Ode to Cable TV

Cable TV is reminding me more and more of the real life towns like Radiator Springs, in the movie Cars, was based on.

Thriving towns cropped up on byways to serve weary travelers set free to roam and explore in their new automobiles. Those travelers needed a place to stay the night, eat, be entertained, fuel up and often times, get their car fixed.

But, as autos became less expensive and more numerous, they also became more reliable, faster and could cover greater distances.

Interstate highways replaced byways a mile down the road, and towns like Radiator Springs shriveled to shells of their former selves, caught between bustle and ghost town, as a generation or two of folks with a special fondness for the town didn’t want to move on.

When flipping channels on Cable TV, I feel I’m visiting one of those towns.

I get it. The interstate highway in entertainment is the long tail. Apps and the plethora of devices that we all have now serve that long tail by giving enough audience to niche shows to watch whenever they want, to make those profitable, while amassing enough users in total by creating lots of niche shows.

TV networks are still trying to maximize eyeballs for a given time slot, which means trying to put more content out with broader appeal.

But, now in comparison to the content that you really like, the more bland, broad appeal content is like stopping at the old roadside attractions in towns like Radiator Springs. In the days of 50 mph car travel, with no A/C or in-car entertainment, those were welcome diversions.

The TV networks are now a mile off the interstate and just not worth getting off the highway for a stop. Things change.

Discovery+ demotes cable subscribers to 2nd class

It makes perfect sense that you launched a streaming service. People have been cutting their cable TV subscriptions and it makes sense for you to offer a product to reach those viewers.

But, I don’t understand why you are punishing your remaining cable TV subscribers in the process by not giving us access to the same new content.

Presumably you already get a few bucks a month from us out of what we pay for our monthly cable bill. I would bet it’s on par with the $5/month you are charging for your base streaming service.

Presumably you also make money by selling ads on your cable channels. So, you are already double dipping on us.

Now you want to triple dip. You want us to pay you again to see the new content while those who have cut the cord only pay once.

At the same time, you’re running old content for us cable subscribers. Then, you remind us at every commercial break that what we have been paying you isn’t enough for you greedy a-holes to show us your new content and that we have to pay you more to see it.

That feels like quadruple dipping.

I can make the same gripe about Disney+.

You all should be treating your remaining cable subscribers and streaming subscribers as equals, rather than demoting us to 2nd class.

At minimum, your cable subscribers should have free access to the base level of streaming.

With pro/rel, D2 could = MLS today

A common retort against pro/rel is that MLS owners, having invested so much in a team, will not like the risk of potentially dropping to division 2.

This assumes that division 2 teams under pro/rel would be just as valuable as they are today, which is <0.

What if, under pro/rel, soccer division 2 teams became just as valuable as people perceive MLS teams to be today and MLS teams became even more valuable?

Then, MLS owners shouldn’t be concerned about dropping to division 2 due to monetary loss.

How could this happen?

An obvious reason is that the value a division 2 team would have the option value of earning its way into division 1. This would make instantly make all division 2 teams more than what they are worth today, without that option value.

Another potential is that division 2 teams could build better fan followings, on par with current MLS teams.

I know this is tough to imagine in the U.S. where college sports plays the role of a profitable second tier in football and basketball, to the NFL and NBA, and no examples of profitable second tier pro sports exists.

But consider, college soccer is nowhere near a profitable second tier to the MLS, as college football is to the NFL. It’s a money loser. The only folks who would miss it if it disappeared are the coaches, players and their parents. It’s an enigma in the soccer world, a strange beast that evolved in the Galapagos Islands of substitutions to favor raw athleticism over purposeful play, that has no meaningful connection to the game played around the world.

What if it were replaced by a 2nd tier pro system that more folks cared about and was connected to the larger the soccer world?

Look elsewhere in the world, like England, where pro club soccer is several divisions deep and you see the second division resembling in talent and income what you see in the MLS.

Like how a U.S. football fan might have his favorite college team and favorite NFL team, football fans in those countries often have their favorite 2nd or 3rd tier team and their favorite top tier team. They might watch their favorite 2nd tier team live and watch their favorite 1st tier team on the telly.

