Questions, Questions

Facebook: Checking Under the Hoodie

May 18, 2012

On the day of its monster IPO, I review questions central to Facebook: CEO, business model and strategy. (Full disclosure: I am a fan, though a skeptical one.)

Zuck as CEO

After Mark Zuckerberg’s appearance last week in front of investment analysts in New York, you’d think that the largest IPO in U.S.history hinged on the acceptability of  his attire, a hoodie sweatshirt. This was, to put it mildly, stupid. The main question about Mr. Zuckerberg is not his hoodie, but what’s under it – his mind and its ability to manage a large corporation, one that he wields considerable control over.

Zuck is not the first young entrepreneur to run a major company.  Silicon Valley turns these out on a regular basis.  Yahoo!’s Jerry Yang was 28 at its IPO in 1996.  The Great Steve Jobs was in his twenties when Apple raised its middle finger toward IBM in the 80s.  Google’s co-founders, Larry Page and Sergey Brin, were 31 and 30 respectively at its IPO.  But the road to greatness is never smooth.  Jobs, famously, was shown the door in 1985, but eventually returned, a wiser man, years later.  Yahoo! had some success, but also a lot of  trouble and continues to struggle.  Google’s life has been relatively calm, making its IPO in 2004 under Eric Schmidt, who is almost 20 years older than the founders.  Schmidt headed the company for 10 years before stepping aside for Page in 2010.

Much has been made about Facebook’s board of directors and Sheryl K. Sandberg, the 42-year-old COO, a former Google executive.  Zuckerberg’s debut in New York may have not have been impressive, but Facebook can still insist that Zuck is guided by a blue-chip team.  Coverage over the weekend pounded away at this, which, if nothing else, proves that Facebook has some great media relations support.  The New York Times ran a long profile that implied that Zuckerberg had the talent and vision to lead, and that he is willing to listen, seeking advice from Bill Gates and Steve Jobs.  The story also walked through a gallery of Who’s Who of Silicon Valley, Peter Thiel, Marc Andreessen, Sean Parker – all senior, experienced hands – who are advising Zuckerberg.  And, of course, there’s Sandberg, who did much of the talking during the road show.

Some of the headlines elsewhere were even more supportive – ZDNET: “Apple co-founder Steve Wozniak: Me + Steve Jobs = Zuckerberg.”   The story’s author, Emil Protalinski, disagrees with this in the subhead — Zuck has vision, but is no longer the technical force behind the company.  Still, Facebook had to be pleased with the headline, particularly as it began to make the rounds on Twitter.

What should we think then?  First, remember that nobody is ever as good, or ever as bad as their press coverage.  Heroes seem to always have a skeleton or two hidden away and serial killers always pay their rent on time and say hello to their neighbors.  Zuckerberg isn’t the Second Coming of Steve Jobs.  (In his twenties Steve Jobs wasn’t even The Steve Jobs.)  Second, a player is only as good as his team.  Just ask LeBron.   As the New York Times story attests, he has a team – a great one.  But does he listen to it? Up to now, he has shown that he doesn’t have to — stories abound that he made the Instagram purchase without consulting the board.  Many of these stories are told to show that he has the vision and will to succeed.  Still, it’s reasonable assume that some board members might have questioned the wisdom of buying an app that has no business plan and hasn’t made any money for a $1B.

My point is not to argue whether buying Instagram was a good decision, but that Zuck didn’t consult his board.  He took action and got sign off later.  The deal was significant – even for a company that is now valued at more than $100B.   This doesn’t bode well for Facebook as a company.  It is one thing to run a private company as if you are Louis  XIV (l’entreprise, c’est moi), but quite another if it is publicly held.

Conclusion: Analysts should be concerned whether Zuck will listen to his advisers.  Right now, I’d say he doesn’t have to and isn’t inclined to.

Part 2: Relevance vs. Dominance

While there is considerable room for debate, I’m inclined to think that Facebook will be relevant, but not dominate, in the advertising market and the expectation of dominance is what is driving the IPO valuation to $100B and beyond.  We will have to wait a while to see how Facebook’s business model works out, or whether it can find a new way to raise revenue.  Right now it relies heavily on display advertising and that just doesn’t seem good enough.

Supporters say that it has a billion users and is continuing to grow.  But digital audiences have a way of wondering away from the crowd – Compuserv and AOL had huge (for their time) user bases and you could argue that these two companies serve as a good as any for analogy of MySpace and Facebook.  Yahoo! tried to maintain its dominant size by collecting companies and websites, increasing its offerings.  Initially that seemed to work, but eventually it users and employees became confused and exhausted.  It is still relevant, but it is not dominant.

Facebook has room to grow, but how much isn’t clear.  Budgets are flowing its way and that can be expected to continue for the next year or two.   GM’s ad budget, however, is flowing away from it and other advertisers may follow.  Many are still trying to get a handle on Facebook – how to use it and how incorporate it into the marcom mix.   There is growing concern that display ads just don’t work on Facebook and that’s where more than 70 percent of its revenue comes from.  Sure, Google can be upended, but right now ads work when people are searching, not when they’re socializing on Facebook.

