The Challenge Dividend

Enterprise Will Pick You Up - And Let You Down?

Do you ever have one of those days or weeks when freaky coincidences align?  For example, an old friend makes an appearance in a dream and then calls you the next morning; or you learn a new word and see it repeatedly over the next several days.  I had a similar experience this week; but instead of a new word or old friend it has been with a comany: Enterprise Rent-a-Car.  My relationship with Enterprise this week culminated in an experience today that left me angry, and I want to challenge my readers and the company to support or refute my frustration.

Like all good coincidences, my tango with Enterprise this week came in threes.  First, on Monday my wife got into a little fender bender (rear ended at a light, everybody's fine), and our insurance steered us to Enterprise for a temporary replacement minivan. 

Second, I attended a training session in which the speaker held up Enterprise as a model of successful market positioning.  While every other car rental company focused on the traveler and staked out territory next to each other at airports, Enterprise became the rental car of your neighborhood, with a "we'll pick you up" service.

Third, yesterday, I left on a business trip to Detroit and my company booked me for an Enterprise rental car.  Of course, I did see the irony that right after a training on how Enterprise positioned itself as NOT the airport guys, I ended up getting a car from them at the airport - but that's beside the point. 

Anyway...From the moment I stepped off the bus and into the Enterprise office I was blown away by the positive service experience.  Someone walked up and welcomed me at the door, pointing me to "Sally" (not her real name) who was ready to take me through the process.  Sally introduced herself and shook my hand.  While Sally smilingly processed my credit card another staffer brought over a bottle of water and offered to give me directions.  Seconds later Sally came out from behind the counter and walked me to my car.  She then dutifully walked me around the car to make sure any damage was noted.  I was on cloud nine consumer-wise.  Friendly people, fast service, a full walk-through inspection.  Wow. 

Then something happened.  Right as she was about to hand me the paper work to sign, Sally asked me about insurance coverage.  On instinct, I said, "Oh, yea, my company always tells me to decline this."  But that wasn't good enough for Sally, and the conversation went something like this:

Sally: "Are you sure?  Usually companies don't cover this.  I would call your company to make sure."

Me: "I don't know, I think my credit card also covers me."

Sally: "Which credit card?  You had better be sure.  Michigan is a 'no fault state'...."

Me: "Well, I have my own personal insurance."

Sally: "What's your insurance company?"

Me: "Ummm (refiling through my wallet for a card)...it's (beep)"

Sally: "Well, you should probably have your insurance company fax you a copy of your card because Michigan police will want to see it.  Hmmm, what's your deductible?"

Me: "I don't know"

Sally: "Well, usually the deductible is $500 (writes it on my form), and if you get in an accident you could miss your flight having to work it out in our office.  But our insurance is only $19.99 for the day..."

Me: "I'll be OK...Wow, this is the most thorough car rental process I've ever been through!"

I said goodbye to Sally and sat there for a few minutes thinking about what just happened.  I went from LOVING my Enterprise experience to getting a lecture about insurance coverage in Michigan.  Suddenly I was worrying about getting into a car wreck, missing my flight, paying $500 and ending up in a Detroit jail.  I haven't worried about stuff like this since maybe my first business trip when I was 22 years old.  I don't think I ever drove more nervously over the 15 miles to my hotel. 

And then I got angry.

I got angry because I figured it out.  This was not great service.  This was a set up to get me to depart with $19.99 in added and unnecessary insurance coverage.  Here's what I think the game plan was for Sally and her cohorts:

• Build a personal relationship and trust - shaking my hand, asking about my trip, personally walking me to my car, showing concern.
• Give a gift - the water, human psychology shows that people feel compelled to return gifts.
• Instill fears - miss your flight, lots of money, and an unpleasant encounter with the Michigan police (not as scary as, say, Mississippi police, but...).
• Suggest a simple solution - "only $19.99 to eliminate all these fears, Mr. Gilbreath"

I can see why and how Enterprise used manipulative tactics on me.  The "Why" is that the $19.99 in insurance coverage is pure profit.  The odds of me crashing in 24 hours and 30 miles are very low, and their own insurance covers that anyway.  The "How" is with a carefully crafted sales strategy, and probably a nice incentive for Sally - probably something like a $10 bonus for her and the "crew"  for each insurance sale.

