The end of the dream

No matter how it works out in the long run, the purchase of Symbian by Nokia marks the end of a dream -- the creation of a new independent OS company to be the mobile equivalent of Microsoft. Put a few beers into former Symbian employees and they'll get a little wistful about it, but the company they talk about most often is Psion, the PDA company that spawned Symbian.

Psion never got much attention in the US, but it was a pioneer in the PDA market in the UK, and even to this day I think the Psion Revo is one of the two coolest-looking PDAs ever made (the Palm V is the other one).


The Revo

Psion explored many ideas that eventually turned into major new consumer electronics categories, but it failed to follow up on them. The company was effectively dismembered when Symbian was formed, and many of its best people drifted off to other companies. Now Symbian itself is transitioning to something very different, with most of its people absorbed into Nokia. What the Psion veterans talk about wistfully is how many smart people worked at Psion, how many great ideas the company fumbled, and how successful many of the people have been in the tech industry post-Psion. In this sense, Psion is similar to many other tech pioneer companies that assembled staffs of very bright people, taught them how to work together, and then blew apart like exploding stars, scattering the elements of new companies across the industry. This process dates back at least to Fairchild Semiconductor, which trained the founders of many of the most prominent semiconductor companies (link). You can find similar networks of former employees from places like Apple, Netscape, and Palm. I think Yahoo is in the process of forming a network now, and some day there's going to be a dandy one made of former Googlers.

What makes the Psion story different is that many of the Psion veterans had to leave the UK, or join non-UK companies, in order to become successful. Some are in other parts of Europe, some are in the US, and some are in London but working for foreign companies. This is a source of intense frustration to the Psion folks I've talked with. They feel like not only their company failed, but their country failed to take advantage of the expertise they had built.

There's a big body of academic research on why Silicon Valley has been successful in sustaining itself, and part of the reason is that the Valley recycles companies very efficiently. Failing companies do not last long, but in the process the brightest people and ideas are rarely lost, they are just shuffled around into new configurations.

About a year ago, Andrew Orlowski of the Register wrote an amazing article on the history of Psion, and how company culture and government philosophy failed to take advantage of it to grow a new industry. It's the longest piece I've ever seen in the Register, almost the nucleus of a book, and it's well worth reading. It didn't get enough attention when it was published, and I'm embarrassed to say that I never posted a link to it. So I'm glad to remedy that now. If you want to understand the context what happened to Symbian, and learn a bit about how the tech industry works, go read it here.

If you want to hear more about what Symbian is morphing into, two of its executives have just started personal weblogs in which they are commenting on the migration to Symbian Foundation (among other things). It's an interesting move, and it seems symbolic of the transition they're trying to make into the open source world. Previously Symbian had a company blog that several execs contributed to; now the execs have personal blogs where they talk directly to the industry.

David Wood (Symbian's EVP of Research) link.
John Forsyth (Symbian's Strategy VP) link.

Symbian changes everything, and nothing

[With a correction made on June 26.]

The Symbian Foundation announcement today is a fascinating change in business strategy, but I'm not sure if it will help or hurt Nokia in the long run. I think something like this was probably necessary just to clean up the mess in Symbian's ownership structure. If Nokia can make the new structure work, it'll be a milestone in the use of open source by large tech companies, but I'm not sure it helps Nokia win the smartphone war.


What happened

--Nokia is buying Symbian. Everyone currently working at Symbian becomes a Nokia employee after the deal closes. Nokia said it will spend the next six months deciding "how we will use the unique talent we are gaining."

[By the way, the buyout by Nokia is a change I said was possible two and a half years ago when it first became clear that some of Symbian's owners wanted out (link). I am astounded that the change took so long. I looked back at my old post a few months ago and thought, "wow, I really got that one wrong." Now I am relieved to say that I was not wrong, I was merely prematurely correct ;-) ]

--Symbian OS will become free. Nokia's Symbian-related assets, including both Symbian OS and the S60 interface, will be contributed to the new Symbian Foundation, a nonprofit that will control the Symbian platform. So Nokia writes the code and then gives it to the foundation for free.

