John Irving: A Study in Grit vs. Ability

The Wall Street Journal: “Most people would think of John Irving as a gifted wordsmith … But Mr. Irving has severe dyslexia, was a C-minus English student in high school and scored 475 out of 800 on the SAT verbal test. How, then, did he have such a remarkably successful career as a writer? Angela Duckworth (author of Grit) argues that the answer is ‘grit,’ which she defines as a combination of passion and perseverance in the pursuit of a long-term goal.”

“Though verbal fluency did not come easily to (John Irving) as a young man, what he lacked in aptitude he made up for in effort. In school, if his peers allotted one hour to an assignment, he devoted two or three. As a writer, he works very slowly, constantly revising drafts of his novels. ‘In doing something over and over again,’ he has said, ‘something that was never natural becomes almost second nature’.”

“It’s a similar story among the other groups that Ms. Duckworth writes about … including spelling-bee champions and sales associates: Grit predicts their success more robustly than innate ability. And there is no positive correlation between ability and grit. A study of Ivy League undergraduates even showed that the smarter the students were, as measured by SAT scores, the less gritty they were … To be gritty, an individual doesn’t need to have an obsessive infatuation with a goal. Rather, he needs to show ‘consistency over time. The grittiest people have developed long-term goals and are constantly working toward them. ‘Enthusiasm is common,’ she writes. ‘Endurance is rare’.”

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McNugget Reboot Targets Different Crowd

The Atlantic: “The reboot of the Chicken McNugget is a mechanism by which McDonald’s is continuing its effort to present itself as a ‘modern progressive burger company.’ Last year, the company announced the phasing out of chicken raised with antibiotics used in human medicine, said it would stop using palm oil linked to deforestation, and pledged to shift to cage-free eggs.”

“The revamped version of the Happy Meal staple will soon be free of artificial preservatives, instead containing lemon-juice solids and rice starch.”

“Through its rebranding process, McDonald’s has still managed to sell plenty of Chicken McNuggets, particularly to lower- and middle-income consumers who are concerned more about price point than about the impeachability of the company’s food sourcing. Instead, this tentative new McNugget is an effort to reach a different crowd. ‘There’s a smaller amount of consumers who don’t eat them, but might be willing to if they raised the bar on quality,’ said Darren Tristano, the executive vice president of the market-research firm Technomic.”

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There’s Nothing ‘Illegal’ About Retail Subscriptions

Bloomberg: “Adore Me is among a group of buzzy Internet retailers accused of sometimes placing customers into unwanted and hard-to-cancel retail subscriptions. Several of these companies have been hit with lawsuits alleging unfair business practices, including JustFab (apparel), Blue Apron (food delivery), and Birchbox (beauty samples). Adore Me is currently facing a lawsuit from a disgruntled subscriber.”

“There’s nothing illegal about retail subscriptions, of course, and many businesses with automatic renewals make the billing process crystal clear. Some services are transparent in their mission and describe themselves primarily as pay-each-month subscriptions, like razor seller Dollar Shave Club.”

“But weak and misleading disclosures are pervasive among subscription e-commerce businesses, says Francisca Allen, the deputy district attorney of California’s Santa Clara County. Allen pursued the JustFab and Stamps.com settlements, both of which included reforms to the companies’ websites. Consumers are losing tens or even hundreds of millions per year on unwanted automatic-renewal subscriptions, she says, and there’s not enough regulatory muscle to monitor and stop unfair practices.”

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Hardware Gone Soft: Apple Integrates the ‘Experience’

Quartz: “Apple’s big surprise in its quarterly numbers isn’t the end of 13 years of go-go growth but the emergence of Services as a very large revenue category … Services grew 10% in 2015, 15% in the December quarter, and now 20% in the last three months.” Consequently, “many on Wall Street and elsewhere have started to ask if Apple is going to treat Services as a separate business with its own profit & loss statement.”

“For Apple, this would be a momentous cultural shift away from its praised functional structure—one Tim Cook sees as fostering effective collaboration across groups such as operating system software, built-in apps, hardware, developer relations, and retail operations. The idea is for everyone to work together on the customer’s experience, as opposed to concentrating on an isolated goal: hardware revenue, App Store profits, or retail numbers.”

Apple “wins or loses through the experience it delivers to its customers. Once upon a time, revenue came mostly from its personal computers, small, medium, and large. Software and Services had one and only one purpose: pushing up personal computers’ volumes and margins. Hardware, software, and Services coalesced into what we now call an ecosystem. Over time, as a result of the size of the installed base of Apple devices, Services became substantial, the number two revenue category.”

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Chipotle ‘Loyalists’ Are Most Unforgiving

The Wall Street Journal: “Foursquare Inc. analyzed traffic data from its location-sharing mobile apps and found that Chipotle’s most loyal customers have been less forgiving of the chain than infrequent visitors. Last summer, 20% of Chipotle customers made up about half of foot-traffic visits.”

Says Foursquare CEO Jeff Glueck: “Interestingly, it’s this group of faithful customers that have changed their Chipotle eating habits most dramatically … These once-reliable visitors were actually 50% more likely to stay away in the fall during the outbreak, and they have been even harder to lure back in … Losing 2–3 loyal customers is the equivalent of losing about 10 other customers.”