Even if Facebook does capture significant share of advertising dollars, it appears that the $100B valuation is at the high end of optimism.  Shawn Tully at Fortune argues that it would have to grow to $61B in annual ad revenue, from its current $3B, to justify as an investment at this valuation: “So Facebook would need to go from a glamour name to capturing something like 8% of all of the world’s ad market in 12 years, grabbing business from the likes of Google and News Corp.  Can it happen? Sure.  But nothing spoils a Wall Street party like a sermon on the math.”

Apple has already shown us over the last 10 years that nothing is impossible.  But new kids come out of nowhere all the time to undermine the status quo.  (Just ask Myspace. ) These days its Pinterest, which has moved into No. 3 in social media views and may drive purchase decisions better than Facebook .

Conclusion: Facebook’s primary source of revenue  still hasn’t won over the industry. Facebook really needs be more persuasive on this or find another way to make money.  Even if it does, it will be a challenge to justify the huge IPO.

Part 3: “Toward complexity”

Remember how Facebook began and how it evolved? Thefacebook, as it was called then, was initially a platform for hooking up — a way for students to check out a classmate to see if they were available.  The most important aspects of an account then were “interested in” (as is meeting men, meeting women) and relationship status.  Since then, Facebook has evolved to focus on the feed and photos, which is great, but it has also continually acquired apps as it has grown, making its interface ever more complex.  Yahoo! started off as a index of the Internet and formed into a site that tries to do everything, none of it really well.  Google, yes, has added a lot to its offering, but it still has a streamlined interface and it knows it does one thing well: search.

Facebook has tried hard to retain simplicity, for example, borrowing the group concept from Google+ and sorting the news feeds (Top Stories vs. Most Recent), but it keeps banging up against the Dunbar’s number,  which says most people can have only about 50 close friends and meaningful relationships with a 150.  What this means for Facebook users is that the more connected you are beyond 150, the less engaged you are.  More connections means viewing more photos of the lunches and cats of people you vaguely know.  Less personal relevance to the user makes the news feed less interesting.  Less interesting means less engagement (and updating).

Hence, Facebook’s efforts to break your connections into groups and sort your newsfeed.  Your post now has a 20 percent chance of being seen by your friends, which leads us back to less engagement.  Dunbar’s number indicates that networks are less beneficial after they expand beyond a certain size.

Sure users can go int0 Facebook and set up groups, or let Facebook do it for them, but a number of  platforms are already offering immediate and simple solutions:  Limited network social platforms, or as I call them, unsocial media that intentionally limit your connections and protect your privacy or, at least, limit public exposure of private information.  These include Path – which limits users to 150 connections.  There are other platforms, too, that appear unrelated at first, but that may steal users’ time, such as Line, sort of an instant Twitter list made from and limited to your contacts.

Lastly, privacy doubts will continue to haunt Facebook.  In many ways, this may be its weakest point.  Facebook’s ubiquity means that it is used more than it is trusted; the social networking incarnation of Windows.

Conclusion:  The strategy maintaining size by adding offerings is similar to Yahoo’s failed strategy of being “everything to everyone” in the late 90s.  Complexity kills.  This, combined with a human inclination (if Dunbar is right) toward platforms offering immediate limited networks will continue to challenge Facebook.  The company, no doubt will survive, it may even prosper, but what about the small investors who bought into the IPO?

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Racing Toward a Distant Horizon

April 6, 2012

Ever faster.

494 Words

On a winter morning Andy and I went to his sports club, Uki Uki, which offers a variety of programs for children.  This has been our typical Sunday since he was two.  There was snow that day and so we played soccer indoors.  His team managed to win one game out of many and my adult team lost them all.  I did, however, avoid a face-plant on the hardwood court, a private victory.  I was moving with unaccustomed speed and caught a toe on the floor.  I became airborne at an angle that guaranteed my head would arrive first, but tucked into a shoulder roll and came up standing – a desperate act executed with surprising agility.  After soccer, we moved on to his swimming lesson, which always makes things better. Lose five games; go swim.

Much later in the day, when he had settled into bed to listen to a story, I remembered that this was his last day as a six-year-old.  This last year had passed with particular speed.  He’d entered elementary school and much of his schedule was already decided.  When he was in daycare he had time, but now the distance between our meetings was longer and it exaggerated his rapid growth.  Pants that were too long one day were above his ankles the next.  He seemed to gain kilos overnight.  Good that we still had his sports club on Sundays.

“Tomorrow you’ll be seven.”

He nodded his head.  He always knew when his birthday would arrive, anticipating each, as he looked ahead to adulthood .  When he turned four he said, “Soon I’ll be able to drive a car.”  I laughed then, but now thought he was right — soon he would be driving.

