The Challenge Dividend

Gas Price Up, Obesity Down

I've written in the past about how higher gas prices may be the best imaginable way for us to truly conserve natural resources, drive energy innovation, and improve our environment.  While our presidential candidates argue about something so small as drilling off Florida, challenging gas prices are working their magic. 

Now, Ryan Jones points to a study that shows high gas prices might help solve our obesity crisis as well.  Ryan's personal experience as an American living in Europe is that bike riding and walking seems more prevalent due to even more expensive gas abroad.  And obesity rates are lower than the U.S.  Further, BusinessWeek reports that in 2007 Germany's economy expanded 2.6%, while it used 5.6% less energy.

A recent article in Wired highlights a study by Charles Courtemanche, an assistant economics professor at the University of North Carolina - Greensboro.  His study looks back at historic data to see a link between cheap gas and higher obesity.  He then predicts that a "$1 increase in the price of gasoline could cut the obesity rate by 10%, saving 16,000 lives and $17 billion in health care costs each year."  The logic is that people walk or take bikes more often, and cut back on eating out (where much of the fare is poor).

I think there could be other unusual benefits from the challenge of high gas prices.  Here's a quick brainstorm:

• Families form tighter bonds, since they at home together more often.
• People abandon suburban sprawl and move back into the cities, leading to an improvement in neighborhoods and schools.
• Fewer deaths and injuries due to car accidents
• Greater investment in city parks, sidewalks and bike paths
• Fewer wars and less power to Mideast dictators

BusinessWeek has a cover story this week suggesting that America set a price floor for oil.  It might seem crazy, but our country's choice to challenge ourselves via high oil prices may help us be more competitive and innovative in the long-term race to become energy efficient and environmentally sustainable.  Maybe rising gas prices will even help us avoid the fate of the world of Wall-E :)

Parents Officially Tougher on First-Borns

Sorry, little sis, but the research says we older siblings are indeed punished more than the younger ones.  Duke Magazine quotes a study by researchers at Johns Hopkins, the University of Maryland, and Duke (my alma mater, so can't be wrong), which found "parents punish older children more harshly - and that they're wise to do so."

The researchers formed a hypothesis that "parents need a reputation among their children for following through on threatened punishments."  And since they know that younger children are watching the older, they tend to follow through more for earlier-borns.  There's both an immediate child need to correct bad behavior, and a deterrent need for the rest of the family.  Since the deterrent need goes down as you reach later borns, there is less motivation to punish.

They tested the hypothesis by looking at records of two measures of bad behavior - high school dropouts and teen pregnancy - and two measures of parent punishment - allowing kids to live at home and financial support.  Sure enough, these measures followed birth order; earlier siblings were punished more and behaved better.

There have been countless studies on the effects of birth order on personality and behavior.  Some say hormone levels in the womb vary by birth order.  Others show that sibling rivalry leads later borns to take more risks.  I haven't seen all the facts on all of the studies but this example here adds something new and compelling to the age-old arguments.  If true, these measures would show that, on average, challenge leads to improvement for parents and children.  More punishment means better behavior.  And it doesn't take a study to realize that parents who don't challenge their kids to behave well end up with worse kids, on average.

Of course there may be an argument that too much punishment - or too much challenge - can lead to failure.  You could argue that later borns give society more rebels and risk takers - in other words, the candles that burn twice as bright but half as long, and drive the most change (and improvement in the world). 

But I'll let my younger sister find that study for me if she really wants to prove it.

Is This the Face of Liberal Propaganda?

Some of the greatest movies in history all seem to have a deeper meaning for society, and caused great cultural debate.  Patton was more than a biography, it was a treatment of the Vietnam War.  2001: A Space Odyssey predicted how computers would change our society.  And Gone with the Wind symbolized the struggle of The Great Depression and was confiscated by Nazis because it gave hope to people under their rule.  Today we can add Disney's Wall-E to the list of cultural lightning rods.

Don't take my word for it - according to Ben Crair in The New Republic, Wall-E has been labeled as "leftist propaganda" and a "90-minute lecture" about how corporations are ruining our society.  Shannen Coffin in The National Review called Wall-E an animated version of Al Gore's An Inconvenient Truth, and that Disney is making "mega-millions off telling us just how greedy, lazy, and destructive we all are."