I am angry at Enterprise.  I have been manipulated and used.  I feel a little bit proud of myself for seeing through the scheme and saving the company 20 bucks, but I'm still more mad than anything.  The purpose of this post is to Challenge the company to cancel this kind of aggressive sales strategy.  Maybe the voice of one blogger will reach others who consider renting from Enterprise, and might also reach the corporate office itself.

On the other hand, maybe I'm wrong.  Maybe I've spent too much time in the marketing trenches and have become too much of a cynic.  But I welcome your challenges!  Is Michigan tougher on car renters?  Was Sally just being really, really concerned?  Has anyone else experienced this with Enterprise?  Please let your voice be heard!

UPDATE: I returned my car today and luckily managed to avoid getting into an accident.  One positive note, the gentleman at Enterprise who processed my return was very friendly and even asked me if I was satisfied with my rental experience.  I said, "Well, I was not happy with the aggressive sales pitch when I rented the car."  He quickly went to the play book of handling a dissatisfied customer; he apologized, said he would give the feedback to the staff, and asked if there was anything he could do to make it better.  Again, it's psychology, but I DO feel better now because he said these words. 

The Power of Variable Energy Pricing

One of the insights of The Challenge Dividend is that actions and decisions at all times should be "challenged" by their true cost and effects.  Businesses need competitors to challenge their strategies, politicians need voters to challenge their records, and charities need donors to challenge their return on investment.  But sometimes we as individuals need to be challenged more in our everyday lives in order to drive improvement for the world.  After all, just running your washing machine at night could change the world.

As the United States is facing financial and political costs to its growing hunger for energy, some organizations and inventors are driving toward what could be a revolutionary change in our homes: Charging by the minute for electricity.  The plan is for power companies to install upgraded meters in our homes which would follow the minute-by-minute change in kilowatt pricing that energy companies themselves are impacted by.  The hope is that once consumers see and start benefiting or suffering from the actual, wildly varying prices throughout the day, we will make better decisions about our power use.  The hope is that we turn down air conditioners when we are at work, and run dishwashers and clothes dryers at night when energy is virtually free.

The facts of power price swings are pretty amazing.  A study in 2000 showed that wholesale prices in Maryland, Pennsylvania and New Jersey could move from $10/kW to $800/kW in a very short time due to peak use requirements.  When a peak hits, temporary and expensive power generation must be put online.  And heavy peak use can also lead to black-outs and brown-outs, which in turn jeopardize critical needs and services everywhere they hit.  Meanwhile, at night, the minimum power needed to run through the system is basically wasted, thus potentially "free" to those who take advantage.

Initial tests of such variable pricing systems have been impressive.  Georgia Power introduced hourly pricing for some industrial customers in 1992.  These energy hogs cut peak demand use by 17%, which led to better prices for everyone plugged into the grid.  Amoco Fabrics and Fibers alone shaved 10% of its energy costs ($800,000).  A test with households in Puget Sound, Washington showed that within only two months customers had moved 5% of their peak energy use to off-peak hours.  Another group of 200 people in Washington and Oregon have installed chips in their home appliances that connect the machines to the Internet.  Consumers can program them to turn on only when power hits a certain price threshold.

The challenge of variable pricing can lead to reduced energy costs for homeowners, but there is a second improvement for the world overall.  McKinsey estimates that variable pricing can:

"Cut [peak energy demand] by at least 30,000 megawatts nationally - enough to avoid (or at least delay) the construction of as many as 250 peak-generating plants, to prevent the burning of 680 billion cubic feet of gas a year, and to eliminate 31,000 tons of nitrogen oxides."

I am excited about the prospect of varying energy pricing both as a homeowner and a global citizen.  Variable pricing also fits with the American culture.  We are apt to change when we have information, and we believe that one should make his own decisions, versus a government that tells you when to turn off the dishwasher.  The only barrier to these benefits is the huge fixed cost of installing next-generation meters in millions of homes.  Maybe the billions funnelled to fight a war in Iraq could have gone to this alternative strategy for energy independence, but that's another story.

Note: Thanks to the McKinsey Quarterly for much of the data here.

UPDATE: The New York Times (1/8/07) has a nice piece on another variable energy pricing experiement in Chicago.  Of many great data points, the best may be that "Consumers would save nearly $23 billion a year if they shifted just 7 percent of their usage during peak periods to less costly times, research at Carnegie Mellon University indicates."

