Henrich Greve

Would you like to have a Renault or a Nissan (well, Datsun brand) for less than USD 5,000? Soon you can, if you live in India. These cars are part of a bold initiative by Renault-Nissan CEO Carlos Ghosn to harness frugal engineering, a set of practices intended to launch new models with radically lower development and production costs than has been done before. Jugaad is the term used by Indian engineers for cost-conscious engineering, and Mr. Ghosn wants to deploy it in other Renault-Nissan markets as well. It is a disruptive innovation in how new model development is done, and it can give a major boost to Renault-Nissan in price-conscious markets in developing nations. It can also make customers elsewhere wonder why they are stuck with so much higher prices for their cars.

Jugaad practices have good cost consequences, but are not without risks. One is the issue of selling cars much more cheaply in some nations than others; an issue that gets worse because one practice is actually to take older-model designs from developing markets as the initial platform. In other words, after Nissan customers in Japan, Europe, and USA pay for the design, it is re-used for free in India.  The other is the question of whether this approach gives the same safety standards that we expect of cars everywhere. Frugal engineering can be too cheap.

Why does Mr. Ghosn take these risks? One answer could be that the payoffs are potentially high in the rapidly growing emerging markets. Another is that there is little to lose in India, where Renault-Nissan started out with a 1.4 percent market share last year (now doubled). But a third opportunity is very intriguing: He may like the attention that comes from doing bold actions.

Gerstner, König, Enders, and Hambrick have published an article in Administrative Science Quarterly that looks at the connection between CEO narcissism and adoption of disruptive innovations. They find that narcissist CEOs are more likely to adopt disruptive innovations, and they are particularly likely to do so when the area of innovation is attracting attention. The reason is that attention is exactly what narcissist CEOs want, and they get it by bold actions in areas of activities that are closely watched.

Is this a good thing? Well, researchers often ask why so few firms adopt disruptive innovations, giving the impression that firms should be doing more of it. And maybe that is the right answer. But disruptive innovations are risky actions that firms would take very judiciously and probably not mix with other risks. And herein lies the problem: narcissist CEOs don’t calibrate overall risks, because as far as attention goes, more is always better. So we are stuck with the dilemma of normal CEOs calibrating risk but taking too little overall, and narcissists not calibrating risks and probably taking too much.

Do I mean to suggest that Mr. Ghosn is a narcissist? No, not at all; it was just an example of a bold action. He has by sheer necessity needed to take many bold choices in his life as a CEO. And he has written an autobiography to describe them.

Choudhury, Santanu. 2013. Renault, Nissan Bet on Small Cars in India. Wall Street Journal, June 11, 2013.

Gerstner, W.-C., König, A., Enders, A., & Hambrick, D. C. (2013). CEO Narcissism,Audience Engagement, and Organizational Adoption of Technological Discontinuities. Administrative Science Quarterly, 58(2), 257-291.

Julie Meyer

Erdogan, the Prime Minister of Turkey, is not listening to his focus group. The thing about focus groups is that you don’t (always) get to choose them. The web gives a voice to special interest groups and brings sites which rate value like Trip Advisor, Mumsnet, IWantGreatCare to life. Governments and politicians will be rated online soon too. Just as technology and digital business models are transforming mature industries, so ‘the crowd’ is transforming democracy. This isn’t about mob rule or Arab Spring. We all will be doing the governing, not being governed in the future.

The infrastructure of democracy- otherwise known as government – hasn’t really changed in 500 years. When people required horses to get to London in order to be represented, then the concept of parliament and the need for Westminster was a powerful one.

Today, people, and not just 200 year olds or digital natives can make themselves heard through YouTube, Twitter, Tumblr and Facebook. Direct. Not in the slow motion of representative democracy currently on offer in major western democracies: I vote you in, and you go off to Westminster and do what you do. I learn about it later, and shrug my shoulders if I disagree. Indirect is *out*. We all feel we know best. We demand to be heard. We don’t accept the proxy of government as it’s currently constructed. We are ignoring it or voting for UKIP which might be the same thing.

After the devastation of World War II, the world quite rightly gave itself a bearhug. It wanted a collective kind of bond, and established models of ‘collective exchange’: the NHS being the prime example. The implicit social contract was one of deference: we vote you in, we trust you, and we endure the consequences. The web flips that on its head, making peer to peer exchange and crowd-sourcing the de facto model of social exchange: collective action through individual empowerment is not only possible but the imperative.