In case you haven't seen the movie, (SPOILER ALERT) the synopsis is that in the future, humans have left Earth because it filled up with trash, Wall-E is a robot charged with cleaning it up.  He eventually finds that humans have been growing fat and lazy on a spaceship for 700 years. Ee helps them return to Earth and their humanity.  It's a cute film and my family and I loved it.

And I love Wall-E because it reflect where our society has been going, and it challenges us to consider the choices we make next.  In fact, this is what all great artwork does.  Art is a product of our society, that at its best makes us realize something about ourselves.  Through a slightly-skewed self-reflection, we may see what we don't like about ourselves, dangers that lie ahead, or that what we have habitually thought for years may be wrong.

Great art challenges us.  It makes us think, and forces us to react.  And it is not without some irony that we sit in big cushy chairs, with giant sodas in oversized cupholders, and Bluetooth headsets on our ears - and watch a movie about an eerily similar society that has lost its connection to what is real and human.

Inbox Victory: Challenge Accomplished

One of my guilty passions is a site called Buzz Feed, which scrounges the world for emerging trends.  It a cross between Brandweek and The National Enquirer, and I never get tired of seeing what microtrends is hitting next. 

A few weeks ago I remember seeing a trend called "Inbox Victory."  The trend was born from a site called Free Art & Technology, which challenged readers to empty their email inboxes and upload a photo of themselves celebrating.  It later got picked up by Boing Boing which means millions of readers and much glory.  Goofy, sure, but interesting nonetheless.  And for some reason this stuck in my head for a few weeks.  I now wanted to celebrate an Inbox Victory, and I started to whittle down my inbox.

Finally, last week I did it, and of course, my photo is above.  This is not a big idea, and barely serves as a microtrend, but it challenged me to act and by reading this maybe you'll do the same!

Great Insights from Google's Roy Gilbert

Last Friday I had a remarkably open schedule so I grabbed a couple of my Strategic Planners and attended a talk by Roy Gilbert, Director of Global Consumer Operations and Policy for Google.  Roy was in town to speak at the kick-off of an event called "In One Weekend" at the University of Cincinnati.  In One Weekend is a competition among teams to create a new start-up business in 48 hours.  I did not enter the competition this year (one 48-hour competition a Summer is enough), but did manage to gather some great insights from Gilbert's talk, which are fitting for The Challenge Dividend blog.

Roy Gilbert has a pretty interesting background.  He was in Navy ("the first military person Google every hired"), launched GMail, and built up a 1,000-person India operation for Google.  Here's some of the most interesting stories he shared:

• Google borrowed a concept from Intel for its quarterly business reviews.  Specific goals are set up in advance, and at the quarterly meetings, progress is measured.  The expectation is that teams hit 70% of their goals.  Anything more than 70%, and they probably didn't stretch enough in setting them.  Anything under 70%, and you need to get your butt in gear.  Lesson: Set stretching goals and measure your progress.
• Google's internal online personnel directory not only shows a photo and job for each person, but also shows their business goals, and their history of performance against those goals.  Lesson: Everyone's goals should be public.
• Failure is celebrated for its ability to uncover new lessons.  For example, when the company made Google Earth public, there were so many people downloading it that Google's search servers were slowed ("we broke the Internet").  This issue was cheered not for the sign of Google Earth's popularity, but because it taught the company a valuable lesson about server capacity.  Lesson: Celebrate failure, but learn and don't repeat it.
• Gilbert shared the personal story of when he and his wife were debating taking a job in India for Google.  They had a newborn baby and were a little wary about living in a developing country.  But Roy's wife brought up a great point: "If we don't go, we will always look back and wonder what it would have been like."  Lesson: Make sure you look to the downsides of a challenge not taken.
• Finally, Gilbert shared a story from a professor at the Wharton School of Business.  This professor had conducted research with the most successful leaders in business.  He found that about 70% of their "training" came from work assignments in which they were thrown into a role where they were "over their heads."  Lesson: Put yourself in positions where you're more challenged than you think you're ready for.

