Game Site Grows Up

Launched in an apartment during the dot com boom, Miniclip has grown into an online empire with more than 43 million unique visitors a month. Their target audience skipped the typical teenager and tween crowd to gather adults and working professionals with a few minutes of free time during their day.

Miniclip had a novel business plan for the time: don’t charge visitors to play games, and collect revenues from advertising. The difference between Miniclip and the millions (literally, millions) of competitors on the web is that Miniclip has been profitable for six of its seven years in business. That’s an accomplishment that was almost unheard of during the dot com bubble when they launched.

But now the company is forced to implement a new structure as it grows. An article in the Financial Times says Miniclip co-founder Rob Small has a few changes on his hands:

With so many potential deals on the horizon, Mr Small says the company must now develop a more sophisticated structure. He has recruited a new chief operating officer, employed more managers and created distinct departments for finance, marketing, graphics and game development.

It will be interesting to watch this small but profitable startup make the leap that all small businesses hope for.

Implementing a Successful Corporate Turnaround

Greg Brenneman spent a good portion of his career serving floundering corporations, including Continental Airlines, Burger King and Quiznos. So how does Brenneman save a dying company? In an article from The Economist, he gives two not-so-simple steps: Stop the activities that drain your bottom line and then formulate a clear strategy, and stick with it.

His recruits have been impressed by another Brenneman tactic. “He’s taught me the importance of seizing the airwaves and making clear what the business agenda is,” says Dave Deno, Quiznos’s new boss. Each Friday the fast-food chain’s franchise-holders get a voicemail updating them on the business. Many of these have been left by Mr Brenneman, but occasionally other managers take a turn. The plain-speaking Mr Brenneman likes this because, he says, “if someone gets on a voicemail and promises something to thousands of people, they will do it.” All voicemails and e-mails from franchise-holders must be answered within 24 hours. This has helped thaw relations with disgruntled restaurant-owners, though some lawsuits still rumble on.

Still, even with a clear strategy, something must be said for putting in the hours and enduring hard work.

Forbes’ World’s 100 Most Powerful Women

 

Last week, Forbes released their list of the 100 most powerful women in the world. The names span nations, industries, corporations and governments. Despite the breadth, their influence is clear and omnipresent.

The top 5 names:

 

1. Angela Merkel, Chancellor of Germany
2. Sheila C. Bair, Chairman of the FDIC
3. Indra K. Nooyi, Chairman and CEO of PepsiCo
4. Angela Braly, CEO and President of WellPoint
5. Cynthia Carroll, CEO of Anglo American

I have to recognize Forbes for this list. For once, we’ve found a list that does not name Oprah or Martha Stewart in their top five. Instead, Forbes reached a bit beyond the obvious to gather the names of the people with plenty of influence who lead the world’s largest organizations.

Ford: You’re Not Done Yet

FORTUNE — Last week, Ford Motor Company announced their first-quarter performance. Snipping costs and trimming the fat by streamlining operations allowed the auto manufacturer to swing a profit and beat analysts predictions. But the road is long. An article from Fortune discusses some of the reasons why it may not be the moment to stop and celebrate:

Auto companies don’t turn around in one year or even two. They can get a nice bump by reducing operating expenses – there is always plenty of fat to trim and operations to streamline – but making improvements in the top line means introducing new models that require a minimum of four years to make it from the idea stage to the showroom. Mulally has been on the job for just 20 months and has plenty of hard work ahead of him.

Regardless of what’s ahead (and the negative tone of the article), Ford has given investors an impressive quarter for the American auto industry. Read article.

How To: Eliminate the Need for Customer Service

Authors Bill Price and David Jaffe aim to flip the world of customer service with their new book, “The Best Service is No Service.”  An article from the LA Times writes:

If companies can get those things right in the first place, most customers neither want nor need so-called customer service.

Many executives may call the goal of eliminating the customer service department impossible; realistically, it is. The only saving grace that this book may provide a bit of insight comes from work experience. Price was the Vice President of Global Customer Services at Amazon.com. Read article.

The Science of Vegas

Just like retail stores, the layout of a casino is nothing short of meticulous, designed for attracting customers to spend as much as possible and linger for hours, days, an entire week. Yet owners of retail stores may be able to use the same logic employed by these executives.