Maybe they are their kid played soccer for the the youth teams at their 2nd tier team, or maybe their kids had friends that worked their way through those teams to top tier teams.

Where markets have been banned by USSF/MLS from participating in the pro levels of the sport because their population doesn’t meet an arbitrary minimum criteria (you know, to protect players from unstable financial situation), perhaps 2nd division teams could find profitable existences in areas unimaginable to the writers of such arbitrary edicts, which could serve to grow the sport, rather than keep it limited.

Consider the club Huddersfield in England. It sits in a town of less than 200,000 between Manchester and Sheffield and it also sits near the bottom of England’s 2nd tier of soccer, currently 18th in the Championship (the misleading name of England’s 2nd tier division), is worth about $200 million and has been in business since 1908.

How can a team in a 2nd tier, in a town the size of which bureaucrats at the USSF think is too small to support a team be doing just as well as, financially, as an MLS team, ‘strategically’ places in much larger markets?

Critics might say, but England is a ‘football country.’

What if it got that way, partially due to to pro/rel? It didn’t wait until football was big to implement. It was like that from the beginning.

If it did contribute to its popularity, then we smother way to grow the game in the U.S. each year we don’t embrace it.

Downside of Randomized Control Trials culture

Randomized control trial (RCT) has become a corporate trend over the past 10 years. The idea is, to drive growth, companies just need to run a bunch of RCTs to find out what works and roll those out.

Sounds great, but having lived that, I’ve seen that a big downside to the ‘RCT culture’ is that it counterintuitively causes stagnation.

RCT’s tend to turn management into ‘statistical significance’ snobs.

They couldn’t explain to you what statistical significance means, but they have been trained, often by the company’s analytics groups, that it sounds smart to only approve things that have statistical significance.

There’s a couple of problems with this.

One is that to get a statistically significance read often requires large sample sizes. So, RCTs become big effort that takes considerable organizational resources. That means, only a handful can be conducted at any one time. In a world where only 1-in-10 things pan out, this means that you might find one good thing every two cycles. At organizations I’ve worked with, a cycle can be a year long. So, the cadence is finding one good thing about every 2-3 years. That seems to hold.

It’s also worth mentioning, that ‘success’ doesn’t necessarily mean growth. Most times, success just means it is slightly better than what you have today. So, finding one thing that moves the needle slightly every 2-3 years isn’t a recipe for high single digit or double digit growth.

Two, any trial too small to have a statistical read is sneered at because it doesn’t have ‘statistical significance.’ So, small pilots, experiments and natural experiments are not conducted at near the pace to keep the fires of innovation going for growth or ignored entirely, even when results are big.

Sometimes, those small, but big results, are discounted even when it has statistical significance due to the second bit of statistical snobbery, small sample size.

This might be a good to link to my old saying, If I need a statistician to tell me if something worked, it didn’t work.

Because of this, management of mature organizations have a tendency to chase big efforts that have small rewards and ignore small efforts that could have big rewards. This leads more to them having to ‘spin’ their results (i.e. putting lipstick on the pig) to try to convince their bosses of success, rather than letting the results speak for themselves.

Pro/rel can make a difference without changing MLS

Here’s how: implement a national/regional pro/rel youth pyramid at U12, U14, U16 and U18 administered by US Soccer Federation.

How cool would it be if you could pull up the youth soccer pyramid on the USSF website, like in Spain?

A couple things worth noting.

First, clubs would only enter their first team at each age group. They wouldn’t have multiple teams. This would change a lot of incentives in how clubs recruit and cultivate talent.

Second, I could see how this might change what goes on at the beginning and intermediate levels of soccer to be more focused on developing players to move up the ladder, than on just selling them a soccer experience where they win trophies against equally incompetent players.

The problem is that the USSF/MLS cartel thinks its better off protecting the interests of the groups it has picked to host elite youth soccer, mostly MLS academies and few other politically connected clubs. Their idea is that the best, self-motivated talent will find their way to those academies, giving them a source of revenue should any clubs around the world be interested in buying those players.

But notice, that model is based on the belief that the soccer system doesn’t have much influence on the quality of top level players. So, the best way to profit from selling players is to eliminate competition and force a path through the cartel.

What is missed is that the system can have a big influence on the top level quality.