Founding members of the foundation include: AT&T, LG, Motorola, Nokia, DoCoMo, Samsung, SonyEricsson, ST Micro, TI, and Vodafone. It's very interesting to see some operators in the mix, especially AT&T.

The foundation will open source the new Symbian platform over a two year period. So eventually Symbian will be available for free.

The new Symbian Platform will have a broader scope than the current Symbian OS. It will include:

-An application suite (previously controlled by licensees)
-Runtimes (including Webkit, Flash, Silverlight, and Java; previously licensee-controlled)
-UI framework (formerly controlled by licensees)
-Middleware
-OS
-Tools, SDK, and application signing (previously shared between Symbian and licensees)

--UIQ is dead. SonyEricsson's UIQ technology, and NTT DoCoMo's MOAP, both of which are user interface layers written on top of Symbian, will also be contributed to the foundation, which will incorporate pieces of them into S60. The new Symbian foundation partners said at the press conference, "We will reposition UIQ in the new ecosystem." That's seems to be a face-saving way of saying, "UIQ is dead." Confirming that, UIQ announced immediate plans to lay off more than half its employees (link).

These are huge changes, even though they'll take a couple of years to implement. We won't get the first release of the new merged platform until 2010, although the partners say S60 and native Symbian apps will continue to run in the future, so they hope many more developers will create Symbian apps today in anticipation of future growth.

--Nokia will continue to control Symbian development. This is my interpretation, not something they announced. Technically, control over Symbian and S60 passes to the new Symbian Foundation, with product plans controlled by a managing board and councils made up of foundation members. This makes Symbian sound independent. But Nokia will employ most of the people maintaining and extending Symbian and S60, and could divert them to other Nokia projects if it ever dislikes the direction of the foundation. More to the point, the whitepaper explaining the new foundation says, "device manufacturers will be eligible for seats based on number of Symbian Foundation platform-based devices shipped, with the other board members selected by election and contribution" (link). So Nokia as the dominant shipper of Symbian devices gets the most seats, and can then control the election of additional board members. Symbian contacted me on June 26 with a correction: "Five Foundation board seats will be allocated to handset vendors on the basis of volumes shipped using the Symbian Foundation platform. There will be a maximum of one (1) board seat per company." So Nokia gets one board seat, and does not control the foundation.

The right phrase for this, I think, is puppet strings. But I don't mean that in a bad way; it would have been insane for Nokia to actually give up control over its smartphone OS. Just don't have any illusion that the strings have been cut. They've merely been relocated, and in fact I think Nokia now controls things more directly since it owns the Symbian development team. Added June 26: Nokia has given other companies a formal say in the feature set, with less official control by Nokia than it had when it held about 50% of Symbian, but perhaps more practical influence because it now directly employs most of the people doing the engineering. So I think Nokia gave up the official veto it had over Symbian's actions, and replaced it with a practical one.


What does it all mean?

I don't know.

The announcement is so complex, and so many things are changing in the mobile market, that it's very difficult to predict how everything will turn out. Also, the whole thing depends on crisp implementation. Even the most brilliant strategy fails if you can't execute on it.

You can't say that Nokia lacks guts. The foundation members said at the announcement that it is one of the largest open source announcements ever, and I think that's true. It's a very interesting, aggressive move for Nokia, and I respect that. There are precedents for a big company acting as a sugar daddy for an open source software project, but I don't think it's ever been done with a project that is as central to the parent company's operations as Symbian is to Nokia. It will be fascinating to see if Nokia can really work effectively through the foundation model. I presume they have thought about this a lot and feel the risks are well controlled.

I'm having trouble seeing the big picture of how this changes the world, though. I suspect the announcement is actually half cleanup and half power move. The power move is that it challenges Android, and could help harness the energy of the open source community to support Symbian. The cleanup is that the ownership situation of Symbian was unstable and had to be changed eventually, and SonyEricsson clearly wanted to get out of the UIQ business. The creation of the foundation solves all of those problems at once. My guess is that since Nokia is paying most of the bills, the other foundation partners were willing to go along with it. The Symbian investors get some money from Nokia, and can sit back and wait to see what the foundation delivers.

