meta | The Tenet and The Future

Know more. Fear less.

The tenet that Six Past Twelve was built upon, the very essence of its journalistic credentials, distilled into four simple words.

It was a phrase I had hastily scribbled down on a hot pink Post-it one morning amidst the swirl of cases, a note pinned to my wall for so long the blue-tack holding it left a dark grease spot against the paint. It was a promise to myself, to be bold in seeking the truth. It was a promise to my readers that business news didn’t have to be inscrutable, and an allusion to the core economic principle my writing was founded on: the most rational actor was the most informed actor. It became the spirit that defined my writing and my purpose. A motto proudly posted on the top of my blog.

Six Past Twelve in the evening. The perfect time to write.

analysis | Stocks fall as oil prices slide amidst investor gloom on China and world economy. Here’s why.

Stock markets around the world have fallen sharply today, after nervous investors triggered a rout following a slide in oil prices and continued contractions in the Chinese economy. The panic was exacerbated by lingering market jitters over a weak start to the new year. The basic explanation is quite simple: oil, China, and fear.

news | Financial Times acquired by Nikkei for £844m

Japanese media company Nikkei acquired the FT Group from current owner Pearson for £844m (US$1.3m) in a deal announced earlier today. When finalized, the deal will bring the British business newspaper Financial Times under the control of Japan’s largest media company, adding to an already impressive but largely domestic media empire spanning radio, print, and television broadcast companies.

news | Ford and GM attempt to move into luxury sector with release of new models

Marking a resurgent entry into the highly competitive luxury automobile sector, Cadillac and Lincoln have both unveiled new high-end sedans at the New York Auto Show intended to compete with leading German marques. The resurrection of the storied Lincoln Continental brand marks parent company Ford's effort to broaden its portfolio following the sale of its luxury marques late in the last decade. Cadillac's CT6 represents GM's efforts to compete with offerings like the Mercedes-Benz S-Class and BMW's 7-series.

analysis | Seeing Past Glass: What Google’s withdrawl of its headset means for its future

Google’s recent decision to withdraw Google Glass has drawn an immediate, almost visceral reaction from both Silicon Valley and Wall Street. Finally, they proclaim, Google has come to its senses! It’s grown up at last; time to put away the balloons and the toy cars, and move on to the things that actually matter!

Make no mistake, Google Glass in its current iteration has failed to become a tenable product, something no amount of marketing spin can cover. If Glass really was doing brisk business, Google would be beside themselves singing the praises of the just-released second generation. That the wearable computer was pulled from the market altogether without so much as a projected date indicates its failure to resonate with consumers.

But the failure of Glass does not mean the company is cubbyholed in the same way Blackberry has been unable to move beyond making mobile handsets. Rather, it is the inevitable result of Google’s “leap without looking” approach, where the game is not necessarily to make the best or the most polished product, but to capitalise on first mover advantages…then figure everything else out, including how if it prints money. Google Search, after all, began life as a pageranking research product until someone realised just how many zeros advertisers were willing to tack onto a cheque in exchange for targeted advertising.

This approach couldn’t be any different from their traditional rivals at Apple. While the Cupertino based technology giant keeps products under wraps for years, testing, redoing, perfecting, and grandly unveiling a highly polished, finished product, Google favours a scattershot approach, floating products to the market to “see what sticks”; ruthlessly killing things that don’t make money or otherwise fail.

While this would send most investors running for the hills, the Mountain View company has an uncanny ability to “sniff” out good investments. Google has historically supplemented itself by making several very smart acquisitions in key areas, nurturing them until they became industry powerhouses: it was prescient enough to buy YouTube near the start of the video sharing revolution, and made an equally prophetic acquisition of a small software startup called Android, Inc.

Most outsiders fail to realise the inherent danger in sticking to core strengths. The obvious cost of playing it safe is missing out on the next big thing. Intel was so wrapped up in its indomitable chokehold of the desktop and laptop market it completely missed the mobile revolution, and now finds itself fending off Qualcomm, VIA, Texas Instruments, and a horde of other eager competitors, some of whom have even begun to encroach on Intel’s traditional leadership in laptops and desktops.

