Archive for October 20th, 2009

First Cash for Clunkers … now, Carts for Clubbers.

October 20, 2009

Ken’s Take: This stuff keeps getting nuttier and nuttier. 

Half-baked ideas with shoddy implementation doesn’t strike me as a (cart) path to success.

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Excerpted from WSJ:Cash for Clubbers – Congress’s fabulous golf cart stimulus, Oct. 17, 2009

Thanks to the federal tax credit to buy high-mileage cars that was part of President Obama’s stimulus plan, Uncle Sam is now paying Americans to buy that great necessity of modern life, the golf cart.

The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. 

The golf-cart boom has followed an IRS ruling that golf carts qualify for the electric-car credit as long as they are also road worthy. These qualifying golf carts are essentially the same as normal golf carts save for adding some safety features, such as side and rearview mirrors and three-point seat belts. They typically can go 15 to 25 miles per hour.

The IRS has also ruled that there’s no limit to how many electric cars an individual can buy, so some enterprising profiteers are stocking up on multiple carts while the federal credit lasts, in order to resell them at a profit later. 

Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. “Is that about the coolest thing you’ve ever heard?”

If this keeps up, it’ll soon make more sense to retire and play golf than work for living.

Full article:
http://online.wsj.com/article/SB10001424052748704107204574473724099542430.html

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All we really want: Status, Certainty, Autonomy, Relatedness, and Fairness …

October 20, 2009

TakeAway: Neuroscience research is revealing the social nature of the high-performance workplace. Perhaps the greatest challenge facing leaders of business or government is to create the kind of atmosphere that promotes status, certainty, autonomy, relatedness, and fairness.

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Excerpted from Strategy+Business, Managing with the Brain in Mind, Issue 56, Autumn 2009

The human brain is a social organ.

Its physiological and neurological reactions are directly and profoundly shaped by social interaction.

“Most processes operating in the background when your brain is at rest are involved in thinking about other people and yourself.”

So, the brain experiences the workplace first and foremost as a social system.  Most people who work in companies learn to rationalize or temper their reactions; they “suck it up,” as the common parlance puts it. But they also limit their commitment and engagement.

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Many studies now show that the brain equates social needs with survival.

For example, being hungry and being ostracized activate similar neural responses.Recently, researchers have documented that the threat response is often triggered in social situations, and it tends to be more intense and longer-lasting than the reward response.  

Because the threat response uses up oxygen and glucose from the blood, they are diverted from other parts of the brain, including the working memory function, which processes new information and ideas. This impairs analytic thinking, creative insight, and problem solving; in other words, just when people most need their sophisticated mental capabilities, the brain’s internal resources are taken away from them.

When leaders trigger a threat response, employees’ brains become much less efficient.

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Five particular qualities minimize the threat response status, certainty, autonomy, relatedness, and fairness (SCARF).

Status and Its Discontents

Humans are constantly assessing how social encounters either enhance or diminish their status.

Research shows that when people realize that they might compare unfavorably to someone else, the threat response kicks in, releasing cortisol and other stress-related hormones.

The mere phrase “Can I give you some advice?” puts people on the defensive because they perceive the person offering advice as claiming superiority.

A Craving for Certainty

When an individual encounters a familiar situation, his or her brain conserves its own energy by shifting into a kind of automatic pilot: it relies on long-established neural connections in the basal ganglia and motor cortex that have, in effect, hardwired this situation and the individual’s response to it.

This makes it easy to do what the person has done in the past, and it frees that person to do two things at once; for example, to talk while driving.

But the minute the brain registers ambiguity or confusion — if, for example, the car ahead of the driver slams on its brakes — the brain flashes an error signal. With the threat response aroused and working memory diminished, the driver must stop talking and shift full attention to the road.

Of course, uncertainty is not necessarily debilitating. Mild uncertainty attracts interest and attention: New and challenging situations create a mild threat response, increasing levels of adrenalin and dopamine just enough to spark curiosity and energize people to solve problems.

The Autonomy Factor

Studies show that the degree of control available to an animal confronted by stressful situations determines whether or not that stressor undermines the ability to function.

