Stephen Shu, PhD – Page 75 – Professor of Practice of Behavioral Economics

March 1, 2005

In Search of Better Ways to Measure the ROI of Blogging

I was motivated to write this post based on some discussion at the CEO Bloggers’ Club.

I contend that the investment by most companies in blogging has been minuscule to date. Plus the number of companies making investments is minuscule. When corporate blogging does become more prevalent, I think more sophisticated frameworks for measuring ROI will evolve. These frameworks could be based on models from online marketing, accounting, or finance theory.

So what can one do today to get a grasp on ROI?

Rather than getting caught up in the minutia and complexity of trying to measure returns directly, here might be another way to think about this. It applies the concept of opportunity cost from economics.

Given certain conditions (e.g., no blogging fatigue, no blogging addiction), bloggers may tend to ante up more when the returns are sufficiently positive. When the returns are negative (not sufficiently positive), they tend to take money (i.e., blogging time) off the table and perform other things (this relates to the concept of opportunity cost).

Thus, if you can measure the returns on the activity that you’ve switched to (presuming you’ve switched away from blogging), then you can presume that your blogging return is not more than the activity you’ve switched to.

A little abstract, but here’s another way of coming at it. One could hypothetically say, how much $$ (or $$/hr) would it take you to switch away from blogging entirely (or for an hour, a year, or all of the above, say)? As you go through the complex process of thinking through this, you get an idea of time invested (which is the primary investment for most) versus the minimum return you require to stay with blogging.

If that number turns out to be less than or equal to $0, well then you are either a blogging addict or being coerced by your employer.

So rather than looking at blogging ROI, what’s your blogging opportunity cost?

Steve Shu
Managing Director, S4 Management Group

February 28, 2005

Is Corporate Blogging a Skillset Yet?

In the past, I’ve used Monster.com to do some unorthodox things:

serve as a data point to find out where early-adopters are with respect to a technology
provide a sanity check on how much a particular technology has dispersed
figure out where labor demand is (e.g., Sarbanes-Oxley).

Now to give a little context on how this might work over time, back in 2000 I was chartered to find customers and partners that were ripe for extensible markup language (XML) technologies (I actually secured a six-figure $$, early adopter customer using laser sighting techniques and based on what they posted on the job boards). Anyway, if I recall back in 2000 when I did a search on Monster, there might have been 20 job postings returned max. Now it is 2005, and the number of postings matching XML exceed 1000, and Monster cannot return all of the results it is so many.

With that as backdrop, is blogging an actual skillset? Well, here’s an excerpt from an actual marketing job posting by Working Assets:

"The ideal candidate is the kind of person who:
• has a gmail account
• reads at least two of the following blogs daily (talkingpointsmemo,
dailykos, atrios, juan cole, wonkette, instapundit, brad Delong, MyDD)
• took time off from your job to volunteer during the election campaign
(or tried but couldn’t get anyone to call you back).
• Maybe never bothered to finish the Cluetrain Manifesto but you got the
point."

Cool. That’s pretty darn specific about blogging, so this might lead
one to believe that blogging as a skill set is really coming into its
own.

If one looks further though, searches for "blog", "blogs", "blogging",
etc. all seem to return from 10-30 job postings. Most of the jobs are
technical or product management jobs that match the tech players in the
aggregation space and list of major software vendors that blog (as
cited by Dave Sifry’s study
of the corporate blogosphere) – this are companies like Macromedia,
Microsoft, etc. Plus the job skill is a "desired" skill. That said,
many of the non-technical jobs involving blogging surround community
development (e.g., ESPN, AOL).

Couldn’t find postings for premo, hired guns positions (like evangelist Robert Scoble).

Maybe we’ll have to check the executive recruiter databases next … 😉

Steve Shu
Managing Director, S4 Management Group

February 28, 2005

MBA Degrees Cause Corruption … What The Bleep?

I respect the Economist. I am on totally on its side on this article. But I don’t understand why it is an article at all. The article leads off …

"SEVERAL of the
corporate scandals that took place in the early years of this decade
are currently being replayed in courtrooms from New York to Alabama.
The trials of top executives at HealthSouth, Tyco International and
WorldCom are reminding the public how unethical was the behaviour of
some of the nation’s top managers only a few short years ago.

