Nintendo Twirls Some Fireballs, But Won’t Play The New Game

Ninetendo last week announced a first-ever annual operating loss of 37.3bn yen (about $460m) in the year to March 31.

The company projected sales of 13m Wiis, but moved just 9.8m; and sold about 80% of forecast 3DS handhelds and 50% of forecast DS machines.

In industry foresight we know that projections are reliable when nothing fundamental changes during the forecast period. Where the underlying changes, the forecast becomes ridiculous, leaders look stupid, and investors lose money. That’s why we use non-extraplative tools more suitable to complex situations.

So, what has changed? Rapid, worldwide smartphone and tablet adoption of course, particularly Apple devices. A bespoke hardware-based game company becomes vulnerable when users can play desirable games on the same handheld they use for everything else.

This is familiar ground in media-entertainment, a field that defines itself in part via the ongoing strategy debate of bespoke platform vs. open systems. Yes, if you can win with your own platform, as occurred with Wii, that’s beautiful. But the aggregators like iOS and Android stalk you.

Nintendo is not going to suddenly turn around and license Super Mario and other games for non-Nintendo devices, not least because it has a $14bn cash cushion as a result of the Wii success, so no need to panic.

Cannibalization

When it comes to leaders managing the future, cannabilization of past success in the service of future success, is the hardest thing to do.

But, even leaving aside platform aggregation, there are underlying market change-drivers that are far bigger thanNintendo, that will vigorously shape its future outcomes, which suggest bold leadership moves are required.

These are, first, the inexorable popular drive to ‘social’ – can I easily share what I’m doing, or playing, with others? The second is ‘mobile’ – can I do this wherever I am, and keep doing it as I move through my day and my week?

Reuters reports that a recent survey by mobile gaming site MocoSpace asked 15,000 gamers where they gamed: 53 percent said they played in bed, 41 percent in the living room, 72 percent commuting and 5 percent on the commode.

What goes from the bedroom to the bathroom, to the car, to the office, to the gym, the restaurant, and beyond? The one and only smart phone.

Experience shows that an apparently small leadership move that misses the future can quickly eviscerate a company, no matter what its cash position. Just ask Kodak, or Blockbuster, or even Encyclopedia Britannica. $14bn today… gone tomorrow.

Cursed Pages

Nintendo of course has its plan to turn things around. The company says it will continue its strategy of “Gaming Population Expansion,” growing its market by offering products across age, gender, and gaming experience segments. Later this year it will release the Wii successor, Wii U. Hoping a weaker yen and new games, including Mario Party 8and more Dragon Quest from Square Enix will boost sales, Nintendo’s president Satoru Iwata expects the business will return to profit next year.

In other words, business as usual. But, I look at the new “Spirit Camera” game blurb and I read… “terror from all directions,” “haunted visions,” and “cursed pages,” and I think, yeah, that about sums it up.

read more

Chelsea Turkey Shoot Points To Shortening Fail-tolerance for All CEOs

villas boas1 150x150 Chelsea Turkey Shoot Points To Shortening Fail tolerance for All CEOs
Fired – Villas-Boas. Picture: uefa.com

The leadership brouhaha of the week was the sacking of Chelsea Football manager André Villas-Boas after only 8 months in charge. This means the London soccer club is looking for its eighth manager since Russian billionaire Roman Abramovich bought it in 2003.

When not firing managers, Abramovich is famous for, among other things, spending $52,215.34 on a lunch for 6 in at Nello’s in Manhattan.

Villas-Boas’ error, like those fired before him (bar one who quit) is he didn’t win enough fast enough. In his charge the team won three of their last 12 Premier League games, and face exit to SSC Napoli after loosing the first leg of their UEFA Champions League round-of-16 tie.

Villas-Boas’ remuneration for the year, including severance, is around the $20m mark.

In industry foresight, noticing extremes helps us see and interpret less visible changes in the world. Stellar pay and commensurately rapid churn at the top of Chelsea FC clues us in to what is going on in the daily mainstream that we may be too immersed in to register.

High pay is nothing new. Also, evidence of high CEO churn is on the radar. A 2006 University of  Chicago study showed CEO turnover was 17.4% per year 1998-2005, implying average tenure of less than six years. It related CEO longevity to three components of stock performance – performance relative to industry, industry performance relative to the overall market, and the performance of the overall stock market.

