be licensed to manufacturers to produce locally
• uses fuel only on long drives to heat the air

Sounds pretty ingenious, eh? And the article points out that “producing no emissions at all in town.”

I like a couple aspects of this car. First, I do like a $5K car. An affordable car! And the use of compressed air, on the face, has me saying “w00t!” It would appear that, from an environmental perspective, we have at least removed the various particulate contaminates from the local air. In fact, I was pleased to see the article specify no emissions “in town” since obviously producing the energy to compress the air will in most places result in some emissions.

I am also quite intrigued with the “produce locally” concept. Unfortunately, that will mean that the cost to manufacture will be different depending on locale, so the actual price of a car will vary widely by market. But then again, as we look at global supply chains we see once again the pressures of transportation costs pushing back to either larger inventories, local production, or both.

There are a few questions left open, as I await it’s delivery to the US.

• Will US Manufacturers step up to the idea of “make locally?”
• Will US Citizens buy a “ride” that isn’t all “pimped out?”
• Will the vehicle pass the US’s strict safety requirements?
• Will “gas” stations still only charge a quarter for their air?

The article itself mentioned the issues of the amenities, and the issue of safety. It is not clear from the article that the creator of the car understands all the issues with safety. According to the BBC:

Mr Negre says there’s no issue with safety – if the air-car crashes the air tanks won’t shatter – they will split with a very loud bang. “The biggest risk is to the ears.”

This does beg the question of impact safety, roll-over safety, and so forth, but it’s a start!

I suppose we wait, and see.

Academics of all people should remember that the plural of anecdote is not data.

I find this to be a humorous, and in some way, interesting quote. I also find myself “engaging” with the quote in ways that I didn’t expect. This statement challenges really two fundamental concepts–that of anecdote, and of data. When does a collection of anecdotes step out of a collection of “stories” and actually add up to real, actionable data?

Data is, at the most broad, a collection of anecdotal evidence that builds a case over time. In fact, case-study analysis is simply a rigorous approach to gathering anecdotal evidence. Yes, you are limited in the amount of pure statistical analysis that can be accomplished through the gathering of anecdotal evidence, but anecdotes bring a richness to the data that one cannot get through simple “number crunching.”

In addition, an anecdote could be considered a data point of one. And sometimes “one” is all you need. How many times should a car not start before you suspect a problem? How many space shuttles do we need to blow up before we learn about O-rings? If one is seeking to improve service, enhance quality, or improve a reputation, then every negative “anecdote” is a story of failure–failure that must be controlled, corrected, and eliminated.

On the other hand, anecdotes of success should be plentiful, and instructive, if they help one overcome the failures in the other negative anecdotes. Anecdotes about repeated success help in that they demonstrate that success can be achieved, and perhaps can be “replicated” with appropriate processes.

Let’s look at one example. In a blog written by one of my students, he struggles with poor customer service from (stand by for stereotype) “the cable guy.” At the end of the day, the cable guy dragged mud over the carpets, cut two holes in the wall (only needing one) and then had to leave so couldn’t repair the damage to the wall.

The best part about the entire story was, the installer had to be at another appointment and couldn’t fix the hole in my wall. I asked what he was going to do about the wall and he gave me some putty and a sponge and explained how to fix it. He then gave me my $80 installation bill and was on his merry way.

Is it any wonder this customer was upset?

Comcast (as Wesley points out) “wants to be perceived as the leader in cable services.” If one seeks to deliver a high quality service, error free, on-time, every time, then a single story of failure is a failure. In fact, what the Comcast blog posting points out is that a service provider, Comcast, is failing in key aspects of the delivery of that service.

The Fitzsimmons’ write, in their book Service Management that reputation is often a key dimension to the provision of a service. They write:

The uncertainty that is associated with the selection of a service provider often is resolved by talking with others about their experiences before a decision is made. Unlike a product, a poor service experience cannot be exchanged or returned for a different model.

So the “take away” here is that for an individual about to make a decision an anecdote is “data.” And as negative experiences begin to collect, the weight of these anecdotes can tarnish (perhaps irretrievably) the reputation of an organization, or a person.

So, does the simple statement “the plural of anecdote is not data” hold true? I think not. Cute, but alas, wrong.

I suppose most, if not all of you dear readers are not old enough to remember the Magic Pan restaurant.  While reading the textbook “Service Management” by Fitzsimmons, I was taken back to the restaurant of my youth, and reminded once again of those wafer-thin crepes, and the delightful fillings that so often filled our Sunday afternoons.

The text book, in discussing quality control in delivering a service, mentions the “foolproof machine” that the Magic Pan designed to cook their crepes.  (For that same upside down pan, perfect crepe experience, try the VillaWare V5225 Crepe Maker) I remember it like it was yesterday, and yes–it was a great example of standardizing a service delivery process. It was one of the “coolest” cooking devices I have ever seen.  The device was a carousel that would hold the crepe pans upside down, while a circle of gas flames heated them from below.  Rather than the traditional approach of pouring the “right amount” of batter into the pan, and then rocking the pan to cover the surface evenly, they literally flipped the idea on its head.

The “chef” would first place a pan, upside down, on the carousel, allowing it to make a few slow revolutions, and thus get up to temperature.  After that, they would remove a pan, wiping the bottom of the pan on a towel that had been embedded with some form of “lubricant” (either butter or vegetable oil).  They would then dip the underside of the pan (yes, the outside!) in the batter.  Once coated, they would place the pan (again face down) on the carousel, where it would cook the crepe evenly.  As a kid, I would love standing there and just watching, watching, watching…

This approach did a few things that guaranteed consistency of delivery:

• The batter on the bottom of the pan meant that they always had the “right” amount of batter for each crepe
• The constant rate of the carousel meant they were always cooked correctly, never over or under cooked.
• By having many slots around the carousel, they were able to “manufacture” a large number of crepes with only one chef.

All pretty doggoned innovative!

So, of course, thinking about the Magic Pan again after so many years set me off on a Google search for the demise of the ‘Pan, and perhaps to find some recipes.  Well I found that, and more!

Let’s start with the “and more.” It turns out that the Magic Pan is back!  Now the Magic Pan of my memories was a rather nice, upscale, yet casual, dining room with great food.  The new Magic Pan is actually a “food court” provider of the same recipes.  According to “Cathy2″ at LTHForum the Magic Pan has as the culinary roots to heart of the original, but appears to be an all new restaurant.  As she writes:

I talked to the manager who advised they had the original chef-trainer from the old Magic Pan fly in from San Franciso to reproduce and train their people for several original Magic Pan dishes: Original Spinach Souffle Crepe; Original Chicken Divan Crepe; Original Crepe Suzette; Original Strawberries and Sour Cream Crepe; Original Chantilly Crepe and Original Cherry Royale Crepe. I remember vaguely the old Magic Pan closed abruptly I believe due to bankruptcy. The manager didn’t remember the circumstances, though he knew all 240+ Magic Pan restaurants closed in one day across the country.

Now, I find that to be quite interesting.  All closed–in one day! Wow.