I thought about all of this as I spent the last 4 days in Istanbul at the Dell Women’s Entrepreneurship Network (DWEN) annual event where the protests went right in front of our hotel.

Here 200 alpha females descended upon this city of 13 million to talk about the bottom-up, tech-fueled, Dell-enabled empowerment while the protests surged by individuals who begged to differ with a very top-down, patriarchal approach to government.

At its core, the Istanbul protests are about a symbol – the one major park in the city which could be torn down. But it’s really about the transparency over the decision-making as to what to do with the park. And it’s even more about whether the government is sliding towards a disintegration of church and state separation. You have to peel back the onion a bit to really understand what’s going on. The Erdogan government believes it’s delivered on its social contract. They’ve ushered in growth over 3 elections spanning a decade. Whether growth would have happened anyway is another matter.

I couldn’t help but think of Valery Gisard d’Estaing’s remark when France voted ‘No’ to the Lisbon treaty; ‘Vote again to get the right answer’.

Government with representation – the very basis upon which democracy has its credibility – is getting granular. What ‘representation’ means is being defined very specifically these days. As data expands exponentially, sampling is becoming less relevant as there is a very real sense that all data can be measured if you have the right tools. That is, I don’t need to be represented; I only really need to be counted, and I want to participate directly in the major decisions, not just the one big decision about who gets into office. A very powerful form of direct democracy could be waiting in the wings. Representation doesn’t mean that you ‘get into office’ and then you shut the door, and do your job. The door is open. If you are a political leader, you must keep establishing your connection, your mandate, your leadership. Government is a constant campaign.

Leadership without followership is bankrupt. Erdogan’s decision to fly to North Africa while the country is erupting in protests and now a general strike shows perhaps fatal signs of arrogance. It is a strategic error to aggravate your citizens by turning your back on them while they are flexing their muscles.

The average 20 year old in the United Kingdom doesn’t identify with the political party offerings. They are however socially and politically aware and active, but traditional party membership is lower than ever. The digital natives see that things can change quickly in the online world. Why is government so slow to implement change in the ‘real world’?

Institutions preserve problems, and entrepreneurs and start-ups are created to solve problems which the founders can’t believe don’t exist. In their mind’s eye, the world should work a certain way, and they become obsessed to bring that future to the present. There are strong similarities between entrepreneurs and how they shape the world, and how citizens see their ability to shape society today. Not everyone will be an entrepreneur. However, we will all play a role in shaping our societies in an increasing entrepreneurial way. The world of kickstarter and kiva where people contribute their own funding to solve social problems is coming soon to your local community.

I can see a world very soon where people shrug their shoulders about what their local government does with their tax money, but they will contribute amounts – perhaps small at first – towards solving community problems. On top of paying their taxes. They will just assume that the collective exchange model of local governments will be ineffective, and that they will have to take charge. The rise of new schools is evidence as well as new models of healthcare like the Circle Partnership. Could it be that the Big Society is really little societies in action all around us?

Not too long ago, my eye caught a Times article which stated that 57% of all revenue collected through Stamp Duty went to administer – you guessed it – stamp duty. That’s collective exchange in action. It’s fat, it’s not using technology to be efficient. New lean government which is being co-created with local little societies have low administration fees if any. It’s not that social justice is less important; it’s the means whereby it’s achieved is not through big government, not through a 60’s era collective exchange framework.

The individual is on the rise. No longer are strong individuals thought of as narcissistic, selfish, greedy. They are seen as capable of creating positive change for society. The web enables us to choose what we consume more easily than ever. We will consume government differently as well as we will co-create it on a regular basis, not just at the time of the election. We will not be separated by terms like ‘labour’ and ‘conservative’, but empowered by causes, campaigns and beliefs. The early adopters of ‘new government’ or ‘government

in the internet age’ are on the streets of Istanbul as well as taking their GCSE’s in London. But early adopters spread to the majority and before you know it, you have a revolution on your hands.

Government is being redefined. Leaders emerge when history taps them on their shoulders. Witness Mandela, Thatcher, Aung San Suu Kyi, Pope John Paul II. The next Prime Minister of both Britain and Turkey are not only listening to their focus groups right now, they are building them. They must have a systematic way of listening daily to what the people want or the people will find someone who will. The entrepreneur knows he or she must think big, start small, and move fast. That world has reached the altar of politics. The holy curtain has been ripped, and behind it, stands just you and me. We the people. The revolution is afoot.