“We had kind of a rough day playing soccer today” I said. “Did you see me fall?”

He nodded, “Kakuii, daddy, Ultraman mittai.” (You looked cool, like Ultraman.)

I picked up a book and began reading one of  his favorite stories, Dr. Seuss’s “The Big Brag.”  He stopped me and asked about the meaning of “brag” and I used the word “ibatteru” to explain.

“Do you ever do that — brag?”

He shook his head, “Not much, how about you?”

“Often,” I said.

“Honto?”

“Yes, I brag about you.   Andy can play soccer.  Andy can swim.  Andy can ice skate.  Andy can rock climb….It’s OK, isn’t it?  That I’m your biggest fan?”

He nodded yes.

We went back to reading the story and soon he was asleep.  In the morning, he’d be seven and one year closer to driving, but he was already racing toward a distant horizon, somewhere in the future.  I had to recognize the inevitable, that there’d be a time when I was no longer around and our paths would not cross again.  Still, if he had a child as good as mine, one that kept him company and held his hand on occasion, then I knew he would be happy wherever he went.

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Mr. Woodford’s Revolution

December 2, 2011

(355 words)

It’s one thing to start a revolt and quite another to lead a revolution.  Michael Woodford, the former Olympus CEO, will be finding this out soon enough.  The revolt spilled out publicly with his firing Oct. 14, but Mr. Woodford had started it privately with a request for the resignations of Tsuyoshi Kikukawa, then Olympus Chairman, and others directly involved in some dubious transactions.  Upon his firing, Mr. Woodford promptly packed up his documentation and went to London, and from there, investigative bodies and numerous news outlets,  seemingly speaking to anyone with a notebook and pen.  Last Friday, he returned to Tokyo for the Olympus board meeting, of which he was still a member.  Triumphant, at a news conference, he praised the news media for providing the pressure that forced Olympus to admit that the transactions were dubious and the resignation of  executives seen as being directly involved, particularly Mr. Kikukawa.

Now, Suichi Takayama is president, and Mr. Woodford is still unhappy because Mr. Takayama was as a member of the board that showed little hesitation dismissing him.  Mr. Woodford feels that Olympus needs an entirely new board and he has resigned his seat so that he may  lead an outside takeover of the company.  This is a bold objective and possibly one that is too far to achieve.  Many stakeholders may agree with his assessment of the transactions, which are still being investigated, but the whistle-blowers are seen as a troublemakers as often as they are heroes — they may be right, but their message is often unwelcome, particularly when, as in this case, the company sheds huge amounts of market value.

In the end, Mr. Woodford may have to settle for reinvigorating interest in corporate governance in Japan and retire to a life of good works at non-profits.  In discussing his legal bills recently, he seemed to hint at a lawsuit.  A book deal could also offset some of his legal fees, but there’s no guarantee that there will be lasting interest in this adventure, particularly if no yakuza are involved and it turns out that it was simply corporate crime — more “Wall Street” than “Goodfellas.”

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Noisy CEOs

Olympus Questions Still Unaswered

November 15, 2011

(516 words)

Just when a pleasant autumn wind was rising, Olympus blew up with a scandal that — depending on how it’s handled — may seriously degrade the foreign investor view Japanese corporations.  Although, it appears that Olympus may avoid de-listing, but there’s a lot it still hasn’t answered.

The details can be had elsewhere, but the Cliffs Notes summary is that Micheal Woodford, a long-time employee and the first foreign CEO of Olympus was unexpectedly and with remarkable speed fired by the board of directors for not having cross-cultural understanding.  It quickly became obvious that what he could not understand was why in the world Olympus would squander billions of dollars on companies that existed almost entirely on paper and nothing more.

Amazingly, Olympus stuck to its position, saying that there was nothing wrong with its acquisitions and that it was right to fire Mr. Woodford.  To support this statement it offered no evidence, but instead tried the “Blame the Employee” tactic.  This tactic might have worked at one time, but now largely results in self-embarrassment, particularly if the employee was your CEO and he has copies of all the relevant corporate documents in his possession.

For Mr. Woodford, the documents were crucial in making his case to the news media and investigative authorities in the U.S. and Britain.  He didn’t have to take his documents to the news media, but it was an effective way to pressure Olympus to move things along.  And, boy, things moved along — a week ago Olympus admitted that the deals were to cover up bad debts from the 90s.

Olympus seemed to think that this was a good explanation.  Except that it wasn’t.  The press and analysts reacted with, “Holy shit, you’ve been doing this for 20 years?  What else are you hiding?” (I’m paraphrasing.)  Apparently, holding bad debts until a more appropriate time was an accepted practice back then, but this would indicate that Olympus has institutionalized corruption for more than two decades.