“Failures” like Google Glass are the necessary price of keeping ahead. While some of Google's products may be tone-deaf and poorly timed, the spirit of “giving it a go” remains ingrained in the corporate culture and should be insulated from the fickleness of investors. There is no harm in throwing things against the wall when you have the finances of a developing nation, and an idea need only work once to be successful.

analysis | The brand of your glasses isn’t meant to influence others. It’s meant to influence you.

Try this the next time you’re on a subway, a bus, or any place filled with lots of people. See if you can determine the brand of glasses someone is wearing before they realize you’re staring and start calling for the police.

Notice the brand yet? It shouldn’t take any longer than a couple of seconds to determine: most frames have the brand plastered along the side.

If your face is considered the world’s window to your soul, then glasses are the window frame in this increasingly torturous analogy. Yet in spite of its visibility, most people don’t seem at all bothered about wearing a designer’s logo on the side of their face.

The truly observant (or perhaps the truly obsessive) will notice that while branding becomes very prominent for most midrange glasses, neither economical frames nor expensive frames carry branding along the sides.

In spite of outwards appearances, the purpose of the branding is not to advertise your affinity for the brand to others, but to advertise the glasses to you.

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A brand at its most basic is a simple way of communicating a complex set of ideas already ingrained in the consumer through extensive marketing.

The brand is a trigger that helps recall the value-added benefits of the company’s marketing message in addition to the immediate utility of the product. Put simply, it reminds you that you’re not just buying a mere cup of coffee, dear consumer, you’re buying the trendy cosmopolitan lifestyle that only the best Arabica, picked by smiling, happy farmers and lovingly batch-roasted by a (possibly bearded) barista named Grant, can provide in a 10% post-consumer recycled cup…whatever that all means.

Conversely, brands help a consumer make a purchase with incomplete information. Rather than needing an intimate knowledge of operating systems, software packages, hardware configurations, and compatibility issues, people buy an Apple computer because the brand is famous for having simple, modern, sophisticated machines with end-to-end support. A brand helps distill what would otherwise be a complex decision into something very simple.

The glasses market is an excellent example of incomplete purchasing information: Even though a pair of glasses will be worn every day from morning to night, often for several years, most people don’t know—and oftentimes don’t need to know—the differences in materials, designs, durability, and workmanship.

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People that buy glasses largely fall into three categories: utilitarian buyers prioritise cost before all other considerations, midrange buyers balance what they are willing to spend with what they want, and high-end specialty buyers make purchasing decisions on other, often aesthetic, factors.

Most buyers fall into the midrange category: A fresh prescription means new glasses as soon as possible, and the buyer must temper “what looks good” with “what can I afford.” Interestingly, the midrange market demonstrates inelastic demand relative to income, partially due to immediate utility. Translation: a richer customer may not take some time to shop around for the best set of eyeglasses because the customer kind of needs them to see. This presents a conundrum: He must make an immediate, informed decision on a product likely to be kept for several years, but has limited knowledge on what makes a “good” pair of glasses aside from how they look and feel.

The brands themselves, however, are a smokescreen: most glasses sold today are all made by the same gargantuan company. They’re not actually “Prada” glasses, they’re made by Luxottica but licensed to carry the name of Prada. It’s not just for show, though; if everything was sold as “Luxottica,” the differences might be difficult to note, but brands help emphasise these differences and draw subconscious associations with the consumer (remember, it’s not just the product, it’s the lifestyle).

All this changes when considering the utilitarian buyer and the high end buyer. Utilitarian buyers make a decision based purely on cost above all else, and won't respond to a brand. Beyond a consideration of what additional features are needed for purpose, the purchase decision is influenced solely by price. Fashion-centric buyers are likely to shop around before committing to a purchasing decision because their decision is made based on other attributes: the style and quality of the frame, the type and design, the workmanship, the materials, and the durability. Glasses marketed in both categories reflect this: they are not labeled with the brand because they are expected to sell based on other attributes other than the brand. With these consumers, the brand loses its relevance because the purchasing decision is made based on other factors. Both these consumers have the luxury of shopping around, whether the goal is to to save money or to find fashionable frames.

The brand is a particularly powerful form of marketing. It tells the consumer where the product sits in relation to its competitors. It serves as a trigger for the brand’s attributes. It is a way of communicating the added value to the consumer if only you bought this wonderful product. But it is in a relatively homogenized market where consumers have limited knowledge, like that of eyeglasses, where brands are at their most effective. You’re not just buying glasses. You’re buying a new lifestyle.

analysis | How Sony’s release of “The Interview” online could change the film industry

Sony Pictures has just announced the simultaneous release of controversial film “The Interview” through internet video-on-demand services in tandem with a limited theatre release.