Here are some other issues and questions that stand out to me:

Symbian gets its UI back. Years ago, Symbian took itself out of the user interface business, allowing Nokia and NTT DoCOMo to develop their own UIs, and spinning out the UIQ interface team. The company declared that it had been a mistake to ever go into the UI business. So it was amusing to hear Symbian at today's press conference saying how disruptive it was to have multiple user interfaces, and how great it is to have them unified.

The reality is that OS companies have traditionally created the UI along with the rest of the OS because they need to be coordinated closely, and because developers want to work with one consistent interface. So the real mistake was getting out of the UI business, and Symbian has now corrected that.

What will happen within Nokia? At the press conference, Nokia was asked what happens to its internal S60 development team (which is rumored to be larger than Symbian itself) once the merger is complete. Nokia said vaguely that it's going to spend six months working out all those integration issues, and what it will do with the multiple geographic locations. It's hard for me to believe that working out process won't result in some layoffs. I hope I'm wrong; I have friends at both Nokia and Symbian, and layoffs would be incredibly painful for the Symbian folks, many of whom have spent most of their careers there.

The fate of the people is just one of the open questions about what the merger means to Nokia. Another is the fate of Trolltech, the development tool that Nokia purchased recently and said would unify app development across Series 40 and S60. Will it be contributed to Symbian? And what does the open sourcing of Symbian mean for Nokia's use of Linux?

How does Nokia differentiate its software? The theory behind S60 was that Nokia would have its own user interface, helping to differentiate its phones from other Symbian vendors. Now that S60 will be given away, how will Nokia differentiate? The Symbian Foundation says licensees will be able to create a "differentiated experience" on its unified UI framework. Lord only knows what that means. Maybe Nokia has decided the UI is not a point of differentiation at all, and plans to focus on something else (web services, perhaps?)

Will the change in Symbian really drive more developers? As the Symbian partners pointed out repeatedly in the press conference, they have already sold 200 million phones. If that's not enough to excite developers, how will adding another 200 million -- or even 500 million -- do it? Although Symbian now has a nicer long term story, I don't think most developers were paying attention to that. They respond to user excitement and the chance to make lots of money. The new Symbian strategy doesn't directly drive either one.

What does it mean to Apple? I think it's probably good news. Although the Symbian partners could theoretically bleed Apple by sharing investments that Apple has to fund for itself, Apple competes on speed and elegance, not cost control. Nokia and Symbian will now spend the next six months sorting out how they'll integrate and rationalize their organizations. No matter how much they try to avoid it, this will slip schedules and force people to revisit plans. And the other Symbian licensees have to wait two years for the new OS. That gives Apple a long, long time to build up its iPhone business. The Register put it very bluntly in its commentary on the Symbian announcement (link):

"Apple must now see a clear road ahead for world dominance...it's now Apple's business to lose."

Wow, from new entrant to industry leader in just a year. That sort of stuff must drive Nokia nuts.

Is Google happy or upset tonight? My first reaction is to say that Google should be worried because there's now another very credible operating system being given away for free in competition with Android (or there will be in two years). What's more, the leading mobile handset companies all participated in the Symbian Foundation announcement. That makes it harder for Android to get licensees. But the new open Symbian OS is two years away from shipment, giving Google lots of runway to get established (that's what I meant about execution determining the real impact of the announcement). Also, the governance system for Android is a lot simpler than Symbian's. While the Symbian committees must debate and agree on product plans, Google can just decide whatever features it wants to add, and toss them out there. In theory, Google should be able to move much faster.

Besides, there is the question of why Google really created Android. One school of thought says that Android was just a tool to bleed Microsoft and force openness in the mobile ecosystem. If that's the goal, then the opening up of Symbian is a kind of a triumph for Google. Nokia is, in many ways, doing Google's work for it. Which brings us to...

What happens to Microsoft? Here's the weird thought for the day: Microsoft is the last major company charging money for a mobile operating system. The throwback. The dinosaur. How many companies are going to want to pay for Windows Mobile when they can get Linux, Android, or Symbian for free? This is Microsoft's ultimate open source nightmare, becoming real.