Now, with this much money involved in this particular manner (disappearing companies in the Caymans), it made sense that the next question to be asked was:  How much of the cost of these deals was to cover postponed bad debts and how much was for services?  There’s no immediate strong evidence of extortion, or the involvement of organized crime or even disorganized crime, but Olympus’ story just has too many wholes in it for the question not to be asked.  Of course, this type of  crime — high-dollar and high-collar – doesn’t need yakuza or the mafia to be involved, as US companies have so ably demonstrated.  Bernie Madoff wasn’t an organized crime type, but he was organized and he committed a huge crime.

For now, we are left with an intriguing story that has only become more intriguing, because of its opaqueness.  Mr. Woodford seems to have weathered the ad hominem attacks that are always directed at whistleblowers.  There is even call among some Olympus investors to bring him back as CEO, but that is still over a distant horizon and  investigative wheels have a tendency to turn slowly in Japan.

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Sumo’s Long Road to Redemption

September 30, 2011

(779 words)

Last Sunday, when Hakuho raised the Emperor’s Cup for the 20th time it seemed that sumo had finally reached a turning point.  It has been 18 months since Asashoryu’s comet crashed to earth and two years this week since I nearly pulled Asa into my party in Daikanyama.  Since that time things have gone from bad to worse, to disastrous, as the Japan Sumo Association (JSA) struggled to deal with one scandal after another.  Things are a little better now – Wednesday Kotoshogiku became the first new Japanese Ozeki in four years — and that will  generate some local interest, attracting some fans back to the fold.

But it is a long road to redemption and it is not clear that the JSA can get anywhere close to  it.  While Hakuho has been cleaning up since Asa left ( 8 wins out of 9 tournaments), there are still doubts that the JSA has cleaned house.

Questions surrounding the scandals of the last two years continue to haunt sumo.  Two weeks ago came news of the arrest of the fellow, a former bosozoku gang leader and bar owner, who had been involved in the incident that resulted in Asashoryu’s departure from sumo.  (Former gang members were also involved in incident with Ebizo, the kabuki actor, last November.)  One can’t help but wonder how Asa came to spend a long night drinking with this fellow during the first week of a sumo tournament.  Yet, this is but one of many questions.

Kotoshogiku, the new ozeki, is of the same beya as Kotomitsuki, the ozeki who was kicked out of the JSA in the baseball gambling scandal last spring.  Prosecutors have dropped the charges against Kotomitsuki for a lack of evidence.  Kotomitsuki has since filed suit against the JSA for wrongful dismissal.

And then there is the lingering stench of the yaocho scandal, which was uncovered in cell phone text messages during the baseball gambling investigation.  Some lower-ranked rikishi seemed to be throwing matches in return for cash from higher-ranked wrestlers.  For example, if you were in juryo,  you were making 1 million yen a month, roughly $120,000 US a year, and if you lost that ranking, you would receive less than a tenth of that – a mighty fall.  One way to avoid this would be to a pay lower-ranked wrestler to throw a fight and let you stay in juryo rank a little longer.

This sounds like a tradition that had somehow become twisted; an extreme form of the sempai-kohai (senior-junior) relationship.  In this case, the “take care of me, and I’ll take care of you” became collusion.  The competitors may have rationalized it as a way to spread the wealth around – lower rikishi  got a nice pay day and the higher rikishi stayed in the money.  But this is speculation.

We still have to wonder what these investigations achieved.  The yaocho investigation, which at first seemed broad and far-reaching,  has churned into confusion.  Several rikishi resigned and some were forced out.  Some of  them are suing the JSA.  Three executive board members, Kitanoumi, Chiyonofuji and Kirishima said they would resign from the board after some of their rikishi were implicated.  The spring Tokyo tournament was cancelled and NHK, an institution nearly as archaic and insular as the JSA, suspended live broadcast of the Nagoya tournament.  This had a double impact – loss of media revenue for the JSA and loss of audience, as many viewers undoubtedly moved to something else.

The tournaments also lacked competition.  At times one wondered if the other rikishi were simply waiting for Hakuho to get old, or injured, so that someone else might win a tournament.  With Asa out, Hakuho knows that he really has to excel to quiet the question of “What if Asa were still around?”  His 2010 streak of  63 consecutive wins  spoke very loudly.  But the competition has been made even weaker with expulsions of so many rikishi.

Still, it was inspiring during the dismal days of the 2011 Setsuden Summer to watch Hakuho’s solitary insistence upon excellence.  Another source of inspiration was Kaio’s push toward Chiyonofuji’s all-time wins record of 1,045.  A battle-scarred warhorse, Kaio had won six tournaments, more than some yokozuna, but he had never managed to win consecutively and so never rose to the rank of yokozuna.   After 23 years, he arrived at the Nagoya tournament on the brink of  lasting glory and yet it appeared he might not succeed, as all his injuries all seemed to rise against him.  But win 1,046 finally came and soon after he retired.  The record is small solace for having never made yokozuna, but it is solace all the same.  And even small solace is more than we’ve come to expect from sumo.