Henrich Greve

If this year is like last year, people in various places can soon watch Citigroup bankers clean beaches, prepare summer camps for children from poor households, and distribute food to the hungry. They participate in what Citigroup calls Global Community Day, a “Day of Service” done by many large corporations. I can imagine various reactions to bankers picking garbage and operate soup kitchens, but as a management scholar I think “Nice, but could they also do something that uses their expertise?” In all fairness, they do, in the form of teaching financial literacy to people in need.

Other companies, such as IBM, place a much greater emphasis on matching their capabilities to the activities. IBM appears to have a day of service, but it is actually a collection of various ongoing skill-based programs involving entrepreneurship and use of technology to serve communities. That’s what IBM knows how to do; start and grow businesses and use technology.

It turns out that these are two competing approaches to corporate community service; both with proponents in the community of social corporate responsibility (see my previous post for more on CSR). I usually study diffusion of strategies and technologies among firms, but occasionally I wonder how such community service spreads. A forthcoming article by Ryan Raffaelli and Mary Ann Glynn in Academy of Management Journal has looked at the question, and found an interesting answer.

It was probably obvious to you that the day of service is easier to do than the skill-based programs. It is not necessary to take into account what people know; they will be doing simple stuff. It is not necessary to motivate them for lengthy commitments. And, for workers who find the tasks unrewarding, going out to do something useful and social with co-workers can be a good motivation in itself. Think about it: can you identify people in your workplace who would be fun company for a beach cleaning trip? I can.

And it turns out that the difficulty level affects how these programs spread. The easy day of service programs only require that the firm is connected to the CSR community where such practices are promoted. Many large firms have such contacts; they can afford them and cannot afford to seem uncaring about their communities. The difficult skill-based programs spread to firms that have CSR contacts and are in industries where such programs are wide-spread.

This finding makes the story relevant to my favorite topic of how strategic actions spread. In order for a company to do something new, it needs to learn two things: (1) is it good? (2) how is it done? Often, as in this case, one or a few network ties are not enough to learn both of these. It takes either a rich network or multiple networks for it to happen. So, strategic change will continue to be hard, and bankers will continue to serve soup once a year.

Raffaelli, R. and M. A. Glynn. Forthcoming. Turnkey orTailored? Relational Pluralism, Institutional Complexity, and the Organizational Adoption of More or Less Customized Practices. Academy of Management Journal,forthcoming.

The regular change of the ‘leader’ is an interesting phenomenon and it is not always the case for high-tech, R&D driven industries. A great counter-example is the microprocessor industry, which shows a similar growth pattern and also exhibits clear generations: remember the XT, AT, 286, 386, 486, Pentium sequence? However, the leader has always been the same, at least until recently: Intel. What is the difference between these markets? This is the puzzle that we tried to solve in a paper with Elie Ofek of Harvard Business School a few years ago. We argue that the answer lies in the nature of the advantage that ‘being a leader’ buys for the firm. When advantage means ‘higher return on R&D spending’ then a dominant firm tends to invest more and, as a result, likely remain the leader.

However, if the advantage simply means a ‘loyal set of locked-in customers’, then the leader has an incentive to lay back, which generally makes it lose its dominant position. The Economist article correctly points out that the nice pattern on the infographics might be changing. The reason is that gaming increasingly moves to the Internet and is increasingly dominated by social gaming. Does this mean that hardcore action games, based on consoles will disappear? Probably not. But growth may slow down and this might also change the industry dynamics.

As we discuss in our recent blog post on HBR Blog Network, the death of over 800 people in the collapse of Rana Plaza, a building with garment factories in Bangladesh, spurred widespread outrage over working conditions in offshore factories. In the search for blame, many commentators point to the absence of building codes, lack of workplace safety rules, and the greed of US corporations.

Many of the solutions proposed are around paying people more to manufacture in the USA. But however well intentioned the ideas are, this is not the best use of one of the most productive workforces in the world. The true solution, we think, lies in understanding the changed nature of modern supply chains and identifying new business models better suited for managing them. Over the last years, labor intensive production keeps moving to ever-cheaper countries. But producers in many of the newer entrants (such as Bangladesh) tend to be small and highly disaggregated. By some estimates there are over 4,000 garment factories in Bangladesh alone. This has made it increasingly hard, if not impossible, for a global retailer to ensure compliance with standards. In a knee-jerk reaction some firms have decided to just give up and exit the country altogether — a move that clearly does not serve the interest of the workers and which pulls valuable resources from developing economies.