5 Reasons I'm OK with Iranian Nukes

For several months and years, the West's preoccupation with nuclear ambitions in developing nations, especially the Middle East, has been front page news.  Tensions with North Korea are ongoing, the attack on Iraq was in part driven by fears of a nuclear program, Iran is rattling its potential nuclear sword, and now Egypt is talking about a "peaceful" nuclear energy project.  Many now worry: "Are we heading into World War III?"

No.  We are very, very far away from the threat of nuclear attack and not even close to the amount of tension during the Cold War.  In fact, I believe there are Five Reasons that We Should Stop Worrying About Iranian (and other) Nuclear Programs:

1. Been There, Not Done That. I am only 34 years old, but I remember the Cold War clearly.  When we grew up, the fear was of thousands of missiles raining down on every city and suburb in America.  The world would literally end for all life.  Meanwhile, the risks then seemed as high or higher than now.  In the USSR, we faced: (1) a large, organized power that really was invading other countries (e.g. Afghanistan); (2) a radical belief system that felt our way of life was destined for overthrow (communism); and (3) a government that supplied resources and placed nuclear missiles throughout unstable third-world regimes (e.g. Cuba).  But we survived with zero launches because the threat of mutual destruction ("deterrence") works.

2. We Should Leave Them Alone Anyway.  Countries do not sign up for the extreme financial and political costs of a nuclear program because they want to attack others or support their egos.  Nuclear weapons are fundamentally a defensive weapon, and when your neighbor has one your ability to defend decreases sharply.  China developed a bomb because Russia had one, India because of China, and Pakistan because of India.  The U.S. invasion of Iraq (no nukes) versus negotiation with North Korea (has nukes) is a clear sign to nations like Iran.  At the end of the day, we should leave nations like Iraq, Iran and North Korea alone.  Seeding democracy is a doubtful cause for attack, and if Iran or North Korea is not actively fighting others then we should leave them to their lunacy.

3. It Will Take a Long Time.  It is not easy to develop a nuclear bomb and can take decades to do so even if the oil money is flowing freely and helpful scientists are imported from Russia.  Over time, the interest in nukes may wane, oil prices might fall, or other forms of payoffs from rich nations can delay final development indefinitely. 

4. Deterrence Works, Even on Nut Jobs.  No one with money and power wants to die - period.  The kids blowing themselves up at security checks in Iraq or Israel are the poor and powerless who are looking for a cause to join and ticket to fame.  Kim Jong-il is having too much fun enjoying the fruits of leadership to risk life and limb by launching a foolish attack.  Any leader with nuclear weapons knows that his use of the bomb would unleash a hurricane of much more effective missiles from the United States.  Again, they are looking for defense of their power and possessions rather than truly sponsoring a holy war.

5. We Are Ignoring Bigger Threats.  At the end of the day, the focus on highly exotic nuclear weapons takes our focus away from threats that are closer to reality.  The attacks on 9/11 employed the technology of box cutters.  Liquid-based explosives have been around since the 49ers were mining gold instead of playing football.  Terrorists succeed by, well, building up fear or terror that any one of us really might die.  They would rather us fear an "attack in our supermarket" than a massive, single bomb smuggled into a city.  We would be better off protecting ourselves through good, old fashioned spying on suspected organizations and individuals, rather than planning stealth attacks against Iranian reactors.

Conclusion: I am not in favor of actively allowing radical nations to develop nuclear arms, and I think the world should be highly engaged in dissuading new programs and much as possible, including moderate threats and  payoffs.  However any attack on a country because they may be starting a program will only cost us enormous lives and expense - and further stir the hatred and fear of U.S. attack that causes governments to pursue nukes in the first place.

Challenge the "Expertists"

Whenever you see a person or organization go unchallenged, run.  No I don't literally mean run for the hills, but we should automatically question the beliefs, choices or course of anything or anyone that runs unchecked.  A great example is the legion of experts who travel the globe telling us what is right or wrong. 

I call them the "Expertists" - futurists and economists, for example - and I believe we should point-blank-question the words of anyone who thinks he knows the ultimate truth or can predict the future.  In spite of their impressive credentials and our human nature to search for answers, as a society we must challenge "experts" proclamations and credibility.

