Paul Reuter, who later founded the Reuters press agency, used a fleet of pigeons to deliver news and stock prices, including the outcome of the Battle of Waterloo, which helped his clients trade on valuable information before their competition.  Every company can find an information advantage, if they are creative enough. 

On June 3, the Wall Street Journal reported on Wal-Mart’s quiet launch of Oodle.com, a free classified service that carries 30 million items – from Madonna tickets to houses.  Of course this will give them even more traffic to Walmat.com, and provide service to their 130 million weekly customers.  But the more interesting angle is how it allows Wal-mart to better understand consumer demand.  They already dominate all other retailers in their ability to spot trends, analyze data, and capture demand – from Hurricane stock ups, to college car washes, they see them coming.  My bet is that they have ramped up Oodle.com so that they can get access to the new frontier of insight which will come as they analyze the used market, and items they don’t carry.  They can see the used price for things they sell, for things that complement things they sell, and for things they don’t sell, but may be good indicators of consumer sentiment – like cars.  Wal-Mart now has a view into an entirely new set of transactions that helps them to run their core business even more powerfully.   The advantage has migrated from analyzing just purchasing behavior of the new to the new and used. 

They are not alone in creating such an information advantage.  In December Goldman Sachs bought Litton Loan Servicing, which is a mortgage servicing company that services high yield loans.  They used Litton to buy Fremont General’s loan servicing rights for $12.2 billion in loans as well.  Not only will Goldman make money on servicing the high priced loans, but as importantly, by buying this asset, they are able to get superior access to information about the mortgage market more broadly.  The information premium can be found by understanding not only the sourcing, structuring and trading of assets, but also in the servicing behaviors too.

Likewise, back in 2005, Aetna bought Active Health Management a healthcare data analytics company for $400 million to help them better understand consumer behavior, and early indicators of problems so that they could design superior health management plans.  For Aetna to take the next step in accurate pricing and better client servicing, the needed a more complete predictive model of customer health behaviors so that they could intervene with a diabetic by having a nurse call him to take his insulin shot – and they know to make the call due to behaviors tracked by Active Health’s data.  The competitive battle ground is not just in pricing and claims anymore, it has moved to predictive analytics and health management. 

So the questions are:

Where is the information advantage in your industry?

Are you making the strategic moves to capture it and use it to drive value?

The easiest way to increase productivity of your knowledge workers is to simply increase the amount of “screen estate” they have.  I recently suggested that a firm add an additional screen for all their customer service workers and you can see below that in a month’s time, the time per call decreased from about three minutes and fifty seconds down to three minutes and twenty seconds – 12% — with no additional training or change in the work load or work design. 

Because of habit, most firms never consider increasing the size of the digital window, or windows, that we work within.  If Henry Ford were around you can be sure that his employees would have at least two screens – and often more.  Most people don’t know that you can add an additional screen to any laptop and by changing the desktop settings – which takes less than 15 seconds, creating a continuous work space from one screen to the next.  The mouse moves across; you can drag applications to the other screen seamlessly.  (Windows can drive up to ten screens if you want to get fancy!)Why bother?  Well, two screens allows you to open two full sized windows or applications at once, so if you are looking at your email, you can also see your calendar, or open a written document.  With the trivial cost of 15-19 inch screens (many under $100), every knowledge worker should have at least two screens – because they will pay for themselves almost immediately.This handy tip is part of a larger concern I have.  With the exception of extreme knowledge work jobs like bond trading, or flying a combat aircraft, companies have not thought creatively about the interface of their knowledge workers and the information tools.  For those familiar with “The Bloomberg” – the information utility designed and delivered by Mayor Michael Bloomberg’s eponymous company, it usually comes two side by side screens in the typical installation. 