But, a system that rewards finding and cultivating talent all the way to the grass roots, can have a significant impact on the quality of top-level players. And, instead of profiting off a few self-motivated players, you will get more players worth even more on the world market.

As Tom Byer has noted, “push up the bottom to push up the top.”

Cheerleader dis-innovation effect

A big barrier to innovation at companies is what I call the cheerleader effect.

Managers see their job as being a cheerleader for the company’s core products.

Admitting that the company should consider ways to grow that doesn’t directly involve selling more of the company’s existing products, or worse, possibly competing with those products, is seen as giving up on the company’s product, which leads to an innovation funnel that only allows through things intended to increase those sales.

Innovation Anemia

A problem plaguing many organizations is anemic innovation. That is, they try too few things to stay relevant over the long haul.

This became apparent, over a 3 year period in my career, when a new CEO took over at my then employer. He came from a company with a healthy culture of innovation. Trying lots of things across the organization was in the company’s DNA and had been for decades.

Up to that point in my career, innovation was a top-down, bureaucratic exercise in the companies that I had worked with.

Like previous years, my group presented our plans to the new CEO, hoping to gain approval on one, maybe two of the five things we were presenting.

After our presentation, he sat quietly. We expected the typical deep dive testing the thinking on our assumptions, then the somewhat arbitrary reasoning that would result in green lighting things related to his ‘vision’ and shelving everything else.

We waited.

He said, “Sounds good. What do you want from me?”

We asked, “Well, which one do you think we should try?”

He answered and asked, “You can’t try all of them?”

We were surprised. We didn’t know what to do. We invited him to can some of the projects. “Well, it would take a lot of resources to try all of them.” What were we saying? We had been infected by anemic innovation.

He responded, “How about you try what you can and let me know how it goes?”

That opened the door to 2-3 year period of innovation at our company that was fantastic. We tried a bunch of stuff and learned a bunch of stuff and a lot of good things emerged.

Then, he left. Like his predecessors, he was given a short runway to change the company’s trajectory and what emerged while he was there didn’t take root until after he left. In fact, one of his last acts was to approve a national rollout of the company’s most successful promotion in a generation, that would change the company’s trajectory over the next 3 years. This promotion had a negative cost of client acquisition, which was UNREAL! I had not seen anything like it before or since.

That promotion was a result of one of the things that we tried that previous CEOs would have never allowed because it sounded so nuts. Even I didn’t think it would work, but I was curious to see what would happen. I was proven wrong and glad for it. The story of that promotion, itself, could make an interesting business movie and I’m glad to have been a part of it. It also opened my eyes that things that seem like real stinkers can surprise you, so its best to have an open mind and let results speak for themselves.

Sadly, the innovative CEO received zero credit for it.

His replacement quickly returned the organization to the centralized, top-down innovation of the past. Two other innovations that had emerged from our group untouched by the previous CEO, suddenly came under micromanagement of the new CEO, who spent a good deal of time deciding whether a sign should have a 9 or 12 point starburst on it (answer: nobody noticed either!).

Eventually, the new guy signed his own pink slip by discontinuing his predecessor’s successful promotion. He didn’t like it because it wasn’t his idea and he overestimated how easy it would be to replace a promotion with a negative acquisition cost. Such promotions do not grow on trees, which I hope was printed on his cancellation notice.

For those 2-3 years, work was fun. We spent more time thinking deeply about what customers want, talking to customers face-to-face and finding effective and inventive ways of giving them what they wanted.

When the bureaucrats returned, we spent more time trying to please the bureaucrats’ whims and personal preferences. Customers became afterthought, again. It should surprise nobody which culture results in long-term success.

The really sad thing, the innovative CEO doesn’t know, to this day, what he did for the company. I think the innovative culture was so ingrained with him, that it didn’t seem at all remarkable to him and he never realized what a difference it made.

After living the contrast on a day-to-day basis for years, I can spot this innovation anemia a mile away. It can infect any human organization: companies, charities, churches, educational institutions, clubs, sports teams, you name it.

It’s the simple belief that they need to do the ‘right things’ rather than ‘try a lot of things.’ Organizations run by folks who believe it’s about doing the ‘right things,’ will eventually be displaced by competition or obsolescence, though sometimes they manage to get really, really lucky.

