Netflix and the Myth of Transparency in the Modern Age

A few days ago, Netflix announced that it would not, after all, split the company in two. You know the story -- recognizing its future is in streaming media, Netflix set out to create separate companies for its DVD and Streaming businesses.

When the company met with a very bad reaction from customers (and a lot of other constituencies), it retracted the plan. Some press described Reed Hastings a "chastened", among other words.

There are probably a number of lessons here. But, I believe the lesson in this episode is that transparency in the new media age is a myth. Netflix was attempting to be the ultimate in transparent: acknowledging to the market that its future was not in DVDs and a new company needed to be formed. It wasn't hiding that fact or playing games. Just taking steps and moving ahead.

A lot of people say that in today's world of 24/7 communications, the market figures everything out and you might as well just admit what you are doing and not try to manage your communications. Netflix did just that and was roundly punished for it.

The reality is it's critical to be a bit cagey in today's world. Or alternatively, do what you want to do but don't acknowledge or admit it. We have seen Facebook, Amazon, Google and many other companies do that repeatedly in recent years. And despite exclamations to the contrary, some of these moves might be a just a little evil.

Netflix was actually trying to not be evil. And it was vilified.

No, Cisco Didn't Flip Out; A good, Fast Lesson for Start Ups

When I first read about Cisco's decision to shut down its Flip division, I was stunned. This technology/product seemed like a no brainer. Even though the capability is quickly being built into multi-purpose, networked devices, surely Flip cameras would be needed or could be repurposed.

I don't know if there is a case to be made for that argument, but Cisco has just taught start ups a really important lesson:

if you have piece of your business that doesn't focus on your core capabilities, don't let it sink slowly. Kill it quickly.

It's hard for any company to do that, but it's really hard for a big business to do it. Because they often have the resources to support the ship in hopes of finding a solution. But with start ups, where every penny matters, that option is not available. Make these decisions quickly.

Of course, this depends on understanding clearly what your core essence is. Because you don't want to kill businesses that are key to that essence. That's what makes the fast decision so hard.

But Cisco's lesson is really important; they know their essence and saw that the Flip wasn't part of it.

Be Provocative -- But Don't Mistake it with Bad Behavior

We are big advocates of being provocative as part of a well-conceived communications strategy. Sometimes, the best way to get people to wake up to a need for change is to challenge conventional wisdom. Ask questions, throw down the gauntlet to established forces, change things up.

That said, in the past few days, we have all been exposed to bad behavior that has gotten a lot of attention: A member of Congress calling the President a liar in the middle of an important speech to the joint members of both Houses; and (admittedly, at a much more mundane level) a singer rudely interrupting an acceptance speech at an award show to advocate for one of the other contestants.

Don't get me wrong. In both cases, the parties in question completely have the right to comment loudly to express their beliefs; That's what makes this a great country. What bothers me about these two episodes is that both of them resulted in front page news. And, in turn, that could encourage acts of rudeness and bad behavior rather than constructive discussion. I am not sure of a solution, but feel compelled to raise the question.

So, what are some ways to provoke debate as part of a communications strategy?

-Present your products in a way that clearly explains the shortcomings of current approaches and asks the market to question the status quo;
-Make speeches that ask the right questions about conventional wisdom;
-Do point-of-view editorials and press releases raising these interesting questions;
-Embark on educational programs that cause people to wonder if current approaches are the right ones;
-Use social media to lead the market to ask the questions; and
-Lots of other ideas.

Please, just don't count on bad behavior to accomplish your goals.

"When all else fails, try the Truth"

I saw a wonderful film the other day called "The Audition" . It was about contestants in the Metropolitan Opera National Council Auditions. At the end of the film, when asked for the most important advice for young opera singers, one veteran star said "Say what you mean and mean what you say".

I thought it was ironic that an opera singer would provide the same coaching advice as we do in the communications realm. Our version is a little more tongue-in-cheek: "When all else fails, try the truth."

Of course, what we really mean is "start with the truth". But that's not as provocative. Either way, its an important perspective. We are in the business of managing perceptions and have always believed that the market always figures out the truth. This is ever more the case today, when all communications are "transparent" and the data is available easily.

This, of course, does not mean that you just spit stuff out. As we have said many times, start with a clear idea of your goals and messages and provide information both within this context and clearly explained.

But, at the end of the day, the truth wins out. So, start there!

"Yes" is the New "No"

Each day I watch President Obama with continued fascination. There are certainly a lot of things to find fascinating in today's world. But, as a communications professional, it is clear that all of us have a lot to learn from our new President.