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To School: Along the Green Route

August 26, 2011

(1,083 words)

Following the Green Route to School

The wind came through a different window one morning last week and a cooler day arrived with the message that autumn was coming.  Soon, we will be back to a schedule set by my son’s elementary school.

Going to school in a commuter city requires timing and teamwork.  Breakfast is brief, accompanied by quick check for the TV weather forecast.  Sometimes, there’s a sudden rush to finish homework.  When we leave, Andy shoulders his rucksack – a leather, square-shaped pack that contains the day’s educational equipment.  A school rucksack costs from a few, to several hundred dollars, and is built to last.  With books inside, it’s a challenge for a first-grader to carry, but all do.

We are usually out the door by 7:35 a.m., and walk up the shopping street and then take a right, crossing over the trolley-like Setagaya-sen.  Here, we encounter the first of many safety measures.  A security guard stands watch, ensuring children’s safe passage at the crossing.  We say good morning and he responds in kind, and we go up a slight hill to the Green Route.  There are three routes children take to school: Green, Pink, and Yellow, named for wide bands of color along both sides of the street, providing clearly marked pathways for children to school.  Automobile traffic on the Green Route is blocked during the mornings and afternoons when most children are walking to and from school.  The only serious hazards on the way are two busy streets, but each has a traffic light that responds to the crossing buttons.  The second busy street, directly in front of the school, has a crossing guard during the peak times.  Lastly, the routes are monitored by PTA parents on bicycles, making sure nothing is amiss.

Along the Green Route.

Most of the 600 students arrive at the school between 8:05 and 8:15 a.m.  So what starts as a quiet walk down an empty lane becomes a boisterous column of children, bobbing rucksacks, mostly red for girls, and dark blue for boys, but also light blue and pink.  As we near the school, “It’s a Small World,” the Disney song, can be heard wafting over the neighborhood from the playground sound system.  The school principal stands outside, greeting children as they arrive.  I thought all this was something special for the first week of school, but this is how children are welcomed every morning.

The school is of standard Japanese design, which to an American looks like a minimum security prison — a high fence, enclosing a gravel-covered area, framed on two sides by the plain white block of the school, and the other sides by the plain white block of the gymnasium and a line of cherry trees.  The playground is austere, but to a child who has spent previous years playing in a walled garden, it is as vast and as full of possibility as the open range.  Children cross it — instinctively it seems — by running.

Playground: "As full of possibility as the open range."

The school building has a wide entrance where children take off their outdoor shoes and switch to their standard white indoor shoes.  The building inside is as fresh as the exterior is austere.  As in most Japanese schools, the hallway is not down the middle of the building, but on one side, running along an exterior wall with windows the full length.  This allows natural light and air to enter the building through the hallway windows and continue through the classroom windows on the hallway side.  The classroom’s external wall has sliding glass doors that face the playground.  In essence, the classrooms have natural light and air entering from both sides of the building.  Sitting in a desk, the students have a views of open sky and trees to their right and left.

The teacher is a cheerful young man I mistook for someone’s older brother. Watching him one morning, his enthusiasm encouraged the children and they remained surprisingly attentive and participative throughout the pedestrian lessons.

At lunchtime, the students turn their desks to form a square of four each to facilitate chatting.  Lunch is wheeled into the classroom on a cart and a team of children don server smocks, masks, and hats to dole out lunch to the others.  Only when the last server has taken off his smock and sat down, do the children eat.  The rule is that they focus on eating for the first few minutes and then talk, but most children focus on talking.

A covered walkway extends along one side of the playground from the school to the gym.  Wide doors on the gym’s ground level and, above these, wide windows can be opened, and when they are the gym feels like a shaded area on the playground.  Again, what appears Spartan on the outside, is sunny and airy inside.  On the roof of the gym is the swimming pool.  The view from there is attractive enough that when Andy forgot his swim gear one day, he happily spent the swim lesson studying the landmark buildings on the horizon.

After school, the children who don’t go directly home go to an adjacent building connected to the school gym for after-school daycare. The children can play inside, on the playground, or in the gym.  The play is facilitated by several adults.  At 5 p.m., the children are called in for a one hour study session until 6 p.m., closing time.

The walk home from school isn’t nearly as exciting as the walk to school, but in some ways more fun. When I’ve accompanied him, Andy and his friends meander along, talking, shouting, laughing, and challenging each other the whole way.  One boy is tall and thin, with eyeglasses, another is almost as tall, a third is shorter and heavier build, and the fourth, small, looking almost two years younger than the others.  Nothing much happens on these walks, unless someone gets angry, and then the wounded party swears that he’ll never have anything to do with the offender.  This continues until they part their ways and go to their homes.  The next morning all is forgotten.

I still walk with Andy when I have time in the mornings, and on the occasional afternoon.  In those first days of school, I sometimes walked all the way to school with him and his friends.  These days, we part where he meets his friends at the first traffic light.  I simply stop and let him walk away, waiting to see if he looks back to wave good-bye.  At first, he often did.  Even now, sometimes, he still does.