The finger of blame for this behaviour is sometimes pointed at the MBA …"

In my mind, an MBA provides a number of things:

training on latest, best practice management and business theories
frameworks for tackling business problems
in some disciplines, explicit trade skills (areas like finance and accounting)
a language for dealing with other business people (just like French is a language)
networks of contacts
a brand and degree reflecting committment to business in of its own right.

The MBA is not a substitute for real-world experience.

It does not provide training in corruption.

That said (and perhaps I will weaken my case here a bit), and MBA can teach one how to recognize corruption or at least recognize where financial numbers are being played with.

To blame the MBA on corruption in the business world is ridiculous. This is somewhat like blaming those who have pursued engineering or science degrees on the atrocities of war and the machines and mechanisms used by governments to conduct war.

The reponsibility of proper behavior ultimately lies with the individual.

In the case of corruption during the bubble era, I think the problems lie in people’s appetite and greed. I am appalled by how some CEOs in that era could have received total compensation in the top 20 of all CEOs (we’re talking $50M+ per year) and destroyed shareholder value by 10x+.

Steve Shu
Managing Director, S4 Management Group

February 27, 2005

Chapter 1 of Business Blogging Book By Shel Israel and Robert Scoble Posted

Shel Israel and Robert Scoble have released Chapter 1 of their forthcoming book on business blogging. For those that have not been following that closely, the book will be one of the largest authoring collaborations on the Internet as it will draw on experiences and feedback from the blogosphere at The Red Couch. Very unique means for building the book, and the structure of the book looks great so far. Even with the knowledge and power of Scoble, it would be impossible to write a book covering the subject without considering the rest of the blogosphere. The first proposal for Israel and Scoble’s book was produced in December, and the authors cut a (speculative) lucrative book deal with Wiley earlier this month. There is also a lot of hot of the presses drama behind the scenes associated with pioneers Dave Winer and John Robb being excluded from the deal. You can view some of it here (Scoble), here (Winer), and here (Robb).

Steve Shu
Managing Director, S4 Management Group

February 26, 2005

Big Brother’s Watching Your Email and Blogs

Some of the same filtering technologies that block SPAM from getting to you will now be applied to keeping your ~~trap~~ mouth shut. (Hey, we’ve trained the SPAM technologies so well they will be getting used against us!) Blog readers of Jeff Nolan saw first hand reporting of these types of company products at the annual Demo conference in Scottsdale, Arizona. With respect to this particular subject, you can look here, here, and here on Jeff’s blog.

Ephraim Schwartz has an article just yesterday portraying his impressions of the growing trend underlying these products. Schwartz writes,

"This year’s show heightened my awareness to one trend in particular: high anxiety over what employees can publish in both
e-mail and blogs. There was a slew of products that monitor employee communications in one way or another, mapping them to
corporate policy on everything from offensive language and sexual harassment to outright prohibition of personal e-mail."

So if companies can’t get comfortable with their corporate policies on blogging, soon there will be no need to express the rules. Just encode the rules explicitly in monitoring software or train the devices using language processing and Bayesian rules like some SPAM filters. Based on Schwartz’s article, imagine:

pop-up windows appearing on employees’ screens telling them to reconsider what they are typing at any given moment,
managers getting scorecards of how many email and blog infractions an employee has, or
the legal department being automatically tied in the loop to approve what people write.

Blogging is big, but Big Brother is not too far off.

Steve Shu
Managing Director, S4 Management Group

February 25, 2005

On The Blog People By Michael Gorman of the American Library Association

I’m almost at a loss for words here. I hate to put words into Michael Gorman’s mouth because he’s written a lot in here. Michael seems to characterize blogging as a phenomena not unlike that of the pre-bubble/irrational exuberance era of the late 90s. Here our failure would be (methinks) our voratious appetite for fast-food information as opposed to scholarly knowledge. Hat tip to Jeff Nolan for the link.

February 24, 2005

Consumer Choice and Self-Control, Part I

As promised last week by Steve, I’m going to be
guest-blogging a little this week on some topics that I’ve been thinking about
as part of my research efforts. My job description says that I’m a marketing
professor, so you’ll see that these musings are heavily oriented toward a
consumer behavior view of the world. But my training is in behavioral economics
and decision theory, so I’ll borrow heavily from those fields as well.