I am somewhat disappointed to learn that they are not using the same innovative cooking machine that I loved watching as a kid.  According to Cathy2:

Magic Pan 2005 is no longer a sit down restaurant, it is a fast food crepe stall. There is no large ring of gas with upside down smooth bottom frying pans with dipped crepe batter cooking as it rotates over the circuit. Instead there are three large flat iron plates to cook the crepe batter. The cook selects from buckwheat, cornmeal or wheat flour crepe batter and pours a measured quantity on the pan. Using a t-stick paddle he smoothes and spreads the batter to the outer edges. Once cooked, the crepe is filled and presented to the customer.

I hope to someday learn more about the reasons for the demise of the Magic Pan, and perhaps even how widespread the “ROMP” (return of Magic Pan) may be.   Until then, I will be trying out some of the recipes I found online, and seeking to take a trip down that culinary memory lane.

UPDATE: 30 Dec 2009. In the meantime, I will tell you that I have found a great machine (the VillaWare V5225 Crepe Maker) for making my own crepes at home.  It uses the same “upside down” approach in an all-in-one griddle.  It works great, and I highly recommend it to any of you.

Obviously I have had an interest lately in fuel economy, and alternatives to the status quo. These are not driven simply by an altruistic vision of the future, but by rather practical personal and business considerations. Considerations that one can see in the supply chain. That said, I would like to invite your thoughts, in more of a conversational vein.

Perhaps you can share your thoughts on the impacts on supply chains of:

• Local food producers gaining a foot-hold in the market
• higher fuel prices as driven by crude oil prices
  • Consider off-shoring in this discussion. Labor prices drive production off-shore. Will fuel prices bring them back?
• alternative, native-grown fuel sources
• transportation routes devoted to moving crude oil
• transportation networks designed to move grains and grasses
• Economic impact of alternative fuel sources
  • If demand for fuel shifts to biomass, what would the impact be on crude oil prices?

I would recommend that you also visit the blog of “Imperfect Mommy” specifically where she outlines the benefits of local eating.

I look forward to reading your thoughts.

The past few years have seen an increase in the attention given to biomass as a fuel source. You all may recognize this a little better as the “ethanol from corn” movement, among others. Of course, there is the first criticism–we need food for people, not to run automobiles. Or to put another way “are we Americans so self-absorbed that we want to take food off the plates of people, and burn it in our cars?” Somewhat inflammatory, but that is generally the way the argument is formulated. Of course, in his book “Omnivore’s Dilemma” Michael Pollan points out that corn really isn’t all that good for people, either.

Additionally, there have been ongoing debates over whether we actually get enough energy out of corn and other crops. In fact, a controversial Cornell University study determined:

Pimentel and Tad W. Patzek, professor of civil and environmental engineering at Berkeley, conducted a detailed analysis of the energy input-yield ratios of producing ethanol from corn, switch grass and wood biomass as well as for producing biodiesel from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76).

In terms of energy output compared with energy input for ethanol production, the study found that:

• corn requires 29 percent more fossil energy than the fuel produced;
• switch grass requires 45 percent more fossil energy than the fuel produced; and
• wood biomass requires 57 percent more fossil energy than the fuel produced.

In terms of energy output compared with the energy input for biodiesel production, the study found that:

• soybean plants requires 27 percent more fossil energy than the fuel produced, and
• sunflower plants requires 118 percent more fossil energy than the fuel produced.

Did I mention it was controversial? Well, this week Scientific American reports that switchgrass is a better choice than corn for ethanol, and goes on to report that:

But yields from a grass that only needs to be planted once would deliver an average of 13.1 megajoules of energy as ethanol for every megajoule of petroleum consumed—in the form of nitrogen fertilizers or diesel for tractors—growing them [...] This means that switchgrass ethanol delivers 540 percent of the energy used to produce it, compared with just roughly 25 percent more energy returned by corn-based ethanol according to the most optimistic studies.

So I am brought again to the views of my youth. We can take back our energy independence. We can have an affordable, cleaner-burner (although not “clean burning”) fuel source. And we can breath life once again into the backbone of America, the family farmer.

Lynn write about finding a newspaper from 1949, and realizing that writing has changed, and she encourages us to change as well:

The same is true of business writing. The language we use and the way we format documents are different. Yet I often get worried email complaining that writers no longer use the language, style, structure, and punctuation people learned in school.

Here is my answer: Get over it! This is not 1949–it’s nearly 2008. Embrace the differences. Accept “Hey” as an email greeting without cringing. Learn to like avatars in place of photos on web sites. (I’m working on this one.) Stop saying “The way I was taught in school . . .” Enjoy the new year.

I cannot say I wholeheartedly agree with her, but I certainly agree in large measure!  I think we walk a fine line between writing with standards that communicates effectively, and allowing our colleagues and our friends to find ways to express themselves.

Let’s all learn to at least “get along” and ensure we communicate–effectively!

I would like you all to think, just for a minute, about some of the other conveniences we enjoy. For instance, in State College, PA there is once again “to the door” delivery of milk. Yes, the milkman is back, at least in that town. I applaud the desire to purchase locally raised eggs and dairy products, perhaps even without the assistance of chemical hormone supplements. I just question whether the “to the door” delivery is actually, as their website insists, an “environmentally-sensible solution to your essential grocery needs.”

Now, before you go insisting that “there goes that prof again…” let me ask you to consider a few things:

• Do you go to the store more frequently simply to get milk, eggs, and other dairy products?
• Is your private automobile more, or less, fuel efficient than the truck used to deliver the dairy?
• Are you actually ordering the more natural, and organic, choices or are you simply buying the same Schneider milk from a different source?

I look forward to perhaps seeing some of your thoughts here, so please, share your answers to these questions with all of us!

I tell myself this is healthy. This is a good thing. That I am keeping my body healthy. And yet, I can’t help but wonder about the efficiencies of a system that makes clean and pure water available to drink, out of half-liter bottles.

There are a number of concerns here, almost all of which touch on environmental issues, but are also at their heart “supply chain” issues. For instance, if we are shipping cases of water, we are moving tons, literally tons, of water by truck. This uses resources that could perhaps be used, or even saved, to move other things. What resources? Well, the obvious resource is fuel required to power the trucks. In addition, the bottles of water take up space in trailers that could, perhaps, have been used for transporting some other good.

And then, of course, there are the issues of storage. Storage at the bottling plants, at the distribution centers, and finally storage at the retailer. A friend of mine used to work at a bottler, and she had told one of my classes that, to prepare for the busiest months of summer, they started stockpiling bottled water in January. This required that they seek “off site” contractor storage, just to store bottles of water! When you think about this, the costs just keep adding up. Obviously, the bottler incurs an additional cost when they have to pay a contractor for storage. But they also have to pay to transport the water to the 3PL (third part logistics provider’s) warehouse. Again, using fuel, and trucks. Finally, they have at least one additional step moving the water from that warehouse to the retailer, but more than likely bringing it back to their own distribution center first.

And of course, being a good conservative, seeking to conserve resources, I think we should also practice reuse, and recycling. This requires a collecting of the bottles, shipping them to a processing facility, and then sorting and melting them. Can you see the use of resources tied up now, heading both directions in this supply chain? All for the delivery of bottles of water?

A recent Wall Street Journal column by the Numbers Guy (Carl Bialik) tackles deals with the purity of the shipping container used for bottled water–the bottle!

Bialik point s out that “Nestlé claims it offers the lightest half-liter bottles in the U.S. market.”As he usually does, he tackles the statistics, and the numbers, behind the assertions. His quest? To determine if their claims are accurate. I decided to look at a slightly different angle. By reducing the weight of the bottle, what impact does that have on the logistics tail–the supply chain?