6 SURESHOT WAYS TO SCORE HIGH ON DQ!!!

CEOs! Thank me like crazy! For after years of insightful research, I’ve finally hit upon the top six mother-guaranteed strategies to score imperially high on your DQ (Donkey Quotient)! Presenting to you, a never before seen DQ checklist. Do you have it in you to win the world DQ crown? Give yourself one mark for each yes!

DQ Poser #1: Successful CEOs never believe in regularly firing people! Yes or no? If your answer is yes, my hero, you’ve gloriously earned your first Donkey Quotient point. A well quoted classic Forbes 2005 study confirms how “employee retrenchment actually increases loyalty!” BCG too confirms in a BusinessWeek article, “Few things demotivate an organisation (and its top performing employees) faster than tolerating and retaining low performers.” Jack Welch became Fortune’s “Manager of the Century” by firing the bottom 10% of his workforce every year! And his DQ is zero!

DQ Poser #2: A successful CEO is known to have jumped more jobs than wives! Yes/No? If you think that a CEO who has been in only one company all his life, must be a joker CEO not worth the toothpaste he uses, brother, you’ve just earned your 2nd DQ point! The Deloitte 2007 CEO Survey shows how a mind-numbing 81% CEOs of the top 100 US firms have never worked anywhere else (or maximum, have changed only one job) all their lives. Forbes quotes how a monumental 75% CEOs of leading non-US firms have spent 35 years or more with the same company they lead.

DQ Poser #3: Experienced people are forever more valuable than youth! Yes/No? Wrong without question my DQ aspirant! While the exemplary Spencer Stuart Route To The Top CEO Survey shows how the average age of CEOs is continuously falling, the most respected Roper Starch Inc.’s survey shows how an unbelievable 67% of American workforce now accepts that “the new century is all about youth.” Economist quotes how Bill Gates has ensured that the most important of Microsoft’s employees [programmers] are now in their 20s and early 30s.

DQ Poser #4: A CEO should never end up destroying or selling his company just to increase shareholder value! Yes/No? If you agree with the statement, you’ve just earned another glorious DQ point. CEOs who destroy their own company’s identity by selling it off or entering into an M&A deal when the offer was ripe and pristine, are now considered the world’s most effective and successful. Lucio A. Noto, CEO, Mobil, sold off his company to Exxon, and instantly added 15% to shareholder’s wealth. Reebok shareholders got a 34% premium when their CEO sold off the company to Adidas. Capellas of Compaq got his shareholders a super 35% (sold to HP). Guy Dolle, CEO Arcelor, is the best by getting an awesome 69% for his shareholders from Mittal Steel. On these terms, Jerry Yang of Yahoo fails miserably for having refused a 62% premium being offered by Microsoft in May 2008. Top CEOs destroy, devastate and demolish their own companies, if that can maximise shareholders’ wealth.

DQ Poser #5: Successful CEOs are never authoritative in their style of leadership! Yes/No? Absolutely wrong! Various separate researches of top institutions like HBS, University of Louisiana, Yale and many more support the authoritarian style of leadership without question. Steve Jobs, head of Fortune’s #1 Admired Global Corporation of 2008, Apple Inc., follows this to the tee. Andrew Keen writes in his best seller (The Cult Of The Amateur), “There’s not an ounce of democracy at Apple... Without Steve Jobs’ authoritarian leadership, Apple would be just another Silicon Valley outfit...”

DQ Poser #6: This is the easiest one... Excellent CEOs are never passionate about what they do! Yes/No? Well, duh... If you said yes to this, a donkey must be more passionate than you are! In a classy 2005 HBS paper, Dr. J. Byrnes (actually from MIT), identified “eight essential characteristics” of transformational leaders. The top one was “capacity for passion”. The existence of just one quality defines the world of a difference between being a titan of a performer, or simply being a historical also ran. And that’s passion!

Clearly, if you’ve scored zero (that is, all ‘No’) on my patented Donkey Quotient questionnaire, you’re in the company of the world’s greatest CEOs. And if you’ve achieved a perfect DQ score of 6, you qualify as the world’s first donkey that can read. Congratulations!!! It’s a privilege...