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Aneki:

One Last Samba

May 13, 2011

(730 words)

A steady, grey rain falls as I come out of Musashi-shinjo station.  Uncertain of the way, I ask for directions, but suddenly it all becomes familiar again. Strange, how the years can clip by so quickly and yet leave memories untouched.

On this little shopping road nearly a decade ago, a friend, Mizuho “Missy” Mitsuhori, and I joined the dancing in the local samba carnival.  I wouldn’t have done it without my friend’s insistence.  If she thought you should do something, well, it was probably something you should do.  At worst, it would be fun.  Missy always focused on fun — and friends.

I pass her beloved yakitori shop – Torimasa – on the left.  The door is slightly open, showing the long narrow counter where you could find her almost daily.  This was where she met her second husband, a man patient enough to draw her out from behind her evening sports newspaper and engage her in a conversation.

Missy loved the horses and read up on the races every day.  The Emperor’s Cup was her day to herd us out to the Fuchu race course.  I hadn’t the slightest interest in horse racing, but going to the races with her and her husband was a splendid way to enjoy a sunny autumn day.   She liked other sports, too.  She was tall and athletic and sports and her blue-collar view shaped her world.  She couldn’t stand to hear me speak my polite classroom Japanese, admonishing me every time I lapsed into “watashi” – “Ore! Omae ha otoko!” If you were a man, you’d better speak like one, so I gave it my best shot.  Missy’s lessons in blue-collar Japanese significantly raised my understanding of my karate instructor and the guy who collected cardboard boxes in my neighborhood.

Missy had a biting wit and no time for fools.  But if you weren’t a fool, only a little lost, then she’d help you without even the slightest pause to give you an opportunity to thank her.  One day she came to my desk and wrote on a sheet of paper, アネキ.  “This,” she said, “is what I am to you.  I’m your big sister.”  Missy was big sister to a lot of people.

I’m now near her apartment.  There’s a playground across from it.   The ground is muddy and a dozen or so people are huddled under a white tent.  I hand the white respect envelope to a former colleagues and then take my place under the tent.

When anybody ever claimed that Japanese were conformist, I always had a winning counter-argument in Missy.  She spoke her mind and was an intentionally noisy presence in the IBM Asia Pacific office.  I helped her install the theme from the “Ichty and Scratchy Show” on her PC so when she turned it on in the mornings it would play.

It is time now to come up to the altar and make an offering of three pinches of incense.  This is always the hardest part, but I’ve done it several times and so try to do it in a way that Missy would like:  Nice martial bows and one, two pinches — and that’s as far as I go maintaining restraint.  I wobble through the third and step back to look at her photo.  It’s an enlargement of her company photo ID.  It has been at least 10 years since I have seen it, but I know it.  I return to the tent and have a long talk with yet another former IBM secretary, who explains that most people came to the wake the night before.

We get busy with life and we don’t talk to the people who made a difference; who made us better than what we were, and shaped us into what we are now.  The years rolled by and the correspondence was too few and now it’s finished.

We come forward one more time to put flowers inside her casket.  Then we step back and wait for her time to leave.  When the hearse is ready, the music for the start of the horse races blares out.  Then the hearse pulls onto the street and the music switches to “The Theme of Inoki,” a samba cheering on the pro wrestler.

Two days later, I muster the courage and read her last post.  Have a look now, and you’ll know how my aneki was.

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Fog of War

Mistakes Cloud bin Laden Coverage

May 10, 2011

(600 words)

The White House’s mishandling of the details of commando raid that killed Osama bin Laden has undermined the effectiveness and credibility of the military action.

When a big, positive news story is impending, there is a tendency for communications professionals to rush it without taking the time to ensure the accuracy of what is being reported.   Eventually corrections will need to be issued and these may overshadow the original news narrative.

A corrected story often isn’t an updated version of the original narrative, but rather a new story entirely that focuses on the errors.  In addition, a news analysis story may appear that focus on the errors, explaining what happened and why.  Meanwhile, the original story gets pushed back into “yesterday’s news.”  Simply stated, a corrected story becomes the story with twice the coverage.

In the case of the bin Laden raid, the White House could have announced the basics of the raid without offering details, but it quickly lost control of the story, with  several versions floating around simultaneously.   One spokesperson ensures consistency, but in this case, with the military and other agencies involved, quotes were flying everywhere.

The focus should have been on a daring, successful raid, which despite trouble with one helicopter, had met surprisingly little resistance considering the profile of the compound’s residents.  The enemy had been caught off guard and overwhelmed quickly.

Instead,  we were soon entirely focused on the corrected details: bin Laden hadn’t participated in a shootout and hadn’t he used a woman as a human shield.  She was not killed, but she was his wife.  And, oh yes,  his luxurious mansion quickly became austere headquarters for directing terrorism.

