The Challenge Dividend

Illegal Challenge to Textbook Market

You may have heard over the past few years that the price of textbooks for college continues to increase rapidly at the same time that digital printing and new classroom techniques should be bringing prices down.  Despite protests, the handful of textbook publishers seems to have been able to retain its pricing power. They have cleverly forced through updates that kill the used book market, and are forcing add-ins like digital workbooks and problem-solving sets that go unused.  But while the market atrophies and government sits on the sidelines, today's student is taking matters into her own hands - by embracing Internet piracy.

It's pretty clear that the textbook market is an inefficient one.  First, there are few competitors in the market - each classroom must use a single edition, and the marketplace has consolidated.  Second, schools and professors directly benefit from the high prices.  At best, they don't feel students' pain, so fail to drive lower prices.  Even worse, they make more money when prices go up and the used book market is quashed.  Students have no choice other than quitting school or refusing to take a necessary class.  Some push the pain off to parents or long-term loans - which further minimizes the true market impact.

Protests against rising textbook prices are gaining at schools across the country.  An organization called Make Textbooks Affordable unites several state school student organizations to lobby congress and push the debate.  But Alex Beam in the Boston Globe praises students that are doing to textbooks what kids did to the music industry with Napster years ago.  He summarizes the benefit of this illegal challenge to textbook publishers:

"A young Northeastern University student named Shawn Fanning wrung billions of dollars of excess profits from the record companies when he invented Napster...But Steve Jobs found the right price point for music at iTunes. Between the pirates and the publishers, we'll find our way to the right price point for textbooks, too."

I am certainly not a fan of copyright violations and the act of taking money out of the mouths of those who create intellectual property.  But at times when the market is not working efficiently, when it does not contain enough challenge to drive improvement, dramatic actions will occur.  As in this case, the court of public opinion will get ahead of our legal system and politicians, and people will "take up arms" against repression.

Like the record industry, which is finally innovating and adjusting to listeners' anger over price increases, album formats and usage controls, the textbook industry had better improve the value equation for students quickly, or a surge in illegal sharing will upend its entire business model. 

Capitalism May Prevent Cold War 2

The nation of Russia seems to be feeling a surge in pride after its walk over the former Soviet republic of Georgia.  But the party seems to have left the country with a bit of an economic hangover.  Actually, you might call a 43% drop in the country's stock market is a lot more damage than a hangover.

According to Bloomberg.com, foreign investors have pulled $35 billion out of the country.  Russian President Dmitri Medvedev has ordered the government to do "everything necessary" to reassure foreign investors.  Sorry, Dmitri, but even a nation sitting on so many naturally resources still rests on global exchange and cooperation for economic success.

The only thing Russia can do to improve its economic stability is to bring military stability to its part of the world.  Whatever George Bush says, the real power rests with investors in today's society.  Russia's economy is still relatively small and volatile, and while it may have a powerful military - it is not strong enough to ignore investors' wrath.

While some fear we are heading into a second Cold War - and I believe the McCain/Palin ticket seems eager for this as a way to scare voters into sticking with a Republican ticket - the reality is that our economic co-dependencies will increasingly prevent dangerous military actions.  The challenge of this powerful, global flow of capital, and the present example of the economic results of Russia's action, will lead to fewer flare-ups, greater stability, and a chance for everyone to make more money together.

Electing to Fact Check

In the history of warfare, major conflicts often brought some breakthrough innovation in technology that defined the scale and outcome of battle.  The English Longbow defined the Hundred Years' War.  The machine gun drove trench warfare of World War I.  And the threat of nuclear weapons defined the Cold War. 

Similarly, every four years the presidential election seems to bring at least once new innovation that defines the period and drives outcomes.  In 1960 it was the use of television and Kennedy's polished look over Nixon's five-o'clock shadow.  In 2004 we saw the rise of bloggers as a respected part of the media sphere of influence.  I predict that this election of 2008 will be defined by the rise of the Fact Checker.

If you take a semi-close look at the newspaper and television coverage of this election, it seems now more than ever that reporters are spending as much time discussing the truth of candidates' statements as they do sharing the statements themselves.  Fox News has the "no spin zone" and CNN talks about "the spin cycle."  In both and other features, experts from both parties counter the claims and check the facts of candidates' words.

I've been particularly impressed by the work of FactCheck.org.  Factcheck.org is a non-partisan, non-profit group that "aims to reduce the level of deception and confusion in U.S. politics."  The group is a project by the University of Pennsylvania's Annenberg Public Policy Center.  The website is the hub of the group and it is surprisingly deep.  There are RSS feeds and mobile alerts and the fact-checking analysis is updated at least daily.  I found the site to be hard-hitting on both parties.  TV commercials from each side are pointedly criticized - whether it's "an Obama ad plays fast and loose with McCain's voting record" or "Palin says Alaska supplies 20 percent of U.S. energy.  Not even close."

Another service that I recently discovered suggests that this trend is bleeding over into other areas of society.  A site called SpinSpotter.com launched in "very beta" just a few weeks ago.  It features an application called "Spinoculars" that "sites in your browser's toolbar" and is "programmed to spot certain indicators of potential bias" in the articles that you read.  Users help add to the rules of the system, and it looks for things like quoting partisan sources, then paints the text in red. 