Thoughts on the 3G iPhone announcement

Apple's 3G iPhone announcement today was probably the minimum necessary to please the community. The real news was the things that weren't announced:

--No tablet device (again).
--No major changes to the form factor of the iPhone.
--No other major product announcements.

Apple has made its Macworld and WWDC keynotes into a specialized form of performance art, complete with cleverly-dropped pre-announcement hints, and often some sort of surprise at the end of the speech. Apple's own past successes have now raised the anticipation for the keynotes so high that it's a disappointment if some sort of major surprise doesn't happen.

Check out Engadget's live blog of the speech if you want to see the result (link). It's littered with whining like this:

"We love what you've done here, but we're yawning."
"Man, these demos are crazy boring."
"Man, please let this string of demos end!"
"Another developer demo. Ugh."
"Wow, we heard Apple's stock is down almost $5 since this keynote started. Maybe they should just demo their top three and keep going."
"Someone, wake us when Steve's back."

I didn't actually attend the talk, so I don't know how boring all those demos were. But I think it's fair to remind people that the WWDC is a developer conference. It is traditional to do a fairly large number of app demos at a developer conference, because that's a low-cost way of rewarding your developers.

Apple discussed some other interesting things in the keynote. Here's what stood out to me, with some comments:

The "lower" pricing. This was completely necessary. AT&T claimed in an interview with the New York Times that $199 is a magic price point for smartphones (link). They're right, it is. But as the Times pointed out in another article, the price cut isn't actually as meaningful as it sounds -- AT&T is making up for it by raising the price of the iPhone data plan by $10 a month, with a two year contract requirement that will apparently be rigorously enforced. So to get that $200 discount on the purchase price of the iPhone, you pay an extra $240 over two years.

You're actually losing money in the long run, but now the iPhone is priced in the same way as every other phone on the market, making it more comfortable to buy. That figures to help iPhone sales -- especially in Europe, where the unusual price structure for iPhone caused a lot of complaints.

If they really do enforce the contract, that will probably put an end to the widespread practice of buying iPhones in the US, unlocking them, and shipping them to places like China. But the iPhone is getting much stronger international distribution, with up to 70 countries in the works according to Apple. We have no way of knowing how well the contracts will be enforced around the world. Chances are there will be gray market leakage from somewhere.

Notification vs. background processing. One of the critiques of the iPhone is that it doesn't allow third party applications to run in the background, without being visible to the user. Apple said this is to prevent background applications from hurting performance, the way they do on Windows Mobile. But that's a very disingenuous explanation -- Windows Mobile manages memory very strangely, often leaving things in memory whether they run in the background or not. You could create a very efficient architecture that still allows background processing.

Apple says it has solved the background problem by setting up a notification server that can wake up applications on your iPhone and pass incoming messages to them. I don't know how that looks on screen -- since Apple won't run apps in the background, does that mean they'll suddenly launch on screen and start operating on their own? Creepy. And although notification does some of the things you'd want from the background, it doesn't do them all. For example, some developers want to write background applications that would perform tasks automatically, whether they are pinged by an outside server or not.

All in all, it's interesting that Apple's establishing a messaging server for iPhones. Combine that with Apple's new MobileMe service, and Apple is gradually creating a lot of back end infrastructure for the iPhone. In the long run, Apple could build many innovative new services around that infrastructure.

I wonder if they'll charge developers a fee for passing messages through the Apple infrastructure.

When do the developer limits come off? Apple bragged in the keynote that there were 25,000 applicants to the iPhone developer program, but the company admitted only 4,000. In other words, they seriously pissed off 21,000 developers. Not the sort of thing I would brag about, but this is Apple and they can sometimes operate on a different set of rules.

The question is, when (if ever) do the other 21,000 developers get into the program? As far as I know, Apple was silent on that issue. If they were about to open up the program, you'd think they would have announced that.

The application demos skew toward consumers. Four of the applications demonstrated during the keynote were games, one was a consumer news applications, one was a social network product (Loopt), one was consumer shopping (eBay), one was consumer blogging (TypePad), one was sports information, and two were vertical medical. Although Apple talked about enterprise at the start of the keynote, the apps they chose to demo tell you everything you need to know about who Apple sees as the iPhone's buyers.