Particular Circumstances of Time and Place

Quick…Think of a little silicone product that will sell millions.

Anything come to mind? Probably not. Not even for the smartest, most creative folks.

But, it did for a 7-year-old Cassidy, who invented the The Baby Toon teething spoon.

Well, I don’t know for sure if it sold millions, but I think it’s selling quite well and much better than any product I came up with.

I saw it on tonight’s episode of Shark Tank and thought it was good illustration of what economist Frederick Hayek called the Local Knowledge Problem, or the knowledge of particular circumstances of time and place.

Put the best minds on the task, with the most robust models and market research, and it may never have occurred to them to solve the problem of a teething in quite the same way that Cassidy did at 7-years-old when she noticed her Mom got scared when her baby sister used a hard plastic spoon to teethe.

Another good example, on the same episode, was with a product named Quevos, a snack food made from egg whites. One of the founders said he was inspired, soon after learning he had Type I diabetes. It occurred to him how much he liked the little crinkly egg white chunks left in the pan after frying an egg.

Mark Cuban agreed, “Those are good!” So did I. But, in all our lives it hasn’t occurred to us to make a snack food from it.

But it did to this founder, because of the particular circumstance of time and place. After his diabetes diagnosis, limiting his carb intake was on his mind. He also loved snacks, like chips and didn’t want to give them up. It was that circumstance that provided the inspiration that has escaped billions of the rest of us who have bit into those crunchy, salty fried egg whites and thought, ‘man, that’s good!’

Are you stuck in the +/-5% box?

‘Thinking outside the the box’ is an oldie but goodie. While I’ve known what it means for a long time, a more defined meaning of it recently dawned on me.

I’ve worked with a few mature businesses where management rotates through the same sets of actions, over and over again. Lower price. Raise price. Increase marketing. Decrease marketing. Open more stores. Close stores. Cut costs. Rinse and repeat.

In mature and declining businesses, these actions generally have an impact on sales and the bottom line in the range of plus or minus 5% for a and long-term trends continue after that.

Few seem to notice.

They push these actions as if this time the results will be different than the previous dozen times and they are disappointed when performance comes in-line with those previous tries instead of moving the company into a new growth phase.

They then shake off their disappointment to develop the next plan, which contains more of the same types of actions.

Basic questions like these tend to escape scrutiny:

  • Why did the action not drive big growth last time?
  • What has changed since then that makes us think the results could be different?
  • In the best case scenario, what can we reasonably expect to happen?
  • Are there cases of companies being successful with this strategy? If so, why? If not, what makes us think it can work for us?

They escape scrutiny because managers believe it is their job to have the right answers to lead the company to the future and entertaining such questions hints that they don’t.

Give luck a chance

In his book, How Innovation Works, Matt Ridley adeptly captures an idea that I’ve struggled to articulate well:

“Serendipity plays a big part in innovation, which is why liberal economies, with their free-roving experimental opportunities, do so well. They give luck a chance.”

Later, he described how nuclear energy has not advanced nearly as far as other areas, like electronics, because not many folks want to give luck a chance with nuclear since because of the risk.

In a world where improving requires trial-and-error, failure, learning and luck, nuclear energy remains in a state close to where it started because it does not have the luxury of errors and failure.

I’ve witnessed this same limitation in many organizations. Managers of mature companies, for example, too often think their job is to keep the company healthy by using their skill to beat the odds, rather than to play the odds. So, they squelch trial-and-error in the company in favor of their grand plans. They don’t give luck a chance. The thought of admitting that the future of the company depends on a bit of serendipity seems like madness to them.

Sometimes they are lucky to beat the odds, but more often the house wins and they leave the business less healthy than where they started.

Those in charge of US Soccer also do not give luck a chance, while soccer federations in other countries do. I believe that’s the the #1 or #2 reason why U.S. men’s soccer has trouble cracking the top 10 and has to generally rely heavily on dual citizens, that as a product of their dual citizenship spent good chunks of their lives in those soccer environments that do give luck a chance.

A huge eye opener in my early days in soccer was how dual citizens seemed well over-represented at the top of our player pool. That was the first hint something was up and I believe Ridley’s view helps explain why.