We must question them because the opinions of "experts" can drive frightening implications for all of society.  One example comes via Technology Review, which recently interviewed Arthur Caplan (pictured above) a "Bioethicist" that has "written or coauthored more than 400 peer-reviewed articles and several books on the ethics of new medical technologies.  In the interview, Caplan brags that he "single handedly held up the movement toward creating markets in organs" while working on a committee for the National Organ Transplant Act. 

With this one stroke, Caplan may caused several thousand deaths, as a "market for organs" is a measure that might have helped solve a serious shortage of organ donations in our country.  But we didn't get a vote on this or even see it covered in the media.  Meanwhile, Caplan holds no medical degree and he admits he is not a scientist, saying, "I did go to medical school for a while, at Columbia. I liked it, but I don't have the patience for the level of detail that makes good science."  Shouldn't "good science" be leading any examination of medical public policy?  Simply shameful.

Some brave souls have worked to challenge the predictors and self-proclaimed "experts" who spend time writing biased books and traveling the talk show circuit.  Julian Simon, for example, famously challenged doomsayer Paul Ehrlich to a wager on the future price of commodities.  Ehrlich claimed that a population bomb would starve hundreds of millions, and that "England would cease to exist by the year 2000."  Simon's bet left Ehrlich's academic pants down and his wallet $576 lighter.

The Internet as a whole is serving as an excellent "B.S. Detector" - as research is at the fingertips of millions and bold statements are recorded forever on Google's hard drives.

At the end of the day, it is human nature to both make bold predictions and want to believe them.  But we must go beyond manipulation by Expertists and go back to the words of Socrates: "He who is wise admits he knows nothing." 

(Thanks to Dynamist Blog for the find)

Let Fashion Victims Suffer

There seems to be no limit to attempts to secure government protection through patents and copyrights.  Notable examples include the family of Margaret Mitchell, who sued to stop publication of The Wind Done Gone, a reinterpretation of the original novel written 50 years after her death.  Recently we suffered from inane patents on Internet ideas like Amazon's "Click-To-Buy" feature.  Now the makers of $4,000 gowns say that they, too, need federal fashion police to protect them.

The Wall Street Journal recently reported that a special interest group representing high-end luxury retailers is pushing Congress to pass a law that would offer three years of copyright protection for designs ranging from belts to dresses to shoes to eyeglass frames.  They complain that days after their thousand-dollar designs march down the cat-walk, low-cost producers are sending similar knock-offs to the malls of the world.  We're not talking about piracy and fake brand logos, but merely $300 designs that look like the $6,000 models.

I believe this is simply another attempt to quash competition that will hurt innovation.

When the Founding Fathers first established our country, they spent some time debating laws around copyrights and patents.  The industrial revolution was just taking hold at the time, and the nation needed some protection for inventors and brand builders so that the nascent economy could take shape.  Some protection ensured that there was enough incentive to invest time and money in innovation.

At the same time, our founders realized that copyright and patent meant government was granting a kind of monopoly.  Further, they understood society as a whole can benefit from open competition, and many new creations depend on the freedom to build on past work.  The Constitution originally provided Congress the right to "promote the progress of science" by granting "exclusive right" to authors for "limited times."  In 1790, Congress set the first copyright protection term at 14 years.  But it has since been increased eleven times in the past 45 years alone, and today the limit is the life of the author plus 70 years.  This is hardly "limited times".

Research in the fashion business suggests that the Founding Fathers were right.  A study by law professors Kal Raustiala at UCLA and Christopher Sprigman at UVA shows that quick copying of designs is pressure that directly leads to innovation.  According to the WSJ:

"Copying makes trends saturate the market quickly, driving the fashion cognoscenti to search out newer looks.  'If copying were illegal, the fashion cycle would occur very slowly, if at all.'  While they concede copying can harm individual designers, they say Congress should protect industries only when piracy stymies - rather than encourages - innovation."

Maybe a faster fashion cycle is not the most important improvement driven by challenge, but it does show a pattern that can hold any time ideas are artificially protected.  And if the fashionistas can get copyrights, maybe my advertising agency should deserves protection for every strategic recommendation or clever marketing insight.  I'm sure Tide would have loved to keep a copyright on "Powder Detergent."  These are also unfair to copy...right?