Bialik was provided the numbers by Nestlé, and since he trusted their data (gathered by Tragon) I will as well. Let’s assume that everyone uses normal, everyday water, and that any minerals added “for taste” are inconsequential to the issue at hand, the weight. We can be reasonably certain that a half-liter of water weighs a half-kilogram, or 500 grams. This then is our baseline. the lightest bottles (the new Nestlé bottles) weight 12.26 grams, and the heaviest ones weight 25.94 grams.

Simple math shows that reductions from the heaviest bottles (Fiji) to the lightest, will reduce transportation weights by 2.6%. Of course, not every bottle shipped is a Fiji bottle, and Nestlé has not replaced every bottle sold. The actual reduction in weight transported would be less, and thus the environmental and supply chain impact reduction would be less, as well.

What to do? Obviously the first solution is to drink more tap water. If at home, get a water filter. I have a Pur faucet filter, but any would work. Just go check out the selection at your local Wal*Mart or Target.

Might I also suggest we take a page out of the athletes’ book and start using reusable water bottles. Nalgene is the bottle of choice among the swimmers I know, but they are certainly not the only manufacturer. Just be sure to get a high quality water bottle to protect against the leaching of chemicals from the plastics and into the water, and thereby into you.

There are other positive stories coming out, including restaurants finally providing tap-water again, rather than insisting on selling you bottled water. I will work to update these stories on occasion as well. In the meantime, share with me your ways of reducing the logistics footprint, and thus both the environmental impacts, and the costs of logistics!

From the paper:

“Podcasting” has taken the technological and hobbyist worlds by storm, allowing for the creation of highly specialized audio (and now video) productions for delivery over the internet. This sort of capability has found its way into the classroom and into courseware, allowing professors to deliver a wide range of content to their students. (King, et al., 2006) This paper discusses the background of podcasting, the technology that enabled it, and how podcasting can be used to enhance supply chain courses with a “blended” or hybrid learning experience.

In addition to the podcast recording of the presentation, I am including the pdf of the paper, as well as the PowerPoint slides from the presentation.

Let me know what you think of it, and as always, leave comments, or send me a voice mail at the number listed in the contact section!

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DC Velocity has published a great article pointing out the way in which logistics (and by extension, supply chain management) comes through time and time again–and occasionally with a high profile effort. In this case, the author writes about the logistics efforts that were essential to the successful roll-out of the latest, and final, Harry Potter book.

I mention the author, Peter Bradley, focuses on the logistics necessary to deliver 12 million books in quantities large (and small) around the globe for a single, timed, opening. This of course goes beyond a simple planning and execution initiative. It required coordination, as Bradley mentions, between the publisher, and a network of transportation providers (carriers.) He writes:

Scholastic’s success was no act of magic. Rather, it was a carefully planned and executed distribution effort that required close collaboration among members of the company’s logistics team and a core group of carriers.

Planning for the rollout began in January, even before Scholastic had the finished manuscript. Internally at Scholastic, the project would require tight coordination among members of the logistics staff and their colleagues in sales, purchasing, customer service, and manufacturing. Yablin points to Ed Swart, director of operations, and Francine Colaneri, vice president of manufacturing and procurement, as key partners and team members.

The close collaboration also extended to Scholastic’s logistics partners: J.B. Hunt, Combined Express, Yellow Transportation, and ActivAir. J.B. Hunt, one of the nation’s largest truckload carriers, moved the majority of the books—all but about a million of the copies. Hunt operated in partnership with Combined Express, a Bensalem, Pa. based logistics and trucking company that specializes in publishing and retail shipping. Yellow Transportation, a major LTL carrier, handled domestic LTL shipments. ActivAir, an international forwarder that specializes in book and magazine distribution, managed international shipments to 32 destinations in 29 countries.

I would like to point out that contemporary to this initiative was the release of the much-touted iPhone. That release required a delivery between 4 and 6 pm local time, for a store opening of 6 in the evening. Another opportunity for logistics to shine.

Let’s not lose sight of the importance of collaboration across the supply chain for both of these products. In both cases, there was a line in the sand–a promised delivery date for large scale release. Satisfactorily meeting these dates required not only a close coordination of “in house” production but also coordination among all the suppliers that provide key elements to your product. In the case of the iPhone, there are many components that make up the phone, from numerous suppliers. According to their analysis (as reported in RFDesign)these suppliers include: South Korea’s Samsung (The processor core), German-based Infineon (providing the RF and broadband functions), and National Semiconductor (a single chip.) In addition, the most exciting part of the iPhone, the multi-touch screen, has many providers:

It is believed by iSuppli that the supplier for the touchscreen module in the model torn down by iSuppli was Balda, with its partner TPK Holding. It is believed by iSuppli that the iPhone LCD display itself is multi-sourced through Epson Imaging Devices, Sharp and Toshiba Matsushita Display Technology. The cost of the LCD used in the iPhone is estimated at $24.50, representing 9.8% of the 8 Gbyte version’s costs. source: RFDesign http://rfdesign.com/rfic/iphone-isuppli-components-0712/

Coordinating such a complex, and global, supply chain and ensuring pinpoint accuracy in delivery (both spatial and temporal) shows how a collaborative supply chain can truly deliver.

Thankfully, others have taken on this task.  Specifically, Seth Godin (you know, the “All Marketers are Liars” author! and blog) has identified several ways that Apple could have differentiated their product, making people “happy” to have paid 33% more for the same product.  As he puts it, “The key is to not give price protection to early buyers (that’s unsustainable as a business model) but to make them feel more exclusive, not less.”

Godin’s ideas include:

• Free exclusive ringtones, commissioned from Bob Dylan and U2, only available to the people who already had a phone. (This is my favorite because it announces to your friends–every time the phone rings–that you got in early).
• Free pass to get to the head of the line next time a new hot product comes out.
• Ability to buy a specially colored iPod, or an iPod with limited edition music that no one else can buy.

Neat–and as he points out, they wouldn’t have cost Apple $20 Million in profit.

I think it is time for another look at that old friend of Economists and students in Econ 101, the “Demand Curve” and the slightly more complex notion of “Price Discrimination.”

To catch up, you undoubtedly recall that the demand curve essentially shows that, as prices decrease, demand will increase for a product. This is shown in the following graph:

Thus we can expect Steve Jobs is correct in saying that they did this to increase sales before the Christmas season. In fact, lowering the price should increase the sales, assuming that there is elasticity in the pricing and demand curve. Remember, elasticity is the degree to which quantity changes with a change in price. The more elastic, the greater the change (steeper the slope of the curve.)

Now, there is this other notion of “price discrimination.” Price discrimination, or “Yield Management,” is the practice of charging different customers a different price for the same product. The notion is really quite simple. As we saw in the Demand Curve, a few people are willing to pay a high price for a product. A few more would be willing to be a lower price, and so on. In the charts that follow, one can see how, by targeting different customers at different prices points, one can increase total revenue.

The first chart shows the revenue generated if one were to charge a single price. You can see that above the “box” is the revenue that is essentially lost due to customers getting a “good deal.” They would have paid more, but are most likely happy that they were able to pay less. Of course, to the right of the “box” is revenue lost because customers felt the price was not at a point where they could make a purchase.