Ask any consumer about the amount of choice he or she would
like in their daily lives, and you are likely to hear a preference for
unlimited choice and complete control. So it is no surprise that consumer
trends have been toward increased choice, even to the point of completely
customized offerings. On the grocery shelves we’ve seen an explosion of variety
– you can now find dozens of types of toothbrushes (an item that used to be
considered more of a commodity), along with new varieties of pasta sauces, snack
crackers, and salsas. The old “cup of joe” has been replaced by a completely
individualized venti decaf triple shot
hazelnut nonfat latte at your local Starbucks. Online, you can visit an
auto manufacturer’s website and customize a long list of options for your new
car, even down to the unique paint job. And in restaurants, perhaps nowhere is
unlimited choice better represented than the buffet line that seemingly
stretches for miles. We are also seeing the trend for increased choice and
control affect public policy, as it becomes part of the debate around
privatizing social security. Proponents of privatization point out the benefits
of allowing individuals control over their own investments, a sentiment many
find enticing.

But at the same time as the number of choices has increased,
dissenting voices have come forward to point out the downside of the trend.
Perhaps most vocal has been psychology Professor Barry Schwartz, author of the 2004
book The Paradox of Choice: Why More Is Less. Schwartz pulls together a long
list of academic research in psychology and marketing to demonstrate that too
much choice can leave consumers overwhelmed and overstressed. Consider, for
example, an often-cited study by Professor Sheena Iyengar of Columbia University and some of her colleagues. They set
up a jam-tasting table in a grocery store, stocked with either six flavors or
twenty-four flavors. With only six flavors, shoppers were able to choose a
favorite, and jam sales went up. With twenty-four flavors, shoppers felt
overwhelmed and often left without buying any jam. In other words, too much
choice ended up being a bad thing.

But is too much choice always a problem? Why does more choice work well at Starbucks, but not when buying jam? I’ll address this conundrum in the next installment, plus offer some prescriptive advice for dealing with increased choice. And then we’ll consider whether there’s another "dark side" of increased choice that we also need to pay attention to. Stay tuned!

Suzanne Shu

February 24, 2005

Where Are The McKinsey Blogs?

Just a moment ago, I had one hand on my credit card ready to buy up the domain names for www.McKinseyBlog.com, www.BainBlog.com, www.BCGBlog.com, www. AccentureBlog.com, www.DeloitteBlog.com, www.PRTMBlog.com, www.BearingPointBlog.com, and www.EYblog.com.

They are all available. Are the traditional management consulting firms a bunch of laggards when it comes to blogging even though the rest of the industry is starting to show signs of life for corporate blogs?

Well, blogs succeed because of individuals so don't go making a run on those corporate-oriented blog domain names.

Now I did find a reference here that talks about how Microsoft and McKinsey are encouraging employees to blog. But I have been unable to find a mass of individual management consultant bloggers out there. Now Tom Peters has an McKinsey alumni badge. One would think that the thought leadership of these firms (whether strategy- or implementation-focused firms) would lead them down this path. History has shown that traditional management consulting firms produce this type of work. Thought leadership includes areas like M&A as it relates to shareholder value, farm animal-growth share frameworks for marketing, pricing methodologies, IT alignment … the list goes on and on.

So far, I have reconciled this in my mind as follows: The use of corporate blogs is not yet widespread enough to justify pressing this too hard in the consultancy firms. There are many other reasons that come to mind too (such as management consultants tend to tackle problems from the top down, i.e., flowing from strategy & conceptual through implementation so blogging may appear at lower-levels), but slow dispersion of corporate blogging to date seems to be the most natural explanation to me.

That said, there are CEO and senior executives forming blogs. And blogging is supposed to be one of the fastest growing things on the Internet as reported by a number of analysts. As management consultants frequently work at the CEO levels, hopefully they are at least getting a chance to learn about the blogging medium that their clients are starting to use. Tom has at least.

Steve Shu
Managing Director, S4 Management Group

Update (5/23/05): Due to continued traffic to this post, I thought it would be good to forward point to an update I had …

Update (1/4/07): After close to two years, here's a new post on more consulting blogs.

Update (3/19/07): McKinsey alum Paola Bonomo commented here (thanks, Paola) and points us to a wiki of McKinseyite and McKinsey alum blogs.

Update (4/16/09): McKinsey blog here?