There are layers of nuances in the way the President communicates. But the single biggest lesson that we can all take away is one the nearly all of us know already and just don't practice. Rule number 1 of communicating is: be inclusive; if you can keep people listening, you have a much better chance of getting your message across.

Let's look at a few recent examples:

1. The big one recently was when Tom Daschle removed himself from consideration as Health and Human Services Secretary. Instead of being defensive, President Obama quickly said "yes, I screwed up." The issue nearly became a non-story and we could move back to the big issues at hand.
2. We are also seeing this technique in the President's dealings with Iran and the Arab world. He has expressed toughness but at the same time went first to an Arab TV station and has openly said we will talk.
3. And with the Labor Unions, which will undoubtedly need to make concessions to help keep the economy progressing, Obama said "We will work with you." Rather than "get with it and lower your expectations." They will become part of the solution through this, rather than part of the resistance.

Daily we see more examples of this very astute communications approach -- it is clearly innate to the President's view of the world. It underscores that, in addition to the other rather wholesale changes happening today, we are returning to a time of candor and what I hope is a "win-win" approach to communicating.

What does this mean to technology start ups? Here are a few takeaways:

1. Start ups are often trying to do what President Obama has been trying to do: change the way people think. Communicating early and often is most effective.
2. Be inclusive in your communications; rather than negative. Try to find a way to get everyone to be a part of the transition/solution.
3. In response to criticism and challenges, acknowledge them and move forward rather than fighting against them.
4. Always remember, "Yes is the new No."

What's good for GM. . .

Let me just be clear. As a former owner of an EV1 electric car that GM subsequently took back and destroyed, I am not a fan of GM. They have made their bed.

That said, GM (along with the other US auto companies) is currently doing some PR that we can all take a lesson from. In short, because they are trying to convince Congress that their futures are worth betting on, the auto companies are currently very proactively showcasing their advanced technology. For the first time, reporters are seeing a lot of auto advancements that are upcoming in ways they have never been allowed to before.

Obviously, these are emergency measures and who knows if these guys will be proactive technology leaders when their lives don't depend on it. But, here's the lesson:

Don't wait till you are fighting for your survival to showcase your breakthroughs and leadership. It should be an integral part of your ongoing positioning strategy and will have broad benefits in the near, medium and long term.

Those of us with a heritage of working with technology start up companies know that technology is often one of the great differentiators for a young company with very tight resources. This means that initially it captures attention of customers, partners, and influencers, over the mid- and long-term it helps you move forward with customers and partners who need to look to tomorrow, and in all cases, when used right, has the potential to lower the cost of capital.

Of course, technology won't get you all the way over the line. You have to show that the technology leads to advantages that customers want. But it's a really powerful tool.

And by the way, I would contend that in this current economic environment it is MORE important today than in the past few years when "the rising tide lifted (almost) all boats".

What Technology Companies can Learn about Communications from the Recent Campaigns

Along with many of you, I have been watching this week's historic Presidential election very closely. In addition to its transformational nature in the story of the United States, the communications strategies of the Obama and McCain campaigns have differed dramatically and can provide some good lessons for start-up technology companies.

In short, the Obama campaign was an excellent example of "high concept" communications; while the McCain campaign followed a much more exclusively tactical path.

If you have read this blog in the past, you know that key elements of high concept communications are developing a simple and clear leadership vision and message which is the guidepost of a long-term communications strategy. With the creation of the "Change" high concept, the Obama campaign built the foundation of its entire communications architecture. And more than that, the campaign was quite disciplined about staying with this architecture – through thick and thin.

But it's also interesting to note that, at the same time as the Obama campaign defined and stuck with a clear architecture, it didn't forego any tactical advantage. A tremendous amount has been and will be written about the campaign's organization, on-the-ground tactics, and ground-breaking use of the Internet. The great communications strategy was not a substitute for those basics of great execution.

Juxtapose this very clear and consistent strategy with the McCain approach. To an outside observer, it didn't look like the campaign ever defined a unifying, overriding high concept that would inform an entire architecture. The communications seemed to change throughout the campaign with new slogans and approaches. Mind you, the campaign faced a number of "near death experiences" and needed to be fleet-of-foot to survive them; but it appears the campaign allowed that survival instinct to exclusively drive communications rather than finding a way to marry survival with a long-term strategy.