This next chart shows, notionally, what would happen to revenue if a business were able to successfully segment the market, and provide 6 different price-points. As you can see a far greater area under the curve is colored in, showing a significantly greater amount of revenue.

By identifying these customers, and finding ways to segment the market, a business can capture more revenue by charging higher prices to those willing to pay those prices. Ideally, businesses would like to charge a different price for every customer, targeting the maximum price they are willing to pay. That level of price discrimination would ensure that every customer felt they were receiving a “fair” deal, while removing even the smallest gaps between revenue and the demand curve. This is rare, although an argument could be made that we see this in online auctions and in car sales with negotiations.

Realistically, we do see price discrimination in our daily lives. Customers can find the “same” available for different prices, simply by shopping at different stores. What makes people pay more? A sense that they are receiving something additional for the increased costs. We are perhaps most familiar with this practice in the airline industry, where yield management has gone from art to science. We pay more for a first class ticket (obvious difference in treatment, although you still arrive at the same destination.) But customers also pay a higher price for the privilege of changing travel arrangements, or for the ability to purchase tickets at the last minute. Alternatively, the airlines are able to ensure full planes by offering a select (and scientifically computed) number of seats at lower prices. Travelers must purchase these tickets within certain guidelines, but more tickets are sold (and seats filled), because they are able to capture those people who could otherwise (perhaps) not afford to travel.

If you look around, you can find other instances as well. Coffee is more expensive depending on whether a coffee shop has the right “feel.” Clothing is more expensive when purchased at “higher end” stores.

What is critical here is the ability to segment your customers, and by doing so, create barriers to transfer. This can be accomplished in many ways to include rules ( in the airline and cellphone industries), controlling information (automobile industry), perception of enhanced service (coffee shops and boutiques) and through geography (different shopping “districts.”)

So what does all this have to do with Apple?

I am glad you asked. I believe Apple made a “good call.” They sought to capture as many people in the high end of the Demand Curve as possible. The problem (if you believe that sales may have been trailing off in August) is that the demographic may have been smaller than they anticipated, or they all reacted more quickly purchasing en masse early on. This then left a potentially large amount of sales untapped. This is essentially what Steve Jobs was talking about when he kept referring to capturing the holiday sales. They want to increase sales and to do that, they must change the price point. This slides them down and to the right along the demand curve.

I suggest that Apple was trying to practice what I will call “temporal price discrimination.” They were hoping to capture the “big spenders” early, and then move down the curve, capturing sales from those who could not, or would not, spend at the higher price points. Unfortunately Steve Jobs misjudged the timing. The group that purchased the iPhones at the higher prices were not satisfied to say that 30 to 60 days of use of an iPhone was sufficient differentiation in their minds to have paid a higher price. For many, one could argue it wasn’t worth $100 to $200 per month to have a cool phone.

So, Apple failed to take the necessary steps to successfully practice price discrimination. They failed to differentiate and segment their customers in a significant and substantial way. They did try to create barriers. They were going to limit the number of people that could “switch”¹ to the lower price by putting a time window on when you could get your money back. But customers, apparently in droves, pressured Apple early and often. Jobs responded within 36 hours, offering in store credit (among other reported compensations.)

All in all, I think this has been an interesting time. I have only given a cursory look at the economics involved, and there are far more details I left out (did I forget to mention marginal costs?)  Also, I am sure there are many other factors and pressures that influenced Apple’s initial decision, and some may even include a pending shift in the demand curve itself. (If new technology makes customers feel this iPhone Gen 1 is “obsolete” then the whole demand curve might shift to the left…) Perhaps we shall revisit this topic…

¹ Ironic that, eh? Apple trying to stop people from switching?

What is TalkShoe? Enables anyone to create, join or listen to LIVE, Interactive, podcasts… (and is a local Pittsburgh PA Company!) For those that listen to the most popular podcaster today (Leo Laporte) he uses this for many of his podcasts, most noteably, Net@Night with Amber McArthur.

• Podcast
• live audio streaming
• live chat
• takes CALLS

Who is using TalkShoe? Talkcasters. I mentioned Leo and Net@Night (id 3185), but also

• Geeza (live commentary DVD viewing… Wow!) (talkshoe ID 8230)
• Scott and Kris – The Power Hour, they are comics writers (talkshoe id 5809)
• Bill Alexander – The NETIO Show (id 1832) He broadcasted last night at the restaurant!
• Cliff Ravenscraft – GSPN.tv (is 5138)
• Adam Christianson – The Maccast (id 17436)
• The Grasshoppers (id 43023) Chris Brogan runs this one! People helping people! How cool!)
• Tech Podcasts Roundtable (id 3254)

So why do TalkShoe he asks?

• Connect with audience
• Format change
• meet people with common interests (miniatures? Doll Houses?)
• form friendships
• content that lasts
• build communities
• have fun!

HOW do we do this?

• Sign up (user ID, Pin, and install the software)
• Click “Create” button…
• Call In to the show…
  • With Skype (using skypeOut)
  • VOIP (SJ Phone, Gizmo Project)
  • ShoePhone (Talkshoe’s built in VOIP)
  • POTS (Plain Old Telephone Service!)
• Click on Record.

It’s that simple.

How much does it cost?

$0.00 (And that is in Canadian dollars… the conversion to Euros is… 0.00)

In FACT they PAY you–$50 for the first 10 episodes, and pay per download after that. How cool is THAT?

NEXT RELEASE: Codename: “Tokyo” ETA 10 Sept 07

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How cool is this? My son and I are thinking it might be a great way to make our football conversations a bit more interactive, and get more people involved. Really helps us connect with the audience. That CAN’T be a bad thing!

How can I use this in education? Imagine a “virtual study group” hosted through podcast–where students can call in and ask questions, and the professor can answer.

How about a call in show to leaders in Supply Chain? Wouldn’t you love a chance to pick the brains of the movers in logistics and supply chain?

Again, how cool…

I flew last week on American Airlines, to St Louis. As you may recall, St Louis was the hub for TWA, which was acquired by American. Despite that, I had a connecting flight out, and back, through Chicago. Every connection is an opportunity for an airline to have problems, and rise, or fall, on the opportunities to deliver customer service.

American Airlines rose.

On the outbound leg, I arrived in Chicago 20 minutes early, and the jovial command pilot asked that we bank it–so next time they run late we can “give it back.” Good humor. Ultimately I arrived on time in St Louis and when I talked to the staff about seating arrangements they were ever congenial.

The return leg was  a bit more problematic.  I arrived at the airport several hours in advance, but unfortunately the airplanes weren’t cooperative.  The flights to Chicago were being shifted back by one flgith schedule each.  My 6:30 departure had turned into a 7:45 departure with an arrival at the same time as my connecting flight.  The customer service line was quite long, but everyone in line was fairly positive.  When I got to the ticket counter the gentleman asked me what I needed.  I responded with “I need to be at [destination] by midnight.”

Guess what? He did it.  He moved me on to the earlier flight, and ensured that my connection wasn’t going to be a “miss.” He even looked, and was able to accommodate my desire to have an aisle seat.  Being 6’2″ I need the legroom.