The need to improve supply chain compliance does not come from moral arguments alone; the business consequences are also increasingly unescapable. Some apparel retailers attempted to deny that they had any connection with the Rana Plaza building that collapsed — but data at the level of each shipment is increasingly available to both researchers like us and to the general public. In fact, the press was quick to point out that some of the deniers did, in fact, source from Rana Plaza recently.

Let’s do some math to see how expensive the necessary improvements in safety and working conditions would actually be. Non-governmental organizations have calculated that it would cost about $600 million per year to bring all Bangladeshi factories up to Western standards. Given that Bangladesh exports $18 billion worth of clothing per year, we are talking about a 3.3% cost increase for garments. In other words, a T-shirt currently costing $3 to produce would cost $3.10 to produce properly. This is a very small price to pay for the ability to claim that no workers producing your closing were in any danger of dying.

In fact, ecolabeling is known to lead to price premiums of 10-50% and we believe one can expect similar price increases with “safe-workplace labeling”. What holds back improvements is thus not direct cost concerns, but the ability to ensure compliance with norms in a supply chain.

We think the answer to that problem lies in the novel business model pioneered by companies like Li & Fung Ltd., a supply chain intermediary that owns no production, transportation or retail facilities, but which is the key link in the sourcing practices of some of the world’s best known companies. This firm created a multi-billion dollar business for itself by sourcing “better” in places like Bangladesh than their customers can by going there directly.

Firms like Li and Fung ltd. have created a new business model that is based on simultaneously providing the flexibility of competitive sourcing and the confidence of long-term relationships that radically increase voluntary compliance even in complex, distributed supply chains. When suppliers and buyers have stable long-term relationships with intermediaries like Li and Fung, their incentives are better aligned, and a small factory in Bangladesh finds it in its own interest to improve workplace conditions that help maintain its long-term relationship with Li & Fung rather than risk losing it all for small gains.

An intermediary of this kind that devoted its energy to ensuring workplace safety could both bring the benefits of free trade to low-income countries and improve workplace conditions without punitive compliance costs or brand damage for the buyer. Such an intermediary organization (in this case probably an NGO) would collect the extra 3.3%, build relationships with buyers and sellers and would use the trust of its relationships to have the confidence to certify that clothing was produced according to proper standards.

Henrich Greve

When North Korea threatens to attack South Korea or fires missiles into the sea, the press reports are typically accompanied by pictures of military parades like the one below. I am wondering if I am the only one struck by the contrast between the missile pointing skyward and the decrepit truck underneath. Once again it is clear that North Korea only spends money on what its leadership cares about, so the best they have of trucks (and trucks can be used to carry food and other useful tasks) is far inferior to their missiles.

Through economic isolation and diplomatic pressure, many nations are trying to make North Korea back off from its program of developing nuclear warheads, re-starting nuclear reactors and fuel processing facilities, and improving missiles. But one might ask, what is the point? The knowledge on how to make nuclear warheads and missiles and operate nuclear reactors is already there. Stopping the program just means a pause; it can be re-started any time the leadership pleases. In fact, there is talk they are planning to re-start a nuclear reactor that was idled in an earlier treaty. So, it would appear that North Korea can give no credible promise that a stop will be permanent, which suggests that other nations cannot reward it for stopping either.

To see why it still makes sense to call for a stop, we need to talk about violins for a moment. In a paper in Organization Science, Gino Cattani, Roger Dunbar, and Zur Shapira discuss why nobody makes violins like the peak period Cremona violins anymore, although they are now seen as the best instruments that exist. These are the violins made by Stradivari and Guernari that are owned by the richest and played by the best (usually on loan; the richest and the best are different people). Current violin makers can get close to their sound, but they cannot reproduce it. Why can’t these violins be made anymore? Cattani and coauthors point out that they became famous for their sound much later than their actual creation, as a result of music performance moving from small spaces in courts to larger concert halls or outdoor performances.  That condition, which is how top-of-the-range violins are used now, is where they are superior.

But something happened on the way to fame: the masters building the violins died and their workshops stopped producing them. Molds and some other technical knowledge persisted, but tacit knowledge disappeared. This tacit knowledge has proven impossible to recover completely, even by violin makers who have significant experience maintaining Cremona violins. It has something to do with wood selection, preparation, and varnish, and how to use those in combination.