What happens next? The iPhone is only a year old, and it generally takes 18 months to design a major new device. So the 3G iPhone we saw today was probably already in early development when the original iPhone was launched. We could see more radical hardware change this fall, but I think it's more likely that would wait for Macworld 2009.

What happens to iPod pricing? I was surprised that the price of the iPod Touch didn't change today. It now looks more expensive than the iPhone, and it lacks GPS. I would not be shocked if the Touch ends up getting a price action this fall.

As for when we'll see the long-rumored larger-screen iPod/iPhone, your guess is as good as mine. Fall is the best time for introducing new products, because it's right before the holiday/new year buying season. If the product exists, that would be the time to announce it.

HOW TO USE RECESSION TO BEAT THE PANTS OFF YOUR COMPETITORS

If you want to learn the tricks of the trade in recession, the first rule of the game is, understand the economic difference between a recession and a depression. They say a recession is when your neighbour loses his job. And a depression is when you lose yours :-) Actually, the same rule applies for companies too! Till the time your competitors are getting rogered, it’s ‘fair play’; the moment the downfall hits you, it’s ‘George Bush must go’! But seriously, the National Bureau of Economic Research defines a recession quite succinctly as the time when business activity (a conglomeration of factors like employment, industrial production, real income and wholesale retail sales) starts to significantly and regularly fall! Generally, if the fall is more than 10%, economists term the extreme recession as depression! At a time when the IMF has forecast that the total hit due to the subprime crisis could well touch the gut wrenching mark of $1 trillion, it’s quite imperative that corporations globally develop strategies not just to survive, but to lead the market and to beat competition!

So what do the world’s most excellent CEOs do to tackle recession? The first question is, can you forecast recession itself? Nobel laureate and top-notch economist Paul Samuelson had claimed, “Economists have correctly predicted nine of the last five recessions.” In other words, it’s perhaps better to learn what to do when recession hits, rather than waiting in fearful anticipation year after year for recession to hit. The hilariously famous presenter Jon Stewart had side-splittingly commented once, “Bush advisers have long been worried that a lagging economy could hamper the Republican Party’s re-election chances. They hope that the Cabinet shake-up will provide a needed jolt. If that doesn’t work, North Korea has to go!” Tackling recession doesn’t really require literally ‘bombastic’ strategies (as the ones Bush uses regularly, whether in Iraq, or now in Iran) but intelligent and simple tactics!

It was just a few months ago that I met the hallowed Ram Charan (Fortune considers him one of their favourite management gurus), over lunch. And it was only two months ago that he wrote the classic ‘Investor’s Special for the Recession Economy’ in Fortune, where he gives four simple and broad principles for CEOs to crack the recession conundrum, which are: (1) Keep Building: “Do not consider product development, innovation, and brand building optional. Sacrificing your future for a slightly more comfortable present is not worth it.” (2) Communicate Intensively: “It’s counterintuitive but true that when the economy slows down, the pace of decision-making has to speed up. The companies that are readiest to act on solid information are primed to shoot ahead of the business cycle.” (3) Evaluate Your Customers: “In good times, companies manage the P&L; in bad times, cash and receivables matter more. Therefore, you need to identify your higher-risk, cash-poor customers. You could decide to simply not supply them anymore.” (4) Just Say No To Across-The-Board Cuts: “By all means cut costs if it makes sense to do so, but make sure there is purpose in how you do it.”

Jay Leno, the king of standup acts, gave a classic perspective of the US economy in one of his shows: “Some good news for the economy. President Bush went on a month-long vacation.” Companies, like I mentioned before, wouldn’t necessarily find the blame game as easy as Jay wishes it to be. Harvard Business School, in its most recent April 2008 posting, gives a tempered, but well researched, response with its paper, ‘4 Steps to Growth During a Recession’. First, “Invest heavily in research and development” – Your competitors may in general cut R&D investments; ergo, your investment increase would yield a “strong product advantage” in the future. Steve Jobs quoted a few days back, “In the last recession, we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over… And it worked! That’s exactly what we’ll do this time!” Second, “Spend some time learning about the customers of your weakest competitors” – Instead of focusing on bagging your strongest competitors’ largest clients, choose these times to add attractive customers of your weakest competitors, who would not have the wherewithal to withstand your attack. Third, “Identify your most critical suppliers and distributors” – Find out ways you could help these suppliers and distributors. HBS quotes, “Even the smallest gesture can sometimes build an enduring loyalty that will pay off for years to come.”