As part of this short-term, survival view of communications, the McCain campaign used "gimmicks" several times. (We believe Governor Palin and "Joe the Plumber" are good examples of this.) They appear to have generally offered short term benefit that ultimately became a deficit and backfired.

So, what are the lessons to be learned from these Presidential campaigns that can be applied to technology start-ups. First, let me explain that our view is that many start-ups share the core characteristic of Presidential campaigns in that they have the potential to “change the world” in some way but also live in a fast changing world where vision and survival are often at odds.

With this perspective the there are multiple lessons:

1. High concept communications works.

2. High concept communications both requires and enables a long-term view of the communications strategy. This means you want to be thoughtful up front about creating that strategy.

3. High concept communications does not argue against near term, practical execution decisions.

4. Gimmicks and hype are very risky.

5. Sometimes high concept communications takes both the will to be consistent and the creativity to marry it with the need for survival.

6. High concept communications are as important to a company as great products, technology, marketing, and business strategy. No single one of these can replace any the others.

Undoubtedly there are both more lessons and room for debate about these ideas. Please share them.

Sequoia’s Right: Just Make Sure You Know All of what they Said about Communications

There is much being made these days about Sequoia Capital’s meeting with portfolio companies where they said “RIP: Good Times.” In short, they have told portfolio companies to tighten their belts, be realistic about their businesses, and hunker down for the long term. Turns out, Sequoia hasn’t been alone in these warnings. We are hearing that most investors are giving their portfolio companies similar messages.

But Sequoia also said some very interesting things about communications. According to GigaOm, Doug Leone made a number of key points:

• Go on the offensive and pound on your competitors’ shortcomings.
• Be aggressive with your messaging and be out there. In a downturn, aggressive PR and communications strategy is key.

This is certainly a version of the old adage: “He who wins in a down market wins.” Therefore, our advice is:

• Take the advice of your investors – most of whom are going to tell you to lengthen your runway as much as possible; and
• Seize the moment by capturing undefended ground during this downturn.

So how does a company use communications to do this?

• Be clear, articulate, and consistent about your differentiation;
• Be clear, articulate, and consistent about your benefits – near term and long term;
• Speak often to your key markets and influencers;
• Be specific and real. Help your customers and their influencers understand how you are better and the benefits you bring;
• Use the transparency of communications today to make sure this communications gets to all of your audiences.
• Don’t stop talking!

We know that you may be wondering how you can both extend your runway and increase your communications.

We intend to create a series of blog posts to address the issues enumerated above. But, if you want to discuss these, call us.

A Tale of Two Responses: Apple and Southwest Airlines

This has been a fascinating week for those of us who communicate for a living. Two companies, Apple and Southwest Airlines, both of whom are famous for nurturing their customer loyalty, were called upon to issue public responses to actions they each took. Apple handled it very well; Southwest failed.

This is ironic (though I imagine not particularly unique) because, of the two companies, Apple has had a long history of being less flexible and closed in its strategy; alternatively, Southwest makes a business of being flexible in the way they deal with customers.

Here’s a version of the situations as I understand them:

• Apple announced a price reduction of the iPhone to $200; loyal Apple customers who had bought the iPhone at the original much-higher price balked at such a deep price cut so soon after the product’s launch; Steve Jobs initially brushed this customer response off; and later -- within the same day -- Apple issued a fairly comprehensive apology to its loyal customers and offered them a rebate. (Here’s one news story.)
• Southwest Airlines pulled aside a woman who, it claimed, was too provocatively dressed to travel. The woman took her embarrassment public, including showing the outfit, which few people found offensive (though many note that the top is tight and the skirt short – like lots of other travelers these days).(Here’s one news story.). Southwest Airlines' repeated response to press inquiries has been one version or another of “we were right.” Here’s Southwest’s own Blog response.

It seems that though both companies are superb at building and maintaining customer loyalty, Apple has shown superb communications skills (as they have often for a long time) and Southwest failed to use some pretty basic communications skills effectively.

One of the first tenets of “crisis” communications is acknowledge the problem/mistake quickly and take action to repair things. But, while Apple did just that and turned a potentially customer-loyalty-damaging situation into a win (both perceptually and financially), Southwest took a situation that could have been minor and turned a molehill into a mountain.

Yes, I know that you might argue that Southwest is taking a “family friendly” position and broadcasting it; and hence, seizing a big opportunity. Maybe that’s the correct way to view their actions, though I am a frequent Southwest traveler and I don’t get the impression that their customer loyalty approach is as much about family values as it is about flexibility.

It will be quite interesting to see how these two sets of actions play out over time.