Bin Laden had first been reported as participating in the shooting, which is why there is now excessive focus on whether he was armed at all.  As Brian Till points out, if bin Laden had been hit with a bomb, as Pres. Obama considered before approving the commando strike, there would be no discussion of whether he was armed.

The U.S. military has made up stories before (Pat Tillman) and so these recent errors inevitably bring up longstanding questions about the military’s veracity and undermines trust in even the basic details of the raid.

Other mistakes:

– White House spokesman Jay Carney used the phrase “fog of war” to explain the contradictory stories.  This was not his phrase – it was offered by a reporter.   This phrase was the title of a book by Robert S. McNamara, U.S. Secretary of Defense during the Vietnam War, and more notably a documentary by Errol Morris about McNamara, and carries negative connotations of the military disinformation campaigns of the era.  While a phrase may seem useful, it can come back to haunt you.  This is why spokespersons are trained to answer in their own words.

– Whether to releasing photos of bin Laden’s body should have been decided in advance, or at least, very quickly.  Some conspiracy believers will not be persuaded by photos anymore than others are not impressed by a long-form birth certificate.  They are not interested in evidence.  The only question that the White House needed to be answer was whether the release would prove useful.

Right tone:

The White House did one thing right – tone.  The ceremonies commemorating the victims of 911 were warranted, but there was no “Mission Accomplished, I’m the Commander-in-Chief” posturing.  Making too much of Bin Laden’s death, just as making too much of  his life, is to once again raise this terrorist beyond what he deserves and give him the status that he so craved and was so willing to kill for.

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Japan: An Enignma Wrapped in a Cliche

April 27, 2011

(939 words)

Much has been written about Japanese culture in the wake of  the 311 disaster.  Some of it has been insightful, and some of it clichéd.

During Meltdown Week, I found this post on Jack McCafferty’s blog:  “Why is there no looting in Japan?”  The answers posted varied, many of them self-serving, others vaguely racist.  After many years in Japan, I have learned that, basically, I really don’t know anything about Japan.  I  live here, but that doesn’t mean I understand it.  So I re-posted the question on Facebook.  A young Japanese woman answered, “We were taught not to be selfish and think just of ourselves, but also others.”

This collectivism, thinking of the group before the self, also explain why a metro area of 30 million can stay remarkably civil day after day, despite packing into commuter trains.  Of course, not everyone behaves, but usually they do.

Going-along-to-get-along can lead to passiveness and this is where the critics of Japanese culture come in.  New York Times reporter Ken Belson noted in a story on jishuku, or self-restraint, that:  “Even in a country whose people are known for walking in lockstep, a national consensus of the proper code of behavior has emerged with startling speed.”  Even after several years in Japan, Belson fell for a cliché.  Writing on deadline will do that to even the best.  The truth is that it was not simply self-restraint, but sadness.  This country was in mourning, quietly and informally.  Japan’s tidy farms and factories had been rolled under the sea.  Children swept away.  A funeral shroud of silence fell over Tokyo.

One morning, I found a wire story that stated the workers as the Fukushima complex, like all Japanese, followed a samurai code of obedience that required that they follow orders from their managers.  (I haven’t been able to find the passage again, and assume it was wisely deleted.)  Not understanding Japan is one thing – everyone has trouble, even Japanese.  However, assuming that you do understand it because you have read James Clavell’s “Shogun,” is infinitely worse.  Should a Japanese reporter say American behavior is defined by a code of honor from the late 19th Century migrant laborer known then as the “cow-boy”?  Mr. Belson, on a better day, offered a story that explained the workers’ motivations — social responsibility and protecting their homes and neighborhoods, though for many, all had been swept away.

One of the better news sources, the Christian Science Monitor, ran a story by a reporter awed by of the polite apologetic language of counter clerk at a car rental:  “We are so sorry to tell you that we have no vehicles for rent at all.  I have no excuse for not being able to be more helpful.”  A lovely misunderstanding of the situation.  The clerk and the reporter are in the formal relationship of customer and service-provider, so it would have been more surprising for the clerk to slip out of this set piece of interaction and speak informally:  “Sorry, bro, all out of cars.  Can’t help ya, that damn disaster in Tohoku.”  As for not making an excuse, the clerk may have felt no need to point out the reason.   Japanese conversation has a tendency to leave  the obvious unstated, in this case, the disaster.  It could be any combination of these, or none.  As I said, I live here, but that doesn’t mean I understand it.

The best course, it seems, is to avoid explaining the entire culture in one encounter.  That doesn’t work anywhere:  “You see, he pointed a gun at us.  In America this is a common way to demand respect.”  Still the temptation is there.

From Time magazine:  “What’s unique about Japan is really a combination of a deep belief in Buddhism and Shinto religious rituals and what we call a collectivist culture where others are at least on par with the self, if not more important.”