When I started using my new Amazon Kindle, their 10.3 ounce electronic reader, it became clear to me that Jeff Bezos is rewriting our relationship to content and information devices.  On My Kindle (yes its content is customized to me), I can access 115,000 books, 327 blogs, 18 newspapers, and 15 magazines, play MP3 music, read and send email, browse the internet, look up the meaning of any English word instantly, and view files – and it boots up in less than ten seconds.  No wonder they can’t keep it in stock.  Some of the functions are clunky – as you’d expect in version 1 – but book reading is easier than “using” a paperback.  Amazon charges a hefty price for both the device ($399.00), digital books ($9.99 to $120.00 or more), and even blogs ($0.99 per month for O’Reilly).  Not only is Amazon getting paid for digital content but the Kindle allows them to link content to customer – the Rosetta Stone of any media company. 
The mind reels with what CEO Bezos will be able to do if he can achieve mass penetration of this device.  The Kindle is not just a reader, it is an entirely new form of network computer – and like the BlackBerry, will create a whole new sets of user behavior.  Given that Amazon knows me, my credit card number, my buying habits, and they back up all the electronic content on my Kindle – including my notes – they can become the portal for any and all relevant media.  iTunes should take notice, as should every media company.     
The general lesson for all companies is that Amazon has this breakthrough strategic option because Bezos did not stick to his knitting.  Think of the courage it took for Amazon to enter one of the most crowded and competitive product categories in the world – consumer electronics.  Imagine trying to get investment capital within an old line company like the New York Times – to create a product like Kindle.  My bet is that the executive chorus would universally shout: Stick to our knitting! (even if our knitting is predictably shrinking).   
In a recent Business Week interview Bezos said that companies which innovate within their existing competencies are doomed to fail; innovation means building new competencies.  Gary Hamel eloquently said in his book Leading the Revolution most executives in an industry are “blind in the same way” – both to what is happening and to what they don’t see happening.  In order to perceive new things, leaders must be willing to try innovations beyond current competencies!  Put another way, if it is comfortable it is probably not profitable!  You need to ask yourself:
·         Is my firm’s dedication to the core killing our ability to innovate?
·         How can I, as a leader, help discover new customer needs?
·         Do I have the courage to lead the investment in new capabilities to fulfill those needs?

Jimmy Wales, the founder of Wikipedia, got flack recently because he took special interest in a page about somone he was dating. The Wikipedia community will get over it, but the kerfuffle calls into question reputation, quality, and the very veracity of the site itself. This would be a salacious detail only of interest to The National Enquirer if it were not for the fact that Wikipedia is one of the top sites on Google, and is rapidly becoming the most cited reference source on the planet – in all languages.

It is not news that the world of user generated content is exploding – blogs, wikis, and the wisdom of crowds are all the rage. Yet, there are only some things for which the crowd is wise. One need only look at the current mortgage crisis to see that crowds can be very wrong in their judgment, and the great thing about the capital markets is that they keep score. Those who are truly wise make more money and get a bigger voice in the opinion market and in the capital market. Warren Buffet gets more votes because he is better at it than I am. The problem with Wikipedia, and blogs, and user generated content is that many of them don’t have a strong reputation management process. Put another way, any idiot can have an opinion. The most important thing is does the person who is giving an opinion have a good reputation? Is that reputation attached to his or her opinion? Does the person own the downside risk of the adverse effects of their opinion? On eBay, people who are lousy merchants bear the reputation risk. On Amazon, those who generate bad reviews are rated poorly and have less influence. Best yet, on stockpicker sites such as Motley Fool’s CAPS, individuals are rated by the number and quality of their picks over time. So, robust reputations evolve as a consequence of the recommendations of the individuals.

You need three elements to create a robust reputation management system:

1. a persistent identity, so that you are always you when you participate in an end user generated forum;

2. a rating mechanism to vet “high quality” and “low quality” opinions or predictions; and

3. a robust quality process to evaluate and adjudicate conflicts of aberrations.

This three-pronged approach is the essence of scientific inquiry. Experts review experts to see if there is new knowledge created. It is the reputation management mechanism that creates the quality. Almost all businesses are embracing – one way or another – user generated content, but few of them are doing a good job of implementing a reputation management system. Are you willing to live at the mercy of the mob, or do you want to take action to make sure that only true experts have influence when rating your product or service?

Like it or not, there are people talking about your company on the web right now. You must be aware of that conversation and engage it with authenticity. If not, your company will be another Target.Recently, Amy Jussel of the blog  ShapingYouth wrote that Target’s billboard in Times Square was offensive to women because the center of the logo in the giant ad pointed to a woman’s crotch. In response, the company said the model was “making a snow angel” on top of the Target bull’s-eye. After Ms. Jussel contacted Target to complain, the company not only did not answer her issue, but also said their policy was to not respond to non-traditional media. The online community was outraged, naturally, but not about the billboard, because many people disagreed with Ms. Jussel. The netizens were outraged over being dismissed by the company.

First, Donahoe has muffled the ability of sellers to rate buyers. At the same time, he has created volume discounts for his larger sellers while raising prices on the little guys. These are all typical moves for a bricks and mortar player: give discounts for volume and default to “the customer is always right” — even when he or she is a jerk. On top of that, he is pushing more fixed price product through the eBay Express site, giving less emphasis to bidding, and thus, undercutting eBay’s true distinguishing characteristic as the world’s dominant auction site.

There are