Of course, problems tend to pile up.  I arrived at Chicago and found that not only was my final flight delayed,  but there were extended delays on the ramp.  Every step of the way the entire American Airlines team made sure that every passenger felt special, and that they knew that each passenger had requirements that they needed to meet as a service provider.  My final arrival was 1 am, later than I had hoped given a two hour drive that followed, but I arrived safely, and well cared for.

I had a choice, and I chose American.  I chose to not fly with US Airways.  I will make the same decision again.

First, I want to recommend that you go read about the $30,000 toothbrush. Okay, so the toothbrush itself didn’t cost that much, but failing to fulfill a simple promise (you know the one “if you forgot a basic toiletry item we will bring one right up to you!”) resulted in a very expensive negative consequence.¹ There you will also find my comments on what a company should do to turn this whole thing around.

Second, I wanted to point out that you can see what I am finding interesting by looking for my tags at http://del.icio.us. If you don’t want to go there on your own, just click on the del.icio.us information on the bottom right of this blog.

Third, I would encourage many of you to not only write to me, but please, let’s start some conversations here! I appreciate the emails (Thanks, Ryan!) but much of what you guys write would be interesting to all. So Mike, Ryan, and the rest of you–engage!  Also, if you like the podcasts, and want to contribute or be a “guest contributor” let me know.  I can set up a telephone “interview!”

Finally, some tidbits of interest:

• iPhone release date June 29th. Any of you getting one?
• HTC Announces their new “touch phone”
• Hugo Chavez, Poster Child of the Anti-War left,^2. is facing uprisings and chastisement for shutting down the free press. And the US Liberals say BUSH is against Free Speech?  What TV or radio stations has he shut down?  Or better yet–do you know of any blogs the Bush White House has shutdown?
• In case you missed it, Fred Thompson is moving towards running for President.  So far he is my guy and apparently many others.  Hey, he OWNED Michael Moore. You gotta love THAT (and hat tip to John C. Dvorak, of http://dvorak.org/blog.)

Well, there you have em.  A few tidbits.  Let me know what you think!

The Professor

^1. An interesting aside: Just a few weeks ago, I stopped at a hotel because I was just too tired to continue. I didn’t have a toothbrush. I called. I was told to come down to the desk to pick it up. So, in my case I would have gotten the free toothbrush, but it wasn’t as convenient as the promise on the card. At least the Hampton Inn hotel is honest. Their card says “Come down to the desk to pick up…”

^2. And going back to that reference from the left, Fleshy then wrote “the reputation and influence of the United States has been reduced to nothing more than that of a common street bully.” Hmmm… Isn’t a Bully someone who forces you to do something you don’t want to do? Sounds more like Chavez than Bush.

As you may recall, I wrote that teens today are social animals, and not that different from the teens of the past that used ice cream parlours, soda counters, and the mall as their means of socializing. In fact,in his presentation at the Penn State Teaching and Learning with Technology 2007 Symposium, Lee Rainie mentioned that in fact most youth today don’t write, or network, or create, for the world to consume.  He believes most do it for their friends, and their small connected groups.

Unfortunately, many of today’s youth are engaged in translating their analog life pursuits into digital ones without necessarily understanding the potentially broad audience.  Many stories have been written in various business journals about companies “googling” prospective employees, or checking their facebook and myspace.com pages.  And the young job-seekers  being surprised when they are confronted with what they themselves posted for the world!  This was made more clear to me in recent discussions over at the Community College Dean’s blog.  On his blog in his “ask an administrator” feature, he was specifically asked (among other things) about whether a Department Chair should reveal that they have found, and are reading, pseudonymous postings by several grad students.  The Chair was actually concerned that the students might feel they are being spied upon!  Is it spying if you write for all the world to read?

(SIDE QUESTION) Question:  Are today’s youth truly “tech saavy” if they don’t understand the world-wide nature of the World Wide Web?

So where do I take this post?  Is this simply a rehash of old thoughts?  No–that would be silly.  I ran across another blog entry over at “Own Your Own Brand!” In this post the author talks about how Mom was significantly networked in her own “social setting” of Small Town USA.  It’s a great story, and I don’t want to re-tell it here.  Honestly, I think you all will enjoy reading it, so go check it out.

There are great lessons the writer draws from this though–lessons that I think perhaps can be applied to our activities both in the “digital space” as well as in our “real” space.  To summarize the points:

• Secrets don’t last long
• Connected is better than disconnected
• Truthful consistency is the best policy

Now imagine if we encouraged everyone in their personal “flesh and blood” activities, and their zero-and-one life, to remember these three things.

Mom is linked.  And so are we.

As if you needed any more reasons to not fly US Airways, this report comes from my wife on her trip back home.

We left on different flights heading back East. She took off on time from San Francisco, but unfortunately, her flight apparently had slower engines than mine, and she arrived 30 minutes later than scheduled. This is, of course, a problem when you only have 40 minutes scheduled between flights, and your flights are in two different terminals. She talked to the flight attendant on board her first flight, and advised them of the situation. The response was actually classic US Airways: 1. You aren’t alone, there are many others who are in the same situation. 2. I am sure they know you are coming, so don’t worry about it.

Why do I call this a classic US Airways response? First, they inevitably tell you that you aren’t alone with this problem. I am not sure why they do that, but I think it is to make you feel small–like somehow you have no “real” gripe because you aren’t really unique, or special. My response has been typically “Well, if so many people are having these problems, perhaps you should be doing something to fix your airline–don’t you agree?” The second ‘typical’ response is to tell you that it will all be taken care of later, by someone else. The classic buck-passer. That’s the story I heard, time and again, from everyone I met who entered the realm of “customer service” with USAirways. Inevitably, and I do mean inevitably, the buck passer mis-spoke, mislead or just didn’t want to do something.

So that brings me back to my wife’s story. She gets off the plane, and starts hurrying through the airport. She sees one of those motorized carts, and asks for a ride, telling them what time her flight is leaving. They graciously take her to the gate (but warn her she most likely will have already missed the flight–USAirways doesn’t wait!). And sure enough, they were closing the door to the plane. “They” let her onboard, only to find out that the Gate Attendant had already given her seat assignment to someone else!

Now, why would an airline, knowing that the person they were missing was an inbound on another flight, and making a connection, do such a thing? There are two “things” that USAirways did here. First, they were going to leave a passenger who’s flight had landed, simply to make their “on time departure” metric. Second, they gave a seat away that was for a customer who was making a connecting flight. The first is an unfortunate “unintended consequence” of metrics. If you measure me on the percentage of on time take offs, and not reducing the number of stranded customers, then US Airways (and all other airlines) will continue to care more about the “push back from the gate” than having happy customers. The second “thing” is a bit more difficult to understand. I mean, giving her seat away? Perhaps one could chalk it up to the need to generate revenue (so much of what they do is meant to nickel and dime their customers) except, and here is the weird thing, they still had seats on the plane. They were able to give my wife a new seat assignment right away.

So what lessons do we learn about US Airways here?

1. Trivialize the customer’s complaint
2. Pass the buck to someone later in the process
3. When you do get “Later in the process” deny that they can do what you were promised earlier
4. Focus on metrics that don’t involve the customer
5. Focus on revenue generation to the detriment of customer service

Yup. US Airways is not a winner, at least not in my book.
2.