Wrong.  Government should encourage challenge and innovation by staying out of the monopoly business, with rare exceptions.  Ideas and inventions are great, but short term profits are incentives enough for their creation.  And it is more unfair for companies or famous descendants to benefit from relics of the past.  We need the pressure for people and companies to focus on make something new versus begging the government to protect past success.

 

(Thanks to Against Monopoly for the find.)

Reduce Malpractice By Smiling

The theme of The Challenge Dividend is that "challenge leads to improvement".  While usually this focuses on the challenging contest itself and celebrating the winners or mocking the losers, I always try to come back to the real winners: everyday consumers and the world itself.  I truly believe that the more challenges our businesses and organizations encounter, the better life will be for all of society.  A "better life" can mean things like lower prices and better laundry detergent, but I also believe it can touch the spirit and decorum of society itself.  One recent example is an article I read several months ago about malpractice rates. 

As everyone knows malpractice is a huge issue for patients, doctors and hospitals.  "Malpractice" of course, means issues related to a doctor's error, and these errors (whether real or perceived) are costing our country a great deal of money and suffering.  Patients feel the pain, as do all doctors, who in some cases have seen their insurance premiums rise 50% due to others' mistakes.  Insurers are just passing on their pain; the St. Paul Companies wrote off nearly $1 billion in losses due to malpractice claims against its policy holders.  This caused St. Paul to exit the market altogether.  Politicians are rousing votes by fighting insurance company premium hikes and aiming to limit the awards of juries.

But while gloom and doom prevail, a little-cited study from 2003 found one critical driver of reduced malpractice suits: nicer doctors.  Researchers from Vanderbilt performed a six-year study in which they looked at complaints against 645 physicians.  They found that less than 10% of the physicians generated over half of patient complaints, while there were zero complaints against 37% of physicians.  Only 8% generated over half of actual malpractice suits.  These doctors tended to be busy, male surgeons who spent less time with patients and were less sensitive.  A follow-up study with 900 maternity patients found that doctors with high complaint and malpractice claim rates were characterized as rude, uncaring and inattentive, and they even failed to return phone calls. 

If you don't believe the data, take if from a malpractice attorney that has sued hundreds of doctors.  Boston attorney Alice Burkin has been representing patients for 20 years.  According to Burkin:

"The most important factor in many cases—besides the injury itself—is the quality of the patient's relationship with the doctor. People just don't sue doctors they really like. We've had people come in saying they want to sue some specialist, and we'll say, 'We don't think that doctor was negligent. We think it's your primary care doctor who's at fault.' And the client will say, 'I don't care what she did. I love her, and I'm not suing her.'"

While the data may not be lock-solid proof, this is one of those insights that clearly leads to an "a-ha!"  Everyone has experienced the pain and concern around seeing a doctor for our own condition or for that of a close family member.  The bottom line is that this is a deeply personal and stressful time.  We are humans at our most base level.  And when a friendly doctor come in, we become like children and give ourselves over to her advice.  But a busy or arrogant doctor sends a nasty impression he makes us feel unimportant when our psyches are exposed.  This leads to the deep human emotion of anger.  At the end of the day, if something goes wrong, most people will either accept it or fight it just based on how good (and nice) the physician was at the time.

Overall, the challenge of patient activism and malpractice lawsuits is forcing physicians to improve their service.  One key result is nicer and more comforting physicians; these are people who can treat the body as well as the mind.  Those who fail to heal both are more likely to be sued or won't find future employment or insurance coverage.  Even better, becoming a better phyisican in this case does not entail more schooling or million-dollar MRI machines; it just means holding someone's hand, smiling, and returning phone calls.

Society might ultimately benefit from lower costs through fewer lawsuits, but the big improvement end result may be a society that is kinder and gentler.

Final note: The idea that society is becoming "nicer" as a result of hard-nosed capitalism and medical lawsuits is furthered by experience in the business world.  Here, research continues to show that "people quit their bosses" rather than their companies. In our modern economy, the job market is tight and decision-making power is being driven down to lower ranks versus remaining command and control. So the cost of lost valuable employees is increasing.  Companies increasingly are working to weed out jerks and train their managers to be better coaches, listeners, and, well, people!

New School Choice

It's the second full week in September and nearly every child in the country is back in school.  I have been shuttling these two school kids myself for the past few weeks, as we have recently opted to pay for our children to attend a private Montessori school in downtown Cincinnati.  Overall, the act of "choosing" a school is getting increasing press across the country and it has been an impressive experience for my wife and I as well.