Now let us go back to disarmament. It is clear that much technical knowledge and documentation can be preserved from a nuclear program and a missile program, and some machinery can be kept in working order. But even today, making highly complex items call for tacit knowledge. If tacit knowledge is not used, it will decline, and the ability to re-start the program will gradually wither away. So there is merit in stopping, even if there is no credible promise of re-starting. Indeed, it would not be surprising if North Korea encountered difficulties in re-starting its idle nuclear reactor.

Cattani, G., R.L.M. Dunbar, Z. Shapira. 2013. Value Creation and Knowledge Loss: The Case of Cremonese Stringed Instruments. Organization Science, articles in advance. 

Postscript: I am aware of the research showing that a sampleof modern violinists chose a modern violin over a Stradivarius. It might suggest that there is some brand value embedded in the experiences that violinists and listeners get from a Stradivarius. But it could also be because playing a violin in an Indianapolis hotel meeting room wearing welding goggles is not an ideal way to assess a violin that plays best in concert halls.

Timothy Rowley

A healthy capital system is an important ingredient for European competitiveness.  Indeed, investors look for stability and predictability, which leads to the necessary flow of capital into our markets.  Besides the key role government plays in creating confidence, there are three main actors in the capital system: “owners” who supply financial resources, managers who apply their expertise to build attractive returns on the owners’ investments, and boards of directors that oversee the process.  The entire system relies on each actor contributing such that economic value is created.

However, many recent media reports on corporate scandals and the financial crisis — which can then lead to sovereign crises — have placed much of the blame on boards saying they have not fulfilled their duties.  It seems that boards of directors in many regions are the achilles heel of the capital system.

Efforts to increase European competitiveness should include plans to improve board effectiveness. The question is what improvements would be most beneficial?  What changes are low-hanging fruit – relatively easy to implement, but have significant impact?  These are questions we gave to 40 participants of the International Directors’ Program at INSEAD.  This program is designed to help directors hone their skills and identify best practices for overseeing organizations and managers.  The participants represent most of the EU in addition to other regions of the globe (see chart below, IDP4 participants by nationality).  They’re in the governance trenches observing first-hand the good and bad of European boards.  What do they think will improve board effectiveness?

We ask our participants to identify the practices and changes that would most significantly improve European governance.  The suggestions included:

Participants of IDP 4:

Tips for Improving European Board Effectiveness

• More independent (from management) directors
• Diversity of thinking (not just board network)
• Higher quality board members
• Higher quality chairs
• Better information flowing to boards
• Restrict number of board appoints for individual directors
• Independent selection of board members (based on meritocracy)
• Improve transparency (better disclosure conflicts of interest)
• More involvement in strategic issues (new markets, acquisitions, etc.)
• Recognize/learn from failures
• Better organization of meetings and agenda
• Improved orientation and training plans for directors
• Less employee representation
• Directors spend more time on board work
• Ensure differentiated strategies
• Be more aggressive/tolerate failure
• Ensure differentiated strategies

Two improvements on the list were identified by nearly all IDP participants and interestingly were common across European countries.

First, the most common response from the list was to ensure more independent directors on boards.  Many IDP participants complained that managers tend to have too much control over the business investment process. “And many directors feel obligated to managers and thus are not willing to fully test their ideas and assumptions, too They were not suggesting that boards take over responsibilities from managers.  Indeed, boards must keep their hands off the controls.  However, they did suggest that boards must serve as more critical evaluators and engage in thorough debate even when managers are stubbornly defending a particular direction.  In addition, independent directors are more capable of identifying and addressing conflicts of interests that may cloud the managerial decision-making process.  For example, what happens when a CEO’s compensation plan rewards growing revenues and the CEO continually suggests acquisitions?  Independent directors are more likely to see and deal with these issues. Our group recommends directors are independent from managers, do not all come from the same informal networks, and do not represent specific shareholders only. The underlying principle is to attract independent thinkers who will fully apply their skills.

Second, diversity on European boards was cited by many IDP participants as a critical factor for improving effectiveness.  Interestingly, this diversity was not particular to gender, which is forefront in the media and the focus of recent regulatory initiatives.  Rather our group recommended many kinds of diversity – nationality, industry and functional background, age, culture, etc.  It is interesting that many telecommunication (cell phone) companies attempting to capture the lucrative 15-25 year old market have boards where the average age is over 50.   Boards continue to look like “old boys networks.”