I had a trip out west, and unfortunately, flew on US Airways. The night before I left, I received a call telling me that my flight out would be delayed by about 2 hours, which would mean I would miss my connecting flight. I had to press hard for them to work through that, but luckily I had already built in a buffer to that schedule. My meeting was the next day at 7 am, so I would be “fine.” I had planned on meeting my wife in San Francisco and thus we had more “complications.” I needed to get her flight re-routed as well, so that she wouldn’t be waiting for 5 or 6 hours in the airport. At first, US Airways was not willing to work with us on this. “Her flight isn’t the one delayed” they kept reminding me. Finally, after a full hour on the phone, I was able to not only work out changes that had us arrive at the same time, but it put us on the same connecting flight!

All’s well that ends well? Not quite. Actually, not by a long shot. When we got on the plane to connect to San Fran, it turned out my wife’s seat was literally double booked.¹ She, and another gentleman, had the same seat assignment.²  On an overbooked flight. Ah, but they were able to accommodate us again. We got to sit next to the bathroom.

Now here is where I feel bad. I could write a nice long blog entry about how the meeting went quite well. (It did.) How absolutely enjoyable (and fabulous) the “vacation” portion of it was. (It was!) I should write about how I enjoyed the seafood, and how I thought it was neat to see and hear the sealions in Monterey. (all true.) But nope. I am still too angry.

You see, I am still at the airport waiting for the final leg of my flight home. When I arrived (yesterday morning) at the airport in San Francisco, I was told that my final flight, the 50 minute connector to my hometown, was canceled (already.) And why was it canceled? Because they wouldn’t– 12 hours later– have an aircrew to fly the plane. Yup–they had a “crew cancel” scheduled more than 12 hours before the flight would even take off!

The gentleman at the counter worked hard to find an alternative, but when US Airways is the only airline to the local airport, the options are limited. Ultimately, I ended up heading to the connecting airport on the East Coast, and having to stay at a (very crappy) hotel at US Airways expense. They did provide me with meal vouchers. And you know just how far that $5 goes at an airport!

I did tell them that, since they screwed up my outbound and my inbound flights that they owed me some additional compensation. Alas, so far I have only received the buck passing. More to follow, no doubt.

_{1 This is interesting, given that on April 24^th the airline’s President, and the Chairman/CEO issued a letter to customers touting that the new reservations system is in place, and that the “new software and better airport processes will allow our airport employees to focus less on keystrokes and more on getting you where you need to be, on time, with your bag. ”
² To delve further into this story, on that same flight there was another seat with two bookings. On top of that, on my final flight home (yes, I finally got one!) “they” double booked a seat on that flight. In today’s era of “Web 2.0″ and Digital Natives, how does this happen? Perhaps another post, on that…}

“Since we made our initial investment in 1998, Chipotle has grown from 16 restaurants in the Denver area to a strong and popular restaurant concept with more than 500 locations throughout the U.S.,” McDonald’s Chief Executive Jim Skinner said in a statement.

“However, attracting more customers to McDonald’s remains our greatest opportunity for long-term profitable growth,” he said.

I, for one, am pleased to see McDonald’s has come out of their slump, and that they are focusing on their core business. This does, of course, bring us back to a fairly common business theme, that we talk about often in class. Firms “diversify” and then they divest… diversify.. divest… Some even step outside the realm of what would seem to make sense. Some diversifications make sense. GMAC not only helped finance cars, but has become quite a strong entity in financing in general–and has helped float GM in these tough times.

Others make far less sense. For instance, remember Phillip Morris buying Nabisco, and Planters Peanuts? So a tobacco company sells food? That was a mistake that if I remember correctly was identified, and divested… *smile*

I look forward to hearing/reading your examples of firms that have gone through the diversify/divest cycle.

The above quote comes out of a very lengthy thread on the Community College Dean’s blog. There are many tangents that have come out of that thread, and this is the first one I have chosen to discuss.

This is not the first time I have heard the argument that “education is not a business.” I would have to agree. Educators have a responsibility to provide an education, to convey material to learners in an environment, and with pedagogical approaches, that enhance the opportunity for the learners to actually grasp and internalize the material. I would then also argue that McDonalds (or, Lone Star Steak House, or any other restaurant), Barnes and Noble (and other perveyors of books), Bloomingdales… none of these are businesses either. They exist to meet a requirement, or satisfy a want, for people that have a need or want. In tfact, they too actually want people to “grasp” and (in the case of restaurants literally, and bookstores not so… ) internalize the materials.

In all these cases the contact person–the educator, the bookstore clerk, the customer specialist, or the counter-kid at McDonalds, needs to focus not on the business aspect of the firm, but on the customer’s satisfaction. The “best” businesses do that–focus on the customer, understanding that the rest will follow.

Specifically, and this is the most critical point, if people see value in what they receive they will pay for it as they are able. If they don’t–they won’t!

Education, and other not-for-profit endeavours are a bit different, in that schools and public broadcasting, and often hospitals, are able to get people in general to see the benefit, and pay for services they themselves might not directly receive, but they do it because the see, and wish to encourage, the product to continue to be provided. (I wish it were possible to go to Barnes and Noble and have someone offer to subsidize my book purchases, but alas, that doesn’t happen.)

So what wordplay am I conducting here? Well, business is, according to lawyerintl.com is “A continuous and regular activity that has income or profit as its primary purpose.” Hmmm… so perhaps, either I am just creating a smoke-screen to obfuscate the point about education, or education has as its primary purpose making money. Or perhaps their is another option–the ‘legal’ definition of a business doesn’t actually fit what we in business actually do.

Businesses most often are in the business of generating revenue. Without revenue no operation can continue. Be it public radio and televion, or the local university, or the local McDonalds, all need revenue to survive. But by the same token all businesses understand that they exist to satisfy some perceived want or need, and that they can only survive through providing that.

Here’s the bottom line: yes, educators, you are not “business people.” Your charter is to serve your institution by delivering the best educational experience possible to the students in your care, and doing all you can to ensure they grasp the material and are hopefully changed by it. That is just like a counter-kid at McDonalds has as their mission to keep the customer “lovin’ it.” It’s the role of the administration, and the management, to ensure the revenue keeps coming in, and that the books either remain “balanced” (not for profits) or stay positive to satisfy the stakeholders.

So if it appears that a conflict exists, then I suggest you ask these simple questions:

1. Does the actions of the administration take the school/college/university away from it’s mission of education?

(critical point here: do not ask yourself if it takes away specific areas of education, such as medieval studies, but rather if it has changed the mission–say to providing conferences and hotel space, without an educational element.)

2. Does the administration make clear the long-term strategic direction for this change?
(perhaps outlining either a) the fiscal need that perhaps ensures survival, such as at Tulane, or b) reaches an as yet untapped clientele with the educational mission, as the discussion at the Dean’s blog has as its base.)

These are only two questions. Perhaps you have more.

I welcome a lengthy discussion here, as well.

The Professor

Last posting, I put a story up about SAP releasing V 5 of their SCM software. I commented there on the need for software to support supply chain collaboration, among other things. It was pointed out to me by a colleague that the book, “Why ERP” presents an implementation of an SAP ERP system that failed. I have yet to read the book, but it is now high on my reading list (and I encourage those of you interested in these things to do as well.)

Hey, I make it easy for you–I am linking this posting to the Amazon site for this book. But not to get you to buy it, because if that was my goal I would have figured out a way to get a kickback. I wanted to actually link to the comments reviewing the book, like the one quoted above. It appears that this book is fairly common required reading, and that students don’t like it. Don’t believe me? Go read the comments!