More recently, executive search firm Crist|Kolder studied Fortune 500 and S&P 500 companies and found that while average CEO churn dipped during the recession it was back on the way up, hitting 13% in 2011.

“Win Now”

What is less clear at this point is the correlation between higher pay levels and higher churn, that may play out more fully in the future. But if the trend is that CEOs are increasingly paid like sports (or sports management) stars — and they are — it’s reasonable to anticipate that this will be on an ever-increasingly short-fuse “win-now” basis.

If the analogy holds, we can expect chief executives to face shorter and shorter periods to justify their pay; probably the higher the remuneration the shorter the justification period. Where eye-watering sums are changing hands, fingers will be itchy on the trigger.

The poverty of management decision-making here is not just in embracing and fostering short-termism, the cancer of management. It is in prejudging and potentially wasting leadership talent, because short-term data is effectively no data. Put it another way, short-term wins or losses are at the mercy of randomness, such that what looks like good or bad results are almost always part of normal near-term fluctuation spread, as argued by Nassim Taleb in his book “Fooled By Randomness.”

Over the long term, twists of fate, or twists of ankles are ironed out, and quality prevails. Nobody would argue that Steve Jobs was not successful or not worthy of star pay. But Villas-Boas … won championships for Porto FC in 2010 and lost championships for Chelsea FC in 2011, and neither results tell us or Abramovich whether he’s any good or not.

The only thing we can expect with confidence is that where the sports-star model of remuneration migrates, Boards (or shareholders) will be eager to read too much into early data, and prone to make Abramovich-like decisions.

read more

The Lion, the Witch, and the Warmonger

Picture 3 The Lion, the Witch, and the Warmonger

Martin Sheen as Josiah 'Jed' Bartlet. Picture: @Pres_Bartlet

Even by the standards of modern political media prattle, this was odd: the Guardian yesterday invited and ran a “response” to Barak Obama’s State of the Union address, from Jed Bartlet the fictional president in The West Wing.

One should immediately add that the response was not that of Martin Sheen (the actor who played Bartlet) or anyone from the show. It was that of an unnamed tweeter who can be found here.

The reader vox-pop box was quick to cry foul, asking what next: a piece on space exploration by Captain Jean-Luc Picard, or 007’s analysis of the War on Terror?

Fair enough. But if there is a serious point to be made, and I think there is, it is that fictional leaders do have a role in real world business and policy leadership.

Fiction and storytelling is important and enduring in all human societies because it is an excellent vehicle for considering complex human situations, reflecting on competing motivations and interpretations, assessing choices made with incomplete information, and following these through to their win-or-lose conclusion. Fiction allows multifaceted situations to be captured without losing the complexity.

Parallels

Incidentally, this is why scenario method, which tells stories of alternative future situations, is such an effective planning device. But the point here is that fiction captures complex human situations and senior executives would be the first to recognize parallels between the challenges that imaginary leaders are put through and what they do in a real working day.

If fiction captures and communicates tricky situations well, it therein becomes a learning vehicle. Whether reading a difficult modern novel or watching a soapy TV show, we put ourselves in others’ shoes, vicariously experiencing their conundrums and learning from the outcomes of their decisions.

Would-be successful leaders could do worse than take note of the leadership attributes of winners such as Sherlock Holmes or Superman or Andy Dufresne; or unpick the illusions and ultimate failures of dark lords such as Voldemort or Mr Kurtz.

Furthermore, a good way to learn is to judge real performance against an ideal template. (Judging me against my clarinet teacher, for example.) Whether your politics aligns with the positions and preferences of The West Wing White House or not, there is no denying that Bartlet is set up as a model president in a model administration. He is thoughtful, caring, effective; manifests an ideal balance of intellect, EQ, and decisiveness; is respected and loved by his staff who will go to the ends of the earth for him. He is a template leader.

So it’s hardly off-the-wall to wonder what Bartlet would have made of Obama 2012. That said, it would have been far more interesting to know what West Wing screenwriter Aaron Sorkin or even Sheen, rather than abitrary unnamed tweeter, thought of the State of the Union address.