My thanks to Roy Gilbert and the folks at In One Weekend for a great session and lessons.

Fixing Car Repair Prices - With Information

Nothing makes me happier than seeing an example of how the Internet is challenging professions in which one party has more information than the other - and tends to use it to secure an unfair slice of the value equation.  This will definitely be a full chapter in the eventual book version of The Challenge Dividend.

The book Freakonomics presents several examples, especially that of real estate agents, who do not always have incentives aligned with the home buyer/seller.  Enter sites like Zillow, that are making the process more competitive and valuable.  In this blog, I have written about sites that are using the Internet to similarly challenge and improve car salesmen, lawyers, venture capitalists, and school photographers.  Sites have even come up where you can get competitive pricing on hospital procedures.

Enter: Car-Repair Challenge

Clearly the process of getting a car repaired qualifies as a market where customers lack information, and have to trust the repair guy to give a fair price.  While many repair services are reputable, the bottom line is that there is to much power to their side of the exchange.  And the temptation to add to the repair service's bottom line is too much.  We need our vehicles and don't have the option of repairing them ourselves, so when the service calls us at work with an estimate we get an uncomfortable gut feeling, but usually green-light it and hope we weren't screwed too badly.

But the Internet is coming to the rescue for this market, too.  Stephen Wildstrom at BusinessWeek recently reviewed two sites that aim to give visitors a decent price estimate for car repair work.  He examined DriverSide and RepairPal.  Both are new and have some work to do; RepairPal is more focused on, well, repairs.  It uses a mixture of proprietary data and information supplied by other visitors to provide a price range for service companies in your local market.

I tested out RepairPal for myself by using an example of a recent replacement of brake pads that I had to do for my '99 Honda Accord.  Within 15 seconds I provided enough information for the site to return an estimate that fit well with what I actually paid at my local dealership.  I liked that the site also provide bite-sized content about where repair services tend to fudge the facts, and it gave me talking points to help make sure I wouldn't get screwed.  I also liked the fact that the site asks for feedback, can email the report to you (or your spouse), and lists nearby repair shops with ratings.  (I'd love a mobile version that I could pull up at the repair place alongside my mechanic.)

It's very early for services like RepairPal, but this is clearly a no-brainer for the consumer.  I'm sure within 5 years these services will get better and better.  Consumers will feel more comfortable with their service decisions, and outrageous prices will have to come down.  It's even good news for the repair services - as the best-priced and most-honest will succeed, while the bad guys will lose customers or be forced to reform. Once again, challenge in the form of Internet-information drives improvement. 

Customer Service Gets More Challenging

In writing about business in this blog, I often show that within a particular category of products or services, tough competition leads to improvement.  For example, when Virgin Airlines upgrades its business class service, British Airlines has to do the same.  The business traveler benefits.  But is it possible for competition in one industry drive improvements in completely non-related industries as well?  It's a new thought, but one that seems possible.

A few weeks ago in BusinessWeek (no link avail), I found a data point that seemed interesting.  According to a poll conducted by Harris Interactive on behalf of RightNow Technologies in 2007, "Roughly 80% of the more than 2,000 adults [polled] vowed never to buy from the same company after a negative experience, up from 68% in 2006."

Think about this for a minute: People are becoming significantly less forgiving of bad service, in only one year.  Why could so many more people be willing to completely cut off a company?  It could be that customer service overall is worsening, and people are at the breaking point as companies have outsourced this service to India, touch-tones, and websites.  But I doubt this is the reason.  If anything, the economy is getting tougher, and companies are re-investing in customer service.

Instead, I believe that improved service in some industries is increasing customer expectations for all businesses.  Think about this one for a minute: Expectations for customer service are not set differently for each business category.  We don't have a "bucket" of expectations for airlines and a different one for grocery stores.  Rather, we expect that any company that earns our business deserves to treat us in a standard, quality manner.  We expect airlines, retailers, and software companies to similarly take our phone calls promptly, be available at all hours, and give us some kind of remuneration if we get treated poorly. 

So my hypothesis is that our general expectations have been increasing, and since it takes longer for individual companies to catch up, we customers are more frustrated - even if the actual service quality in a vacuum is unchanged.