This was doubly interesting to me, since it combined the ERP discussion with a discussion on evaluations by students. Over at the blog “Confessions of a Community College Dean” the Dean is trying to figure out ways to evaluate his faculty. This is often stymied by the fact that students’ evaluations are, well, sometimes less than constructive. Note, I say sometimes.

In these reviews of the book you will find there to be constructive critiques. These critiques say things like:

“Do not read this book if you are an expert on SAP or very familiar with ERP systems. This is little more than a text book put in the form of one large example.” (Hmmm one CASE example can be quite rich in individual exmplars used for discussion and study. But still, good critique.)

CAUTION: This book (actually a novel) is good only for those who do not know anything about ERP. Finish this quickly and move on to more detailed stuff like MISSION CRITICAL by Thomas Davenport. (again, the usefulness is challenged, but at least the commentator provides an alternative.)

and, Perhaps the best review:

This actually is a good read. It kept my interest for a full 2 hours, which is what is took to read it. The case study is real and on the mark. It illustrates that even if SAP is being widely adopted in your industry (in this case furniture), it may not be the right solution for you. In this instance, SAP (or the SAP implementation approach) was wrong because the company, whose business model was “make to order”, tried to cut time and costs by directly implementing a configuration which worked well for a company that has a very limited (few part numbers with minimal change) product line.

The author also did a realistic job in presenting the politics of the situation. The company president wanted an easy integration under a tight deadline. The IT geek wasn’t interested in the business model and wanted a showcase quick installation. The marketing guy wasn’t interested in the details and wanted to showcase the installation. The book’s hero is a healthy skeptic, who is trying to understand ERP, its benefits, and how it fit his company’s business.

Based the book’s title, I thought I was picking up another SAP marketing book. But it is not that at all. It’s objective and deals with business issues. No ABAP, idocs, and organization elements here.

My recommendations for anyone writing a review or a critique, including critiquing a course or an instructor? They are quite simple really:

1. Provide positive feedback if at all possible. What did you like, and why? The why is important because it helps to know how to develop future information in a way that worked well previously. Criticism need not be negative, or even pointing out weaknesses. Sometimes people need to be told the good things.

2. Be critical, with a positive attitude. Say things like “While I appreciate XXX, it didn’t work well, because…” Again, the because, or the why, is critical to helping the professor or author provide a fix for things later.

3. Understand the purpose of what you are critiquing. If you are critiquing a course, and the course is on advanced astrophysics, don’t criticize the lack of creative writing assignments. Alternatively, if you are in an MBA program, regardless of the quantitative rigour of the individual course, you should have an expectation that students will be expected to communicate clearly–after all, you are there to be better managers.

So, remember: criticism should be given with the intent of improvement, and while it may have been cathartic for the reviewer to write: “I wouldn’t even make paper airplanes with this book – because they would suck too. When millions of books were burned in WWII, why did they miss this one?” they certainly provided nothing to the discussion.

The Prof

Postscript: (In fact, the paper airplane comment was followed by a recommendation to read “The Goal” by Goldratt. An excellent book, but with a completely different message/intent. This reviewer apparently missed point number three.)

I guess this is it. Get your spot while you can–Space calls!

So, class, a few questions:

1. What would it take to get you to sign up to go to space?

2. Many have argued that government funds would be better spent on purely earthbound endeavours (ignoring, often times, that the only place to actually spend dollars is “on Earth”). How do you feel about private enterprise funding these businesses designed for “vacations” to space?

I look forward to your answers. I have enjoyed all the others!

The Prof

Get this story while you can!

Yes, here we go–while many are worried that the Bush Administration is slowly (or perhaps, quickly) eroding our civil liberties, the various liberal “health advocates” are working hard to eliminate civil liberties where it matters most–at work, and at home! In fact, this story was so bizarre I had to check the date to make sure I wasn’t reading a left-over from April 1st!

According to this story in the Wall Street Journal, from Dec 20th, 2005, “Scotts Miracle-Gro Co. is taking its campaign to stamp out smoking among its workers to an unusual length: It’s threatening to fire smokers beginning next fall.” Yes, you read it right–if you smoke, you will be fired. Of course, many places have a “no smoking” policy, this policy goes further. If you smoke, you will lose your job. Not just if you smoke at work–but if you smoke at all. So, if you smoke at home… in your car… on vacation… it doesn’t matter.

Later in the article, we find “Next October, the Marysville, Ohio, company said it will begin randomly testing about 20% of its work force nationwide where it is legal to do so. (Ohio is among the states that don’t have specific smoker-protection laws.) The company says it hasn’t worked out the details of how to test employees. Workers found to be still smoking or using other tobacco products habitually could be fired, Scotts says, as long as they work in states where such termination is legal.” This is, of course, similar to the various drug testing policies in place both for government and civilian sector employees. What makes this step unique is the reason.

While drug testing is often defended as protection of the workers, and those around them, because “drugs” tend to alter behavior, this goes a step further. The companies are now attempting to force a change in your behavior specifically to lower the long term costs of their health care programs. Yes, that’s right. They will force you to be heathy.

So how far does this go? We have already heard from the fringes when it comes to second hand smoke–and that argument has now become mainstream. We have seen the (2nd rate–unscientific to boot!) movie “Super Size Me” become mandatory viewing in secondary education. There have even been those on the fringe that wish to tax fatty foods, since ultimately they can have a negative impact on health.

So let’s see how far this can go. The article continues:
“The tobacco initiative is part of a broad wellness program that includes a $5 million fitness gym and health clinic opened last month near the company’s headquarters. Employees on the company’s medical plan will have free access in the clinic to a physician, nurse practitioners, diet and fitness experts and a pharmacy with generic drugs.”

This sounds harmless enough. In fact, it shows that the company is willing to help those who have an interest in staying healthy. Nothing wrong here–and this should be applauded as forward thinking. But wait! There’s MORE!

“In return, every year employees will face a strict requirement: Take a health assessment through a program affiliated with medical-information Web site WebMD Health Corp. — or pay $40 extra a month in health-care costs. The health assessment starts with a form to be filled out online. Then, a “health coach” contacts the employee and arranges a treatment regimen for any health issues. The employee must follow through with the recommendations or pay higher premiums, though the exact amount hasn’t been worked out yet.”

So, there is a second edge to this sword. If you refuse to take an active interest in your health, they will charge you more for insurance. All in all, that seems fair–if you won’t take care of yourself, you should at least pay the consequences, as the costs.

Unfortunately, as noted, the whole premise of this story is that this company, and others, are actually going that next step. If you don’t fit their definition of healthy, then you cannot work for them any more. Whether it impairs your ability to work, or not.

As one woman said in the article: “‘The consensus is like, is this the end or is it going to lead to something else?’ she says. ‘Are they going to watch what we eat?’”

This story from CBS is an Interesting commentary.

What surprises me more than anything else though, is that it is another example of politicians fleeing from thoughtful analysis for fear that the American populace will condemn them for holding a view that seems contrary.

Outsourcing has been portrayed lately as another example of a Bush Administration seeking the well being of corporations, to the detriment of the “working class families.” In fact, the Kerry campaign is pointing out quite consistently that we have a large number of jobs that have “moved” overseas. The fact is, most business professors will tell you that the globalization of the economy, and the “outsourcing” as it is so popularly described, has helped fuel the economic growth seen throughout the 90s. Yes, the 90s–that era of Clinton growth so touted by Democrats.