A perception of reduced autonomy — for example, because of being micromanaged — can easily generate a threat response.

When an employee experiences a lack of control, or agency, his or her perception of uncertainty is also aroused, further raising stress levels.

By contrast, the perception of greater autonomy increases the feeling of certainty and reduces stress.

Relating to Relatedness

Fruitful and healthy relationships require trust and empathy.

But in the brain, the ability to feel trust and empathy about others is shaped by whether they are perceived to be part of ateam.

Conversely, the human threat response is aroused when people feel cut off from social interaction.

Loneliness and isolation are profoundly stressful.

Playing for Fairness

The perception that an event has been unfair generates a strong response in the limbic system, stirring hostility and undermining trust.

As with status, people perceive fairness in relative terms, feeling more satisfied with a fair exchange that offers a minimal reward than an unfair exchange in which the reward is substantial.

The cognitive need for fairness is so strong that some people are willing to fight and die for causes they believe are just — or commit themselves wholeheartedly to an organization they recognize as fair.

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Remember SCARF: status, certainty, autonomy, relatedness, and fairness.

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Full article:
http://www.strategy-business.com/article/09306?pg=all

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So, will social networking sites ever make money ?

October 20, 2009

TakeAway: Social networking sites may be popular, but they’re still not profitable …

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Excerpted from: Knowledge@Wharton, Early Tremors: Is It Time for Another Social Network Shakeout?, October 14, 2009

Experts predict a shakeout in the social networking market.  Why? Consumers only have time for so many social networking sites and are likely to gravitate where they already have friends.

What’s unclear is where social networking goes from here. Experts say there’s still a lot of growth left in the sector, but a round of consolidation, reinvention and restructuring is likely in the not-too-distant future. “Clearly, social networking has caught on in a great way, but there’s still a lot of uncertainty about where all of this will wind up. The market is very dynamic.”

The upcoming round of consolidation may include a good bit of reinvention as social networking sites tinker with business models.

“The big question today is: How will social networking and social media sites monetize themselves? Turning themselves into social commerce sites will be very difficult.”

Most companies in the social networking space are still experimenting with ways to generate revenue. The Holy Grail: Highly personalized advertising and word of mouth marketing.

Social networking companies could sell applications (like Apple’s iTunes Store does), aggregate massive audiences for advertisers or target high-value consumers that are coveted by Madison Avenue. Another option: Sell behavioral data to advertisers. Smaller players can target groups that are highly coveted by marketers.

Other social networks are focusing on business uses and providing tools for advertisers and any company that wants to monitor its brand. Most social networks are likely to develop models that revolve around serving so-called “enterprise customers” — companies looking for intelligence about their products and reputation.

Indeed, the focus on business intelligence could help some of the smaller social networks thrive. For instance, LinkedIn has a recruiter product for human resources professionals, designed to find “passive candidates,” or people not actively looking for jobs who could be good hires. LinkedIn charges a fee per user for the recruiting service and counts Allstate, eBay, Logitech and Kaiser Permanente as customers.  

The real trick will be finding the balance between privacy and profit.  In 2007, Facebook launched a service called Beacon that was designed to track users’ activity on external sites and deliver more targeted ads. After privacy complaints, Facebook continued to tweak Beacon before ultimately shutting it down in September.

What’s likely to emerge is a social networking market where there are multipurpose sites that have vast economies of scale, like Facebook and MySpace, and niche players, like LinkedIn, that find profitable business models. “People will go with the large social networking sites, but there will be very niche communities that will also be successful. The companies in the middle will be squeezed.”

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According to comScore’s August data, the top three social networking sites in the current U.S. market are Facebook, MySpace and Twitter.

Facebook (which launched in 2004) is number one, with year-over-year growth of 125%.  Facebook had more than 92 million unique visitors in August in the U.S., and now serves more than 300 million people worldwide.

MySpace, which is increasingly focused on becoming an entertainment portal as well as a social networking site, is in flux, but is still the second-largest social networking site. MySpace had 64.2 million unique users in August, down from 75.5 million in August 2008

In third place sits Twitter, launched in 2006, which had 20.8 million unique users in August — up 1,773% from a year ago.

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Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2354

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