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Airline Travel May Be Better Than We Think

The Washington Post: “While customer grumblings abound about airline travel, a new report suggests that satisfaction is actually at its highest in more than two decades … Highest rankings went to ease of check-in process and ease of making a reservation, while lowest scores went to quality of in-flight services (beverages, food, movies and music) and seat comfort.”

“According to the American Customer Satisfaction Index (ACSI) Travel Report 2016, top ratings go to JetBlue Airways and Southwest Airlines (which tie for highest satisfaction), followed by Alaska Airlines. Spirit Airlines brings up the rear, preceded by Allegiant Air and Frontier Airlines … Except JetBlue, all of the airlines’ scores went up from last year (JetBlue is down 1 percent), and some did so substantially. Budget airlines Spirit and Frontier, which rank last and third from the bottom, respectively, both had double-digit improvements in customer satisfaction, at 15 percent for Spirit and 14 percent for Frontier.”

“The overall customer satisfaction ranking in the 2016 survey increased 4.3 percent, to 72 out of 100 points, over last year’s score. This year’s score ties with the highest one that airlines have received since the survey began … American Airlines’ score went up 9 percent, to 72 points, and United Airlines’ score rose 13 percent, to 68 points … both airlines recently returned to serving free snacks in economy class … Customers’ embrace of airline loyalty programs slipped one point, to 73 this year, and the report points out that travelers find it challenging to redeem rewards.”

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Lucky Charms: Colors Sans Chemicals

Quartz: “Removing the artificial ingredients while retaining the classic flavor of a bowl of Lucky Charms has sent the food scientists at General Mills back to the proverbial drawing board time and again. After all, how does one retain the vibrant hue of the blue crescent moon without Blue #2? … And the moon is just one marshmallow type in the bowl. There are multi-colored rainbows, pink hearts, yellow hour glasses, and neon-green leprechaun hats, too.”

“It has turned the quest to get Lucky Charms to look and taste right into an art form of its own … For each marshmallow conquered, the food scientists must then step back and consider the state of the entire bowl, paying keen attention to any small difference in taste. The subtlety of Lucky Charms—versus the loud, fruity flavors one would find in a bowl of Trix—makes the task of achieving vibrant colors with muted flavor all the more challenging. General Mills hopes to introduce the new, all-natural Lucky Charms to market by the end of 2017.”

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Luxury Today: Big Data & The Rising Velvet Rope

The New York Times: “Today, ever greater resources are being invested in winning market share at the very top of the pyramid, sometimes at the cost of diminished service for the rest of the public. While middle-class incomes are stagnating, the period since the end of the Great Recession has been a boom time for the very rich and the businesses that cater to them.”

“In many ways, the rise of the velvet rope reverses the great democratization of travel and leisure, and other elements of American life, in the post-World War II era. As the Jet Set gave way to budget airlines, in places like airports and theme parks even the wealthiest often rubbed shoulders with hoi polloi … What is new is just how far big American companies are now willing to go to pamper the biggest spenders.”

“Many companies … have discovered that offering ordinary customers just a whiff of the rarefied air can actually enhance the bottom line, even if it stirs a certain amount of envy and resentment … And with the rise of the Internet and big data, companies can pinpoint and favor these wealthiest customers in ways unimaginable even a decade ago.”

“For companies trying to entice moneyed customers, that means identifying and anticipating what they want … But for people at the lower end of the market, as well as in the middle, plenty of friction remains. The trade-off is that the amount of hassle is precisely calibrated to just how much you are willing to pay.”

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Quote of the Day: Prince

“I’d rather give people what they need rather than just what they want.” – Prince Rogers Nelson (1958-2016)

It’s kind of the inverse of Mick Jagger: “You can’t always get what you want,” where what you need is something less than what you want. Prince (and David Bowie for that matter — and the Stones to be fair!), understood that what we need is something more than what we want.

Isn’t this also true of great brands? They take us somewhere beyond what we want. The magic is in what we need, whether we know we “want” it or not — until we experience it.

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The True Cost of Good Content

Jesse Weaver: “We want our web and we want it for free. However, the inconvenient truth is that there is a cost to doing business and at some point companies have to make money …. And so we sacrifice the magic. We devalue content and products by refusing to pay for the work it takes to create and maintain them. We are satisfied wading through poorly designed, ad-based experiences. And we allow our most precious resource, our time, to become a commodity to be traded, sold and manipulated. Our data is mined, our privacy discarded and our actions tracked all in the name of more targeted advertising.”

“And it’s not even the best scenario for companies either. In Q4 of 2015 Facebook brought in $5.9 billion in revenue with 1.59 billion active users/month. That’s roughly $1.23 of revenue/user/month. If, in the same quarter, Facebook moved away from ads and instead charged each active user just $1.50 a month for the service, their Q4 2015 revenue would have increased by $1.2 billion dollars, from $5.9 billion to $7.1 billion.”

“Now, what if Facebook started using that extra $1.2 billion to pay content creators for posting quality content on the platform? … Suddenly the revenue sources for content creators starts to diversify. The reliance on advertisers wanes. Feeds … are designed to promote connection and shine a light on creators. Bloated, ad-filled UIs start to disappear … Creators develop more immersive content experiences focused on the people using them. The balance of power flips back to the user … we stop being the commodity and we start being the driver. And when users are the driver, companies will focus on adding value, not just grabbing our attention.”

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