For the record:

The Lion: President Obama. Mangy, patchy, apparently underfed. Definitely caged. But he has a heart. Whether it is the lion heart of the ruler of Narnia … time will tell.

The Witch: Here we have to go with Shakespeare; in fact there are three witches: Romney, Gingrich, Santorum. On Tuesday Obama called for a fairer country. Notice they responded: fair is foul, and foul is fair.

The Warmonger: he that exited the presidency in 2008, having wasted 4,000 lives and $800,000,000,000 on a war as poorly judged as that of Douglas Haig at Somme, 1916.

 The Lion, the Witch, and the Warmonger
read more

The Car on the Sidewalk and Other Reversals

The future will be full of surprises and reversals. Can leaders and decision-makers get better at seeing them before they happen? Or better at themselves instigating and managing such reversals, in pursuit of social or financial benefit?

Exhibition Road The Car on the Sidewalk and Other Reversals
Exhibition Road, London. Picture: The Guardian

A fun and instructive example is the ongoing developments in Exhibition Road, a kind of ‘museum mile’ in London, where the distinction between road and sidewalk is being abolished to make way for a car, bike, and pedestrian free-for-all.

Have the city’s planning wonks finally, truly, verifiably gone mad?

Since the automobile first reared its fearsome fender, road-management wisdom has always been that pedestrians are safest when kept separate from 5,000lb of moving metal.

Evangelists for livable urban areas usually clamor for pedestrian-only streets; or failing that, bigger, better-marked walking, running, and cycle lanes from which drivers are banned.

But pedestrian-car segregation has its own systemic effect. It means drivers are less likely to expect people in front of them, and so less likely to be vigilant and more likely to speed.

Exhibition Road planners say making the street a mixed area makes drivers anticipate something crossing their paths at all times.

Monderman

The mixed-use-street idea is not new: it was pioneered by town planner and traffic engineer Hans Monderman in the Netherlands in the 1980s and 1990s. According to a Guardian obituary, Monderman “succeeded in challenging many long-established assumptions about safety and the relationship between pedestrians and traffic…

“Monderman pioneered an approach that respected the driver’s common sense and intelligence instead of reliance on signs, road markings, traffic signals and physical barriers. He recognised that increasing control and regulation by the state reduced individual and collective responsibility.”

The jury is out on how effective mixed-use streets are; or exactly where they are most effective.

But the leadership lesson is clear: all decisions and resulting directives rest on foundational assumptions. The more robust these underlying assumptions, the better the decisions.

In this case, the assumption that greater safety is achieved by separation of vehicle and pedestrian is being challenged, and may turn out not to hold up at all for specific city areas.

Where assumptions are weak — or become weak over time due to changes in technology or values or market needs — poor decisions follow.

Leaders who don’t identify and regularly revisit the assumptions that underly their past decisions abdicate the ability to manage reversals and transitions when required. And will be surprised and blindsided when others initiate them.

 

 

 The Car on the Sidewalk and Other Reversals
read more

IBM100 ‘THINK’ Draws History Lessons For The Future

IBM100 100x150 IBM100 THINK Draws History Lessons For The Future“The most vital, obvious, and underestimated lesson in the 100-year history of IBM is you must keep moving to the future,” said IBM President and CEO Sam Palmisano, opening the company’s recent THINK: A Forum on the Future of Leadership‘ conference at the Lincoln Center in New York.

Further gratifyingly embracing the fundamental identity between leadership and successfully navigating the future, Palmisano continued: “It is so easy to stick with things that have made you a successful company or institution – a winning product, a profitable business model … but one of the core responsibilities of leadership is to understand when it’s time to change.”

And then, applying the mantra of respectable industry foresight analysts and practitioners (there are some): “It’s also particularly important to know what not to change, what must endure. To get that balance right is really, really hard.”

The full address is on Youtube.

The THINK conference is a key plank in IBM’s ongoing centennial year observance. It brought together 700 global leaders and IBM partners and employees, shining a light on leadership as a function that demands active, high-quality forward thinking.

Among the many insight nuggets was Carmen Medina, former Director of the CIA’s Center for the Study of Intelligence, commenting that “observing the present” is the only valid basis of future-exploration (correct); and that this sensemaking function is now being augmented by analytic and computational tools that make far better sense of all types of observed data and behavior, for example, social media behavior.