Make no mistake, this is huge.

Never before has an industry stalwart like Sony chosen online distribution simultaneously with a theatrical run. Should online releases of “The Interview” generate significant returns and positive consumer feedback, the film industry would be forced to reconsider their approach to digital distribution. Theatres could be inclined to release future films both in theatres and online.

In a surprise move, Sony has also secured distribution deals with Microsoft and Google, supplementing Sony’s own online video-on-demand services. Piggybacking on the hype generated through the high profile hacking scandal at Sony, these deals could provide Microsoft and Google’s online VOD services with much needed visibility as they struggle to make headway in a market dominated by incumbents like Apple’s iTunes and Netflix. In particular, Google’s release of “The Interview” on their relatively unknown YouTube VOD service could increase consumer mindshare, something the service has struggled with in spite of the enormously popular YouTube brand.

A dual release model would represent a major victory for the consumer. As moviegoers are given the choice between watching a new movie in theatres or in the comfort of their own homes, theatres would necessarily lower costs and provide additional value to entice consumers through their doors. This may spark a new golden age in the moviegoing experience, one in which theatres provide additional amenities and offerings not typically found during the home experience.

Simultaneous distribution is typically used by smaller studios that do not have distribution agreements with large, nationwide theatre chains. By releasing films online while they play in theatres, small studios can reach the largest possible audience before a film loses any momentum it generates. In contrast, larger studios stagger their releases so that theatres can extract the maximum profit from a film before it is released online and on physical media, where it generates profit solely for the studio.

But for a behemoth like Sony to simultaneously distribute a film online is unprecedented. As unusual as it may be given their track record, Sony could become one of the most forward thinking studios out there. Sony has just upended the traditional model, and it’s the consumer that comes out the ultimate victor.

opinion | Sony cyberattacks require strong, fearless leadership

What made headlines about the recent cyberattack on Sony was not the revelation that Hollywood is filled with big shots and bigger egos. I doubt that many would be surprised to hear about such rancor in a big name studio—an industry in which narcissism is the key to stardom. Like a sewer main break in the midst of AnyStreet, USA, the shock came not from the stink, but from the suddenness and the scale.

And boy, does it smell.

Documents and emails between executives describing working relationships in harsh, stinging language. Leaked social security numbers, passports, and paygrades. And with each passing day, the inaction of the Sony parent company erodes the consumer trust the brand has worked so hard to build.

The diversity of Sony’s business is breathtaking. While it does not enjoy the truly frightening reach of the Korean Chaebols, the venerable conglomerate has managed to build a reputation among consumers for quality. This “halo” effect gives all of their operations a sheen of quality and reliability—even those beyond their traditional strengths as a premier electronics manufacturer. However, the reverse is also true. Just as technological excellence in electronic manufacturing gives the brand a positive mindshare in consumers, so too does a mishandled crisis infect a sterling reputation; some consumers are indeed “once bitten twice shy.” The mishandling of brand management quickly turns from an asset to a liability, and reflects poorly on all Sony products across the line. The company already holds a poor reputation among video game enthusiasts for the high profile hack of its PlayStation network. Given the scale of the crisis now enveloping the American movie producing arm, damage control should have been in overdrive from the start, with the uppermost echelons doing what managers do best: managing the crisis.

The surprising inaction from the Japanese parent company makes sense in context. Best to let the American arm handle the fallout, publicly lop a few heads once the dust settles, and carry on as if the throbbing shiner on the side of Sony’s face was “just a wee little stumble early in the morning—honest!” For any manager to handle this crisis would be to accept responsibility for any subsequent damage, even becoming the punching bag for all those slighted egos and damaged reputations. But without a rally point, a steady voice at the helm, with every passing second the Sony brand becomes more closely associated with noxious relationships, poor security, and worse, ineffective leadership in times of crisis.

The truly outstanding leader is one that can successfully navigate a company through a predicament. Conversely, the mark of ineffective leadership is a cycle of inaction and the shirking of responsibility, allowing misfortune to tarnish and infect a brand that took so long to build.

And like a sewer main break, the smell of poor management tends to linger.