It is the ability to find, and leverage, comparative advantage, I commend http://internationalecon.com/v1.0/ch40/40c000.html as a good discussion of comparative advantage.

It is unfortunate that we find ourselves once again seeking to protect jobs that have become uncompetitive rather than encourage people to be re-educated, or at a minimum retrained, to do jobs in which we ourselves have a competitive advantage. Of course, educating America is a herculean effort, and given that those charged with that very task, educating America, have consistently allied themselves with a particular party, and a particular agenda, it is a task we won’t see tackled any time soon.

This is the problem with much of the discussion from the politicians. Because things seem, as that academic link says, to be counterintuitive, or worse, to be without heart, we distance ourselves from it, no matter how truthful.

Homework for today is quite simple: Read the link, and answer this thought question: How would you educate America on those issues that seem on the face counterintuitive, but if accepted would greatly improve our lot as a nation? Submit your thoughts, as a comment on this blog!

Wow!! Here I was preparing to write a blog about how both sides can present “true” facts (yes, I realize the humor in that…) and still hold opposing views.

It turns out that the Democrats chose to distort the facts anyway. Why would they do that? Because the facts from the CBO report show that everyone–yes everyone benefited from the tax cuts. In fact, refer to my previous discussion about why the tax cuts were a good idea to help recover from the slowing economy that Clinton passed on to Bush.

So, let’s start with the distortions. According to the Democrats, as reported in the Yahoo/Reuters news story, The CBO report shows that “the top 1 percent, with incomes averaging $1.2 million per year, will receive an average tax cut of $78,460 this year, and have seen their share of the total tax burden fall roughly 2 percentage points to 20.1 percent.” While this is most likely “accurate reporting” (that is, the Democrats did say this) it’s not actually to be found in the data of the CBO report. In fact, if you look at Table 3 of the report (use the link above, and read this for yourself) you will find that the share of “Total Tax Liabilities” for the top 1% of the population hits 21.2% by 2010, when the tax laws sunset (that is, revert back to the higher tax rates of 2000.)

So first, the Democrats actually understate the tax burden by 1 full percentage point. Not “even” a rounding error mistake. But what’s worse, they are arguing that it is “not fair” in some measure that 1% of the population is only paying 21% of the taxes. Read that again, slowly. 1% of the population is only paying 21% of the taxes. Let that sink in. That’s apparently too low, according to the Democrats.

Wow.

As if that isn’t enough, Table 4 actually is more “telling” since it presents the differences in tax Rates and liabilities. Yes, the tax rates for the top 1% dropped by a greater percentage. Could that be due to the fact that we are taxing them at a much higher rate to begin with? Remember, the more money you earn after you hit the highest tax rate, the greater percentage of your income you pay at that rate. If today, you happen to earn one dollar over the line, pushing you into the highest tax bracket, you will pay that rate–but only on one dollar. On the other hand, if you earn 1 million dollars over the line, you pay that higher rate for that total amount. So the total effective tax rate for a person one dollar over the line is far lower (given that the vast weight of the rate is the lower tax rates) than the rate for the person one million over who, for all practical purposes, earned all their income at the higher rate.

Now, that being said, you would think that the total change in share of the tax burden, or as the CBO report puts it, the total share of the “Individual Income Tax LIabilities” would decrease by a greater rate. But we see that is not the case. According to their report, those people in the top 20% of earners (highest quintile) actually show an increase in the share of the liability for most years, and there are only three years (2006-2008) when the tax share decreases at all for those in the top 1%. On the other hand, those in the bottom 60% of earners show a decrease in the total share of income tax burden every year. EVERY year.

Please, Democrats, let’s be intellectually honest here. Present the facts. The facts being simply this–The tax cuts put more money back in everyones’ hands, and at the same time did maintain the progressive tax structure that you believe is so important.

The other fact is even more insidious. Most people won’t go read the report, and the CBO won’t engage in political debates, so they won’t correct you.

But I will. And hopefully so will others.

Your homework today? Find truth. Seek truth. Live Truth.

I have given much thought to the economic news. Today the latest job figures were released, and while unemployment had gone down significantly, there is still some consternation over the fact that “only” about 30,000 jobs were created. I personally find that to be good news, and continues to put the lie to the argument that this is a presidency reminiscent of Herbert Hoover.

First, let’s set a few historical facts right. While the “Great Depression” officially started under Hoover, the economic stage was in large measure set by the actions taken by Coolidge, and by the actions of the international community around the US prior to the Hoover administration. So, to paint the Hoover administration as the “bad guy” here, would do a disservice to Hoover. In fact, this is a point I have often pondered during this campaign–why are the Democrats so quick to compare Bush to Hoover, and not Coolidge? It certainly couldn’t be that they don’t remember their civics classes, could it? I am left with few choices–either they failed to learn their history lessons in school, and are speaking from ignorance, or else they are perhaps choosing to distort history for some other purpose. Distort history? Naw…

Moving on, today Kerry also talked more about his proposed tax cuts for the middle class, and tax cut repeal (tax hike) for those earning over 200K. This is yet another salvo leashed against Bush’s tax cuts as being irresponsible during a time of economic downturn. Let me set a few things straight here.

First, it has been an accepted Macro Economic principle that, in time of recession/downturn, the government should increase spending, and perhaps go into a deficit, to moderate the negative effects of the downturn. More pointedly, if the government pumps money into the economy through government expenditures, it helps buoy the economy, and softens the blow. Typically this has been down through increased government programs, either through the various alphabet soup programs of FDR, or various subsidy/welfare expenditures of the Great Society and beyond. The problem with this approach is that it generates a ravenous consumer of resources that usually does not go away after the economy recovers. Rarely do we see government programs end (although I will give the New Deal credit–most of those programs are now gone!) These programs have spent money on government priorities, which are not usually the same prorities that the consumers would choose, resulting in a misallocation of resources. In addition, these new government demands would compete for resources in the then heating up economy and, given the tension of supply and demand, causes an increase in inflation spurred by the limited supply and competing demands.

So what did Bush do? Bush put the money directly back into the hands of the taxpayers, while not reducing government spending (and because of the war, having to increase spending moderately.) This has resulted in deficit spending, and significant deficit spending. This though is a fiscal policy espoused by the Democrats for nearly 70 years. The difference is, the money isn’t filtered through government programs! So why is this important, and in my mind, a stroke of genius? First, there are no new programs that will continue to compete for resources after the economy begins it’s recovery, which of course means that the pressures that result in inflation will be held at bay (notice, we are not too worried about inflation yet, and most concerns are minimal in the near to mid term.) Additionally, by putting the money directly into the hands of the people, the consumers use the money on those items that they most need, and are most likely to continue to purchase once the recovery takes hold. This essentially “primes the pump” ensuring that the economy is prepared for the coming boon, and is not malpositioned by meeting the needs of the government, rather than the needs of the people.

Okay, this is enough for now. The bottom line is this: the economy is recovering, and is entering a sustained recovery, because the money has been placed in the hands of the people who best know how to spend it–the Taxpayers. Give it up for George–he performed a stroke of genius, and made it seem so easy!

Class dismissed.