Prime time TV host Craig Kilborn commented recently, “President Bush’s economic plan will create 2.5 million new jobs. The bad news is, they are all for Iraqi soldiers!” After you’ve recovered from your sarcastic chuckles on this statement, is the fourth, and I think the most important of HBS’ learning philosophies, “Think carefully about your talent needs” – When weaker competitors try to survive, many excellent employees of these companies would find themselves without jobs. Recession is the best time to grab on to these world-class employees and give them jobs and responsibilities that they’ll cherish for a long time with unwavering loyalty!
The most distinguished Professor John Quelch, who is also the Senior Associate Dean at HBS, added his expert views for the marketing heads in his terrific treatise, ‘Marketing Your Way Through Recession’, which came out just around a month back. Some of his key recession mantras for the marketing team are: (a) Research the customer well before deciding on pricing tactics. Price elasticities might not change as dramatically as you might expect. (b) Maintain marketing spending. Recession is surely not the period to cut advertising. Recession creates, as Quelch says, “uncertain customers, who need the reassurance of known brands,” and thus ensure customer loyalty for years. (c) Adjust pricing tactics. In other words, rather than cutting the price of your product (which will immediately send a wrong signal about quality), intelligently play around with newer promotional schemes, give credit to the A-category customers, play around with the quantity of your product in, say, every pack (price it the same, but start giving a non-noticeable less, for example). (d) Ensure employees (and customers) believe in the core values of your oganisation and believe that your organisation will get through tough times! For that, the CEO himself must “spend more time with customers, and employees.”

My favourite David Letterman’s classic and ripping statement stays with me forever, “Al Gore says President Bush’s economic plan has zero chance of working. Now, this raises on important question: Bush has an economic plan?!??!” Seriously, look at yourself and ask, do you as a CEO have a plan in place if recession hits you?

Chris Zook and Darrel Rigby, noted consultants of the globally renowned consulting firm, Bain & Company, a few years back had warned through their path breaking paper (Strategy For The Recession) that CEOs globally today don’t have a ghost of an idea of what their Plan B would be if recession were to hit their economy/company. Think about it again yourself. What is the reason that you don’t currently have a Plan B if the economy crashes? Zook and Rigby recommend that as a CEO, you should most necessarily “build strategic contingency planning into your culture,” even if the economy looks really rosy currently. A fact supported fanatically by McKinsey & Co in their quite readable paper that came out in Spring 2007, Preparing For The Next Downturn.

There was once a millionaire CEO who, while on a lone yachting expedition across the Atlantic, got his yacht smashed up in a thunderstorm, floated for a fortnight living on molasses, till one day, half dead already, he floats ashore on a completely isolated island in the middle of nowhere, when he sees an amazingly seductive super-model of a woman, wearing palm leaves, walk over to him. She smiles at him, tells him how she also is a shipwreck living alone on the island. She then guides him to her awesome tree home, gives him delicious water, vegetarian food and fruits to eat, new clothes made out of super-fashionable leaves, provides him a top quality razor made out of animal bone to shave his overgrown beard, shows him her utopian teakwood bathroom, which even has a shower for him made out of bamboo sticks with coconut water pouring out! The CEO’s over the moon! Freshened up, he comes out of the bathroom to see her lying down on her super sized banyan bed, dressed in a very tasteful sarong, when she whispers, “Guess what more I can provide to you!” He thinks for a moment, and then his eyes light up like crazy, and he screams in pleasure, “Don’t tell me you have email too!!!”

Dear CEOs, the final learning is, in a recession, in your attempts to read too much in market dynamics, don’t miss the obvious!