Of course this hypothesis begs the question: Why are people's general expectations increasing?  I believe it is a combination of a few firms that are doing an outstanding job, and the rise of the web.  To the first point, take the example of Apple Stores.  If the Apple Store becomes the model for the best retail experience, retailers of all types need to pay attention.  A new bar is set - even if you're not selling laptops and iPhones. 

To the latter point, the web is allowing people to self-service their needs, and to easily rate and rant about their experiences.  For more on the impact of the web on customer service, check out my friend, Pete Blackshaw's new book: Satisfied Customers Tell 3 Friends; Angry Customers Tell 3,000.

Once people are online, their need for information about their purchases is insatiable.  Take Domino's Pizza Tracker tool, which people can use to see each step of their order in progress.  This tool is taking off because people like the experience of tracking their package deliveries at UPS and Fed-Ex.

The final piece of the puzzle is that there seem to be more purchasing options than ever.  In retail, instead of having to relying on a handful of stores in driving distance, we can check out hundreds of companies online selling the same products.  In fact, greater competitive options could itself be the force that is driving higher expectations.  When we know that we can easily move our business elsewhere, we become tougher consumers, and, going back to the original poll question, are more like to "never buy from the same company again."

I will admit that my specific hypothesis on increased customer service expectations is pretty raw, but I'm much more confident in the overall message: Competition - and the pressure to improve - often crosses individual product and service categories. 

Wisdom from Patton, the Patriot

Today I wanted to offer a belated post in honor of our nation's birth.  In going through my folder of Challenge Dividend topics, I found a list of quotes from General George Patton.  For all of his faults, Patton was an archetypal example of a person who rose to greatness because of an extreme challenge.

Patton's quotes below are here to honor such few great leaders - and the many, many courageous soldiers that followed them to earn and protect our liberty.  Enjoy...

"If a man does his best, what else is there?"

"Accept the challenges so that you can feel the exhilaration of victory"

"Success is how high you bounce when you hit bottom"

"Courage is fear holding on a minute longer"

"Pressure makes diamonds"

"Never tell people how to do things.  Tell them what to do and they will surprise you with their ingenuity"

"You're never beaten until you admit it"

"It is only by doing things that others have not that one can advance"

"It is foolish and wrong to mourn the men who have died.  Rather we should thank God that such men lived"

"You must do your damnedest and win"

Helicoptering Continues

Just before sitting down to write this post, I saw off my 7-year-old daughter as she went on a bike ride by herself.  It's a moment of some concern for all of us nowadays, as we seem more worried about our kids venturing out alone than ever before.  Yet I gained more satisfaction in letting her free than by watching her intently or greatly limiting her freedoms.  This brings me to an old favorite topic for this blog: Helicopter Parents.

As regular readers know, I have increasingly been using The Challenge Dividend concept to highlight the danger of American children who are insulated from the lessons of failure by their parents.  My most recent post on the issue hit on a new counter-meme to Helicopter Parents called "Free Range Kids."  That post has many other links and some great discussion.

Today, however, I wanted to throw two more examples of society shifting both ways in its view of how to best raise kids.  Both come from this weekend's issue of The Week magazine, which pulls from the best-of newspapers around the world.

First, news that a high school in Fairfax County, VA "has abolished the concept of class valedictorian, out of concern that ranking students makes some of them feel inferior."  Instead, everyone with a 4.0 GPA will sit in a special front-row seat at graduation and all will have dinner with the principal.  Do these educators believe that the idea of "best in class" should not exist anymore - that we have reached some Utopian  realm where all are equal?  Most likely is that parents complained that it is unfair for only one "perfect GPA" to be recognized.  Trophies for everyone, please.

On the other hand, there is power to the movement against helicoptering.  Debra Bruno of USA Today laments that, as college graduation closes "nearly three out of five college graduates are moving back home."  She suggests that, "'maybe we need to let these kids face a few years of dead-end jobs.  If we don't stop jumping in and saving them from their own mistakes, they'll never learn to stop making them."

I think these stories show some progress in advancing the dialog about parenting styles and results.