The old horizon scanning function really has become a much more complex, dynamic, and rewarding activity in the current era. Data visualization was also a key theme at the THINK exhibit.

Among the CEO delegates were Sir Howard Stringer (Sony); Jamie Dimon, (JP Morgan Chase & Co.); Jim McNerney (Boeing); Andrew Liveris (Dow Chemical); Peter Voser (Royal Dutch Shell); and Ellen Kullman, (DuPont.) Filling out Shell’s guest list were Abdullah II, King of Jordan; Felipe Calderón, President of Mexico; Laura Chinchilla-Miranda, President of Costa Rica; WTO Director-General Pascal Lamy; NY Mayor Michael Bloomberg; and media celebrities Charlie Rose and Tom Friedman. Selected video highlights are on the IMB100 site.

 

 

 IBM100 THINK Draws History Lessons For The Future
read more

10,000 Year Clock Is Symbol of Building to Scale and for Long Term

10944v1 max 450x450 10,000 Year Clock Is Symbol of Building to Scale and for Long Term

Jeff Bezos

When I was at INSEAD for my MBA, I noticed it was fashionable for young men on the move in their careers to wear genuinely expensive watches. We’re talking $5,000 a pop and more (and no doubt they would upgrade in time.)

Me, I’d rather invest in my wine cellar: each to his own. The point is, it’s nothing new for rich men to spend handsomely on their timepiece. And nothing new for even richer men to lavish a fortune on signature and-or vanity projects.

So it’s all to type that Amazon founder and CEO billionare,Jeff Bezos, is spending $42m on his timepiece. The clock the size of a building, which will still take a number of years to complete, is being constructed deep in the Sierra Diablo Mountain Range, Texas. It is designed to run for 10,000 years.

On the clock’s web site Bezos says: “It’s a special clock, designed to be a symbol, an icon for long-term thinking… As I see it, humans are now technologically advanced enough that we can create not only extraordinary wonders but also civilization-scale problems. We’re likely to need more long-term thinking.”

This is partly the standard, “world-going-to-hell-in-a-handcart unless we wake up and change our lifestyle” plea for a long-term, sustainable, perspective.

But, in fact, the general thrust of communications around the 10K Clock is refreshingly low on planetary doom. Long Now Foundation founder member Steward Brand says of the clock: “Ideally it would do for thinking about time what the photographs of Earth from space have done for thinking about the environment.”

Picture 3 10,000 Year Clock Is Symbol of Building to Scale and for Long Term

Builders in clock tunnel. Image: http://www.10000yearclock.net/

So the clock is in fact about exactly what it says on the tin: just a symbol of long-term thinking, a monument to the value of a long-term perspective.

And while 10,000 years is no business horizon, it’s possible to interpret the clock as symbol not just socially, but also in terms of dollars and cents. In a short-term world, where most businesses are rated by the quarterly numbers, it is a living monument to making scaled-up and lasting investments, and not pulling the plug too soon.

Who better than Bezos to put up this monument? In his first report to Amazon.com shareholders in 1997 he said: “because of our emphasis on the long term, we may make decisions and weigh trade-offs differently than some companies.”

The company was founded in 1994, listed in 1997, and but didn’t post profit until 2001. But by the time it did, it was far bigger and more influential than imagined. It was on the road to becoming what it is today: the world’s biggest online retailer, period. Reflecting a final coming of age after 15 years, the share price (AMZN) has doubled and doubled again in the last two years.

Arguably Bezos’ true leadership genius at Amazon in the early days was not just seeing the long-term and scalable possibility (beyond book retailing) but also being able tactically to hold the short-termers at bay for long enough to do the building required.

As a business culture, we’re locked into annual reports and rapid product life cycles. We’re quick to say “fail-fast” and pull the plug on a fledgling project that’s in the red. Or we make a return, so good, let’s cash it in and do something else.

But Bezos was able to see and to say that a critical component of business leadership success is looking beyond your own or your competitors’ time horizons and scale horizons.

The leadership message in the clock is “Don’t think small. Forget short-term wins. Look beyond your time horizon. Give weight to the long-term possibilities. Build for tomorrow and allow the full potential of a project to evolve.”

 

read more