The idea of "school choice" is really not as far-fetched as it may seem.  Today, a majority of parents do, in fact, engage in school choice every time they move into a new home.  As any homeowner will tell you, the school district you live in is a very important part of the decision-making process.  Even if you are childless (and want to stay that way), living in a good school district can add thousands to your re-sell value.  In fact, a key driver of the rise of suburbs across the country may be less due to a desire for McMansions, and more of a drive to make sure the children have access to a winning school system.  This, in turn, helps them get into a great college and be more successful in life.  Parents have been driven away from inner cities by horrible schools and the city bureaucracies that oversee them.

Our experience has been somewhat unusual.  We live in the suburbs where the schools are strong and the buses run right by our house; but we are paying money and driving our children back downtown for their education.  For us, the appeal is a Montessori education and a desire to add some diversity to their experiences.  In fact, we recently moved our kids from a different private Montessori school they were in last year to the current one that better met our needs.

"Choice" and "met our needs" sounds a lot like capitalism, and it is.  The experience of selecting a school that best fits our children's needs and our budget is a pretty neat process.  We looked at schools around the city and my wife interviewed several teachers and principals before we signed on at their current school.  Our satisfaction with this investment has been high so far as we have spent time in parent orientation night, met several staff members, and heard great reviews from our kids. 

Perhaps the most amazing thing I heard came from the Director of the school, who started off each parent orientation night with: "I always say that 'you've made a great choice.'"  Later we learned about innovations that the 36-year-old school had made to further improve the experience and keep us customers happy.  First, they added electives this year in classes ranging from Spanish to Drama.  Second, they now give out personalized home work assignments based on individual skill development needs.  And this is for our first grader!

On the other hand, I feel bad for other parents and children who have less of a choice.  Our income and schedules afford us the privilege of school shopping.  But everyday as I drive downtown to drop my kids off, we pass dozens of inner-city youths waiting for their bus to a much less challenging education and a less-appealing environment.  Cities in Ohio and Florida have tried to introduce the free market dynamics to their troubled school systems.  These vouchers would allow kids to go to any school in the district, and reformers believe it would encourage and reward excellent schools while weeding out the failing teachers and administrators.  Research also suggests that vouchers improve  racial diversity - another issue in todays schools that has seen little improvement.  Unfortunately, the courts and teachers unions have fought vouchers at every turn.

It's a little hard to get used to bringing my kids to school on the way to work.  My morning productivity is down and I have constant music critics in the backseat.  But it is a fun bonding experience and a chance to see my educational investment at work every day.  The thought I keep coming back to is, "I wish I could have gone to a school like this."  This gives me confidence that our choice was right.

Side Note: Check out ABC's site for a recent report by John Stossel, "Stupid in America".  Here he tears down American's school system and makes comparisons to that of Belgium which has used school choice to great success.

UPDATE: The Cato-At-Liberty blog today (1/4/07) points to an article in the Washington Post about the popularity of Montessori schools and wonders why school administrators and reformers continue to push a one-size-fits-all model for education.  One new favorite quote for me is that of founder Maria Montessori:

"One test of the correctness of educational procedure is the happiness of the child."

Google Kowtows to Coke

Back in July I ran a series of posts that highlighted winning organizations that seemed to be growing arrogant.  Without strong rivals to challenge their leadership, they tend to make bad moves and fail to improve their products and services.

One example was Google, which continues to dominate the search market, and has shown signs of following the pattern by giving in to Chinese censorship and failing to do enough to counter click-fraud.  However, in at least one case, Google has sacrificed itself to make another great brand feel at home: Coke executives are on the way, and they have taken Pepsi products out of their soda machines.

According to "Valley Wag", an infamous source of gossip in the high-tech marketing world, Google sent out a company memo informing the workforce that Pepsi products would be removed from the cafeteria and vending machines as a sign of respect for a visit by Coke execs.  While many Google and non-Google employees alike have made light of the move, I am very impressed that a young, hot upstart like Google is taking the time to make Coke visitors feel at home. 

While it is much younger than Coca-Cola, in many ways one could argue that Google is the more dominant company.  Its market cap exceeds that of The Coca-Cola Company by nearly $15 billion, and in the annual Brandweek "Superbrands" survey, Google's equity scores beat even Coca-Cola Classic.