The Time writer offers an example:  “We walked to the corner and the light turned red and there were no cars.  I started crossing and I looked back and she and the others were still standing on the corner waiting.  I said ‘It’s ok, there are no cars.’  She smiles and the light turns green and then she starts walking and says, ‘Now doesn’t that feel better.’  It has nothing to with ‘Is it safe to cross?’  A red light is a signal that everyone must obey.  And it’s not blind obedience to authority, its devotion to a real communal culture where the focus is always on the other.”

Is this an example of something? Maybe, but of what, I’m not sure.  Tokyo residents jaywalk often, but they do it carefully to avoid being honked at (tragically embarrassing), and making full-body contact with high-speed, internal-combustion vehicles.  We can’t know why the woman waited for the light.  She might have felt the need to encourage the foreigner to respect law.

She continues:  “In restaurants, you never pour your own sake, you have to notice whose glass is empty and you serve them.  It’s these little rituals [that have prepared them for this crisis] so that even if you have one bowl of rice, you share it with a stranger.”

You shouldn’t let a person’s glass become empty – fill it before that happens.  But isn’t this just good manners with a bit of extra ritual?  As for sharing a bowl of rice with a stranger – that’s common decency.  I as recall, Americans of a certain belief system refer to this as “being Christian” and “Christian charity,” but, perhaps, it is part of the traditional code of the cow-boy.

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TEPCO’s Failure to Communicate

April 21, 2011

(727)

Watching TEPCO handle the Fukushima reactor crisis, I’m reminded of Strother Martin’s famous line, “What we got here is failure to communicate.”

TEPCO’s failure was so  complete that it is difficult to focus on any part, but for the moment let’s consider how to it dealt with the numbers.  In crisis communication, as in investor relations, there are the numbers and there is no changing those.  They are what they are. Your only hope is explaining “why” they are what they are, and, if you’re really lucky, “how” you’ll try to change them.  That’s it.

If the corporation does not put its numbers in context, someone else will, and they are under no obligation to do it fairly.  The anti-nuclear energy crowd seems to be better organized and often appears as the sole nuclear expert in news stories, such as in the fourth paragraph here.

Let’s look at the coverage of the upgrade of the crisis to a Level 7, here, here, and here.   Fukushima’s upgrade was based on the total amount of radiation released – roughly 10 percent (though if the release continues, much more) of Chernobyl.  This needed to be part of the lead and in the headline: “Crisis upgraded to Level 7 based on total radiation released,” but look how far into these stories you have to read before you get to the number.  This is the “why” of the story, but its near the middle or lower in every story.  Now look at TEPCO’s handling of it.  It could have cited why it was rated a Level 7, but it simply acknowledges the rating.  I know, regulations and all that, but there could have been something more here.  This looks like TEPCO falling on its sword rather than trying to give a full, honest accounting.

TEPCO consistently posts data without much explanation.  Most of what it does is simply from tradition and style.  There is a reluctance for  Japanese corporations to explain themselves and this really hurts them when they have a crisis, particularly if they are dealing with the international press.

There’s nothing wrong with putting your numbers in context if it is accurate.  Putting the numbers in perspective helps people to better understand what the numbers mean — not “x number microsierverts,” but “x number of microsierverts, or the equivalent of half a year’s worth of background radiation.”  Instead, TEPCO simply dumps its data in terse releases that are difficult understand.  If you make it hard for reporters, you make it hard for your company, too.

Recently, TEPCO began pumping out 25,000 tons of highly radioactive water from one of the  reactors.  Does anybody have any idea how much 25,000 tons of water is?  Neither do I.  Maybe engineers measure their water in tons, but everyone else uses volume rather than weight.  Nobody buys half a kilo of water at a convenience store, so why not do what the Wall Street Journal does here and explain the amount in Olympic swimming pool equivalencies.  You learn 25,000 metric tons (2,200 pounds) equals about 10  OSP (Olympic swimming pools).  That’s much easier to imagine than 25,000 tons, which has no meaning to most people.

Press releases  are explanations to the public.  The worse a corporation does with these, the less likely its actions will be understood and the more likely that its information will be doubted.  Opacity looks like a thin veil of deceit and audiences assume that it is.

Several years ago, I advised the Republic of Botswana’s Embassy in Japan.  At that time, Botswana was well known for one number — the highest AIDS/HIV rate in the world.  That was true, but a more accurate statement, and one I insisted upon, was that Botswana had the highest documented AIDS rate in the world.  This often resulted in a parenthetical explanation that many sub-Saharan countries had yet to document AIDS rates.  It also highlighted that Botswana was doing something about its problem, allowing an opening to mention a different number –  a third of all gem quality diamonds came from Botswana and this revenue was used in the war against AIDS.  The story often changed from “highest AIDS rate in the world,” to “diamond revenue in the war against AIDS.”

Crisis communication is almost never about winning the game, but about staying  close and avoiding a devastating loss.  TEPCO’s executives mishandled the crisis, clearly, but the company’s public communications has exacerbated the situation.

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