There are many opportunities to improve board effectiveness and we only list a few.  Our IDP participants have enrolled in this program to improve their board effectiveness skills through discussions of best practices, case studies and expert insights.  It is clear from their interactions that board effectiveness is complex.  However, competitiveness relies on all of us making changes to move boards forward such that they are fully contributing to a healthy capital system.

–

Tim Rowley - Professor of Strategy and Organizations, Director of the Clarkson Centre for Board Effectiveness, Rotman School of Management, University of Toronto.

Visiting Professor, INSEAD and Co-Director of the INSEAD International Directors Programme.

The goal of my articles to date here on the Linkedin Influencers platform has been to help you slow down and guide you on the journey inwards, to discover your true Self, to help you be the Captain of your Ship.

I have discussed that when you release the person you are truly capable of being you won’t have to look for that On switch when you start to present or communicate because You will be On all the time.

This journey inwards is something I will absolutely, definitely, 100% return to, because the journey of self discovery is never ending. Each and every day we should be learning something new about our Self.

Right now though I would like to start a series of articles to help you produce and present the best presentations you have ever made. Presentations that are meticulously planned and designed to inspire, to influence, to encourage, to make a positive impact, to motivate, to lead, to create change, to rally your audience to action.

It goes without saying that people need to be convinced by what you are saying.

Whether you are…

• Presenting at a conference
• Pitching to potential clients for that crucial contract
• Informing the general public through the broadcast media and online media platforms
• Launching a new product or service, or
• Delivering a key message to a team, to the board, or to stakeholders

There is no such thing as information only; you need to persuade your audience and your stakeholders that your information is worth listening to, that it’s accurate and that it matters to them. This requires the winning combination of the right content and the right delivery; the message and the messenger.

Photo: Steve Knight hosting British Chamber of Commerce Awards in the Painted Hall, Old Royal Naval College, Greenwich, London

There is a strict code of conduct and order of doing things to ensure you maximize your effectiveness and seize the opportunity.

So here we go with an easy to remember system and phrase to help you take the steps in the right order…

The Rules

• Prepared Goals
• Command Attention
• with Passion
• from You

When you put The Rules into action it becomes extremely apparent that there is a whole host of questions that you need to ask yourself before you get anywhere near putting pen to paper, or fingers to keyboard. Failure to ask yourself these questions will drastically reduce your chances of success, so let’s set ourselves up to succeed.

Prepared

1: Assess your audience…

• Who is going to be in your audience and what is their level of expertise?
• Who has the power to sign-off or block your proposal?
• Who is an expert advisor?
• Who is a potential user of your idea?
• Who is a supporter?
• Who is an opposer?
• Who is undecided?
• Who has zero knowledge?

When you consider those questions it becomes inconceivable to think that you can ever walk blindly into a presentation and expect to win your audience over without considering their needs and requirements. Once you know the answer to those questions, to the best degree that is realistically possible, you can start to produce your message.

2: Avoid the “So what?” factor by being crystal clear…

• What are you going to be talking about?… and the one that many people forget is…
• Why are you talking about it? i.e…
• What relevance does it have on your audience?
• Why should it matter to them?
• What’s in it for them?

Remember that it’s not about what you want to say to your audience, it’s what they need to hear from you.

Goals

Be 100% crystal clear about what it is that you want your audience to do.

Ask yourself these questions…

When the audience leaves after my presentation…

• How do I want people to feel?
• What do I want them to do?
• How do I want them to act?
• What do I want people to think?
• What do I want them to specifically remember?

If you don’t consider these questions then you are in the dark and your audience will also be in the dark, so make sure you shed plenty of light. People cannot see the path if you don’t light the way.

In my next article I will help you with the next step of The Rules: Command Attention www.yourvoiceispower.nl

Photo 2: Shutterstock, cristovao

Photo 3: Shutterstock, JoffreyM

Photo 4: Shutterstock, vovan

This article is part of the Linkedin Influencers series; I welcome your questions, thoughts, observations, and experiences there:

Another set of news concerns advertising revenues. Here, the positive news is that revenues have increased 30+% compared to the first quarter last year. There have been a lot of new advertising products introduced and mobile advertising is substantially up. The more pessimistic view is that despite these changes, profits remained flat.

To me the real worry is that there has not been any game-changing move from Facebook in the past two years. Sure, there is a lot of incremental innovation: the move to mobile, some new products, etc. But the user experience is essentially the same for years now (mobile or not, in fact with more ads, somewhat less attractive). The revenue model is also identical even if somewhat better executed. But the $5-6 billion revenue simply does not justify the valuation.