I was further surprised at the move given that Google is known for coddling its employees with free gourmet food, among other benefits.  I believe it sends a message to these employees that at the end of the day they are in the client service business; and it is advertising from companies like Coca-Cola that will power its growth in the years to come. 

Google knows that it needs to continually adapt to the challenges of the changing interactive marketing space and fight for the advertising dollar among titans like Yahoo!, MSN, and CBS.  Sometimes it's the little things, like pushing Pepsi aside, that can make the difference when billions are at stake.

Note: You can find previous posts for the "The Spoils of Success" series here:
- Google
- Chinese Economy
- The Gates Foundation
- Republicans
- Starbucks
- Apple

9/11 + 5: What Hath Challenge Wrought?

Nine years ago today I was walking through Greenwich Village to class at NYU, passing the looming Twin Towers on my right and reflecting on their architectural majesty - a testament to mankind's progress.  Five years ago, from the safety of my office in Cincinnati, I joined the rest of the world in watching CNN report the fall of the towers in one of the worst examples of mankind's dark nature.  That evening I opened up my notes file for The Challenge Dividend and began to write about how even this horrible challenge might improve the world we live in.  Five years later, the results are decidedly mixed.

When writing in my journal in the evening of 9/11/01, I correctly predicted that this event would galvanize the American people to fight the threat of terrorism.  Like the invasion of Pearl Harbor in WWII, an isolated democracy like the United States needed a wounding wake up call to finally unite its people into action.  The invasion of Afghanistan and victory over the Taliban was an expected first, successful step.

But the last five years has been far from success in the face of challenge.  Good and bad results and lessons have been born from this challenge.  For example:

Improvements:

• Awareness of the threat of terrorism in the U.S. - We were "lucky" that less than 3,000 people died in the 9/11 attack.  The awareness of our vulnerability might save us from bigger losses in the future.
• Success in Afghanistan - A terrorist regime has been ousted and the people of this country seem to be moving forward, albeit with lingering pull from the forces of the Dark Ages.
• Global alliance against terror - Like the alliance that helped turn the tide in WWII, we have a link between most of the nations of the world, including nations like Saudi Arabia and Pakistan that have been less tough on terrorists in the past.
• A proven deterrent to rogue states - While the wars in Afghanistan and Iraq have been far from slam-dunks, at least they show that the United States will go after terrorist states and put their vast resources against them when threatened - whether or not the UN or other nations support us.

Negatives:

• Iraq - The costs in people and resources have been immense and we continually see evidence that this was a horrendous failure in judgment by our President.  We have created legions of terrorists here and dampened hope for the region overall.  And our country has lost the moral high-ground by engaging in torture.
• Anti-Americanism - Much of the world now looks down on the U.S. and to a certain extent each one of its citizens.  We have become the bully power that many feared and terrorists themselves warned of. 
• Security Fears - We are more wary of attack, but this is eroding the freedoms worth protecting in the first place.  President Bush has green-lighted 1984ish measures to spy on questionable terror suspects.
• Iran and Others Seeking Nuclear Deterrence - Countries who have supported terrorism can either give in, like Libya, or forge ahead by buying protection through nuclear weapons.  It has worked for North Korea, which has guaranteed its safety through fears of a nuclear attack.

Five years after 9/11, I believe much of the fruits of challenge are resting on whether or not the Middle East can transition from its recent history of anger and stagnation to one of peace and improvement, more reminiscent of its glory hundreds of years ago.  The key to unlocking the potential of this region and tearing down the evil of terrorism is a move toward democracy and capitalism.  History has shown that people who seek fame and power through destruction will only take down their entire society; while those who build productive businesses and fair governments will raise their people to success.

I have grown much more doubtful that we will see such a transition in our lifetimes.  Frankly, the ability to suck money and power from the ground through oil - without hard earned business building - saps stable development while inspiring angry citizens and terrorist funding.  The future of the Middle East may only improve once the oil runs dry or alternative, cheaper power blossoms.

Not up for the Challenge

Saturday in Cincinnati and almost every child in the 'burbs has a soccer game.

My little soccer star, Grace, however, is having a hard time getting "up" for the game. It may have been dance class this morning that pooped her out...So I'm sitting in the minivan listening to football.

Go Lady Bulls!