A recent article in d/visible discusses the evolution of the modern day casino. They quote Bill Friedman, an expert casino design consultant, as he writes:

Build a space that guides people easily around a large property to strategic spending points while inspiring a sense of curiosity. “First you want them to be curious, using curves walls and plants to obscure full view of the casino,” according to Friedman. “And once they’re where you want’ em, you want them to feel comfortable. So in the future, we can expect the hotel-casino to become a stylized reinvention of retail, entertainment, and classic casino style. Don’t get rid of the smoky male rooms with chandeliers yet, but get ready for more airy, entertaining retail-like venues with a more feminine touch to lead the market.

Theme parks, malls and other recreational consumer centers already use the concept of easily guiding people to spending points. How can you apply the same idea to your business?

How Apple Got Ahead

Even in its early years, Apple Inc avoided the corporate culture of revered firms like IBM and GE. Yet, this deviation allowed the Cupertino, CA-based company to show unparalleled progress compared to competitors and cause both executives and academics to reconsider formal guidelines in management (see yesterday’s post about Motorola).

Wired Magazine’s feature story for the month examines “Jobs & Co” and the CEO’s behavior in the company. They also list how Apple breaks business conventions and succeeds.

How Apple Defies 5 Core Business Principles:

1. Don’t communicate with the press: Never leak product news until release
2. Don’t play nice: Use hardball tactics to get ahead
3. Forget about customers: Design products that YOU would want to use, not your customers
4. Motivate employees through fear: Threaten them, withhold praise, and bring them to tears
5. Lock customers into your product: People are willing to trade freedom for a great device.

These tactics completely clash with a post I made last week where Knowledge@Wharton showed how companies could increase profits by playing fair.

Motorola: Knowing When to Take a New Direction

Yesterday, Motorola announced they would split the company, leaving the struggling and unprofitable phone division to take a new course. According to an article in the International Herald Tribune:

The activist investor Carl Icahn, who has pressured Motorola to make such a move, said in a letter to its board that the announcement was “clearly a step in the right direction.” But he questioned Motorola’s commitment to moving quickly to solve its problems.

Gregory Brown, Motorola’s chief executive, conceded that the main problem facing the company was its inability to come up with new products to replace the highly successful Razr, which was once a must-have phone but has faded from the scene.

Motorola’s actions may cause executives to ask themselves when they should take struggling enterprises into new directions. Analysts cite the competition in the market, especially with Apple’s iPhone, as well as the need for a new chief executive to take control.

As with any business, consecutive months of declining sales or slow growth almost always require a change; knowing exactly what steps to take is another concern altogether.

Increasing Revenues in Movie Theaters

Cinemas, with the majority of their revenues coming from concession sales and pre-showing advertising, are investigating simple ways to increase their revenues. New York-based marketing firm Brand Experience Lab is working with cinemas across the United States and United Kingdom to introduce “AudienceGames.”

Immediately before movie showings, advertisers will encourage audience members to cooperate by playing interactive games. Motion-sensing cameras positioned in the front of the theater track members’ movements.

Volvo tested this technology and measured the audience’s response in this YouTube video. During a showing, moviegoers competed simultaneously with other theaters. Collectively, the audience had the task of driving a virtual car through an obstacle course on the cinema’s screen.

Recreating Starbucks

Starbucks may need a sip of its own espresso. In the past year and a half, the company’s stock tumbled from almost touching 40 to falling short of 20. Chairman Howard Schultz may have accidentally caused shareholders to lose confidence in the company when his memo, criticizing the company’s “brand dilution” and “cookie-cutter” type store layouts, leaked onto the web. So what can this industry leader do to maintain its market share and growth?

Remember the Experience
Starbucks launched the idea of a “third-place,” saying people occasionally want to escape stress at home and work. Their coffee shops attempt to fill the void with flavorful aroma and an understated soundtrack. Starbucks’ alternations within their stores should remind customers of this experience that they used to enjoy.

Get Back to Basics
After experiencing tremendous success in coffee, Starbucks moved into manufacturing consumer products from espresso machines to coffee mugs and water bottles. They also released a line of alcoholic beverages, as well as distributing music albums and feature films. Perhaps this loss of focus, with an incredibly fast rate of expansion, contributed to the company’s dilution.

Yet even with the trouble Starbucks and its shareholders have seen during the past year, very few people have lost hope in Schultz’ guiding philosophy. He may be the Steve Jobs of designer drinks. Regardless of his strategy, the actions Starbucks makes from this point forward will live in textbooks as a case study for years.

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