I believe the rise of Fact Checking and Spin Spotting are types of challenges that will improve our government and broader society.  Overall, these services force competitors to play fair and be truthful, it's a little bit like an attorney in a courtroom being able to "object" to improper language from the other side.  As in a court of law, attorney's end up playing by the rules, and we get a better judicial system.  In politics, marketing and journalism, the rise of services that check our facts will help keep all of us playing equally on a higher-level field.  The liars will fail to hold an edge, and people will tend to trust statements and claims. 

This challenge might lead to a better President in 2009, and better society for centuries to come.

Nike+ Challenging Me to Run

A few days ago, over on my marketing-focused blog, Marketing with Meaning, I wrote about my early experiences with the Nike+ system.  For those who haven't seen it, there's a sensor for your shoe that links to an iPod, which in turn tracks your time and distance while running then syncs with a Nike website.  It's a great example of a value-added tool from Nike that helps improve people's lives while selling more shoes.  But as I continue to use the system myself, I'm finding some very interesting Challenge Dividends.

The overall goal of the Nike+ system is to coach you to run more miles and run faster.  There are multiple ways that the system challenges you to improve.  For example:

• All of your runs are recorded, giving you a chance to watch your progress over time.  It's motivation to increase your total miles and lower your total average time.  Personal bests for total distance and best time on 1 mile, 5k and 10k are recorded.
• You can set goals for yourself that are tracked with your runs.  I've got a goal right now to run 24 times over 4 weeks.  When you achieve a challenge, you get a marker for your "trophy case."
• There are events like the recent Human Race 10k, in which you upload a 10k time and see how you placed among people around the world.
• There are hundreds of challenges created by friends and people in the community.  Right now I'm participating in two challenges: (1) the NFL challenge in which the team whose fans run the most miles wins; and (2) the "4 For Fall" challenge set by a couple of friends in which we're trying to run the fastest 4-miles by October.
• Nike+ periodically recognizes you for adding on miles.  At 10 miles, it encouraged me to hit 100.  And when you hit 100 you enter a special hall-of-fame with about 250,000 other people
• Although I tend to use my iPod just to track my distance, if you listen there is a voice that encourages you to keep going or tells you that you hit a personal best.
• The system offers goal-based training programs to help you plan out weeks of preparation for, say, a 10k or marathon.
• You can create a screen saver and Facebook widget called a Nike Mini - it's a character that says and does things based on your recent runs.  Mine is above.

I'm sure results vary for Nike+ users, but so far I'm enjoying the heck out of it.  Every time after I run I rush up to my laptop to sync my information.  I love the feedback of seeing my new info and updated totals.  Yesterday I ran my fastest 5k in over a decade as a way of working toward the 4-mile challenge with my friends.  And my 24 runs in 4 weeks challenge is motivating me to make it happen. 

These challenges from the Nike+ system are paying other dividends as well.  I feel both physically and mentally healthier than I have in years because of my return to running.  I have lost about 10 pounds in a month without having to curb my eating choices at all.  And I'm really having a lot of fun both running and discovering more about how the Nike+ system can work for me.  I have to compare it to my Guitar Hero experience, which also felt like a fun activity that actually is designed to build skills.

I'm still only a few weeks into my return to running through Nike+, and although I love it now, I am somewhat wary that I may grow tired of it.  But I trust Nike will keep investing in and improving the system, knowing that only a continuous flow of new challenges will pay the dividends to both the brand and its customers.

UPDATE: I reached 100 total miles!

The Power of Vetting

(Sorry for my lack of posts lately.  I've had vacation and some busy work weeks.)

Don't you just love it when a rarely-used word seems to be everywhere you turn all of a sudden.  My word-of-the-month is "vetted".  No, it has nothing to do with Corvette - sorry for the lame pun and photo.  Instead, it's the "process of examination and evaluation" that is used to check into something or someone before a final decision is made.  It's also an interesting sub-point in the idea of The Challenge Dividend.

Most readers have heard "vetting" used to describe McCain and Obama's search for a Vice Presidential candidate.  We heard news stories of potential nominees that were and were not vetted.  In the past week we've seen praise for the selection of Joe Biden, a man vetted by many campaigns and decades in the Senate.  And this weekend we've seen analysis on the risk of the selection of Sarah Palin, a political newcomer who was vetted by a committee but not the harsh glare of national media.

Last week I encountered the concept of "vetting" while meeting management of one of my clients.  We were receiving our annual agency performance review (itself a great Challenge Dividend concept), and heard that - while lots of other new agencies are trying to do work for the client - the digital agency world is full of over-promising and under-delivering.  Our client felt great that we were doing great work and delivered on our promises.  In her words: "You are vetted."

The vetting process is smart for all manner of "hiring" decisions, and seems to be increasing as we have access to new tools and technology.  When I interview people, I usually take only a cursory look at the resume - and instead use tools like Google and LinkedIn to form my initial impressions.  Why?  Well, the resume is like a one-sided advertisement.  You only see the good stuff in the best possible light.  But other information, tools, and personal references help to "vet" candidates in a more trusted way.  And when I have to make a critical employment decision, I cannot afford to trust only a resume and a few hours of interviews.  Meanwhile, the act of vetting job applicants ensures that these people work harder to make impartial, positive impressions.

We'll see if the "vetting" concept dies away as the Vice Presidents are picked and the race for the White House is finished.  I think this one might stick around, as it's another powerful way that challenge drives improvement.