While reading the details of the Federal Government’s broadband plan I was reminded of Jim Collins’ BHAGs, or Big Hairy Audacious Goals.
The Federal government’s plan is a BHAG and the beauty of this particular one is that it will spawn many other BHAGs.
Has your business got a big hairy audacious goal? If so, what are you going to do about achieving it?
Is the lipstick theory really true? I’ve been hearing a lot about it lately and I’m not so sure.
The “lipstick theory” is people will spend money on small, modest priced luxuries in a downturn to make up for not being able to afford big luxuries.
It’s been used to justify everything from increased fast food sales to Belgain chocolates to expensive beer to, well, lipstick.
I recently heard it used by a software developer as the rationale for investing in a software as a service product.
But is it true?
The Economist isn’t so sure and shows there’s little correlation between past recessions and lipstick sales.
My suspicion is if it was true in the twenties and thirties, it was more because better manufacturing and distribution techniques meant a better, cheaper product could get to the market.
Even if the lipstick theory is true, it’s dangerous to assume your product is the same.
For a start, some lipsticks will do better than others, partly because of marketing and partly because their price points are smarter.
Should your “lipstick” product be successful, it might not make much money for you anyway. In the last recession we saw McDonalds and other fast food chains introduce $1 and $2 meals, we’re seeing a similar trend at the moment with sub $500 computers.
These “recesssion busters” may keep your market share up, but they aren’t going to be particularly profitable. Indeed, for the computer manufacturers, the sub $500 laptops may well be cannibalising what’s left of their profitable product lines.
The reality is a lot of the products that are claiming the “lipstick theory” will save them are really doomed. The vast majority of shops selling expensive chocolate, lingerie, beer and other pricey but non essential products are simply marking time until the effects of the popped bubble reach them.
It’s best to base your business plans on sound evidence rather than blind hope in an idea that may or may not be true and may or may not apply to your products.
Associated Press have warned they will start taking action against news aggregrators like Google. Rupert Murdoch made similar noises last week.
As Fred Wilson has pointed out, the problem for AP and News is the web is now the newstand and taking publications off the shelves is not good business sense.
We see that with the Australian Financial Review. Its position as an Australian journal of record has been diminished by Fairfax’s incompetent obsession with protecting content.
As result, other channels such as The Australian, Business Spectator and blogs have stepped into the vaccuum and eroded the AFR’s online authority.
Following the RIAA path and suing Google, the Huffington Post and any blog that dares link to their sites will backfire on the news industry just as it did on the record industry.
In many ways newspapers are even more vulnerable as journalists employed by organisations like News and AP are quick to rip stories off from blogs, web forums or MySpace and Facebook pages with little regard for permission or attribution.
I suspect it’s one legal quagmire Associated Press or Rupert Murdoch might rue becoming bogged down in at the very time their business models are challenged by both economic and technological change.
I woke to a BBC program discussing economic growth and if the growth rates we’ve seen in the last 50 years are sustainable.
The real question is what sort of growth.
Much of that growth, particularly in the last fifteen or so years, has been a debt fueled binge on household goods and speculative assets.
Perhaps what we’re returning to is sustainable growth, where the economic engine is provided by things like improved health care, business productivity and real innovation.
Do we really need three thousand mile Caesar salads, three cars and a DVD in each bedroom to be the drivers of our economy?
Time Magazine looks at the end of the era of excess and asks “is it good for America”
http://www.time.com/time/nation/article/0,8599,1887728-1,00.html
One of the telling quotes in the article is the line “This is the end of the world as we’ve known it. But it isn’t the end of the world.”
Indeed it is; the era of cheap credit is over. The way we do business, the way we run our private lives and the how we finance that way of life is going to change.
That doesn’t mean the world is ending and the sky is falling, but it does mean its time for fresh ideas.
Hat tip to Fred Wilson for the article