B&O neutered

Case

The Danish design icon, B&O, is in deep, deep trouble. The company was bleeding heavily before the crisis, and now they are looking to raise 400M DKK in new capital in order to weather the Covid-19 storm (or at least that’s the convenient excuse).

The problems at B&O run deep. Back in the day it was a luxury icon. You spent money on their nicely Jacob Jensen designed stereos, TVs and speakers just to show off to other people and send a message that you could afford it, and they – most likely – couldn’t.

Today Samsung, LG, Sonos and what have you is not only considered just as good but better. Because function and affordable cost has taken over from form and high cost (except pretty much for Apple, which I consider somewhat of an outlier that just proves the point).

After having taken professor Scott Galloways Strategy Sprint course on what characterizes companies that grows to be trillion dollar companies, I decided to do the reverse exercise:

Can the T-Algorithm help explain why some companies – in this case B&O – go in the opposite direction and is moving closer to bankruptcy than world domination?

Maybe. It is worth a try. So here goes:

Appeals to Human Instinct? Does B&O’s products appeal to the Brain, the Heart, the Gut and/or the Genitals?

You could argue that when it was a real ‘thing’, it appealed to the Genitals, ie “I’m a better off and more attractive and thus a better mate for you because I can afford spending an obscene amount of money on a stereo?”

But now? Not more. It has zero sex appeal left. Zero. It no longer sends a message of testosterone to own and display B&O. The brand has – so to say – been neutered. Ouch.

Mark? Failed.

Career Accelerant: Is B&O a place young talent goes to work to further their career?

Can they attract the best and brightest? B&O had a kind of a second coming with their Play spin-out brand for headphones on-the-go a couple of yours ago. The team behind was younger, bright, skilled and ambitious.

Success followed in a tough Red Ocean-market. And then for some inexplicable reason, B&O decided to ditch the Play brand and move it into the old brand fold to try to breathe new life into their comatose brand patient.

Guess what happened? Great people started to get new great opportunities. Elsewhere.

Mark? Narrow pass but trending towards Failed.

Growth & Margins: Has B&O been able to maintain a business with high growth and high margins?

On the face value of their last several earnings calls…eehhm…not so much. In fact quite the opposite. And that’s me being super generous.

Back in the day when their design appealed to mating (see Genitals above), they had a fighting chance. When customers figured out that the hardware was essentially the same as in much cheaper competitive products, and they didn’t want to overpay for a fancy wrapping, they kind of lost their mojo.

Mark? Failed, but more due to market circumstance than their own doing. Except for not really being able to keep up with the times in terms of great, valuable design.

Rundle: Does B&O have the opportunity to create an attractive bundle that can form the basis of a business relying on recurring revenues?

Absolutely. Not. In. A. Million. Years. Next question.

Mark? Failed due to No Show.

Vertical integration: Does B&O already have or are they able to create vertical integration through their supply chain?

Well, they have been sort of trying through their franchised brand stores. However, they have turned out to be more of an offloading dock for stock products sitting idle in warehouses, because no-one seemed really willing to buy them.

They were instead stashed away in stores and as a result the franchise owners ceremonially cried quarter after quarter about too much inventory in their stores leading to even more ceremonially write-downs by B&O.

Not exactly efficient, let alone profitable.

As for the supply chain backwards there is no room for vertical integration. Apart from a few inhouse components and technologies, the vast majority of components in B&O products are commodities you can source all over, and B&O has for a long time been way too little a player to really be able to exercise pressure on the supply chain.

Mark? Failed.

Benjamin Button Product: Does B&Os products become better with age and/or use?

Not really. It’s home electronics essentially, and they don’t age very well. Of course there is a secondary market for some of their design classics, but it would be a far, FAR cry to call that a Benjamin Button effect.

Mark? Failed.

Visionary Storytelling: Does B&O have a compelling story to tell?

Well, yes they actually do. They have a great story steeped in tradition, excellence in design and sound (primarily), and they are still pushing the exclusivity of the experience super hard.

The problem is that the size of the audience who is listening – and who even find the story interesting at all – is diminishing.

Every time a senior citizen dies, one more of those who remembered what B&O once was and think they still are goes away. Brutal but true.

It doesn’t help B&O that a lot of the narrative the past 10-20 years has been about the constant crisis of the company, the eternal struggle to survive and stay relevant, which brings me to the last point…

(Mark? Passed but with a mediocre grade).

Likeability: Does B&O have a management team that customers, partners and employees have confidence in?

In short: No! Why? Because it is super, f****** hard to be likeable, when you change your CEO once every year (OK, maybe not exactly that often but very often).

B&O have burned through several CEOs over the last 20 years, and the story has been anything but consistent; one minut it is a branding guy with no real message in charge, the next minute it is an engineer, who then gets replaced by someone who nobody knows who is, because – yes – he is THAT anonymous.

I mean, really?

B&O has essentially been left rudderless. There has been nobody to truly rally around, who could articulate that the company may be akin to a plane in flames flying on the last fumes, but we will all eventually get down safely and live to take another flight – with no flames.

The man at the helm has essentially been AVOL for years.

Mark? Utterly Failed. In an abysmal way.

Which ultimately reflects back on the parents of this particular student; the board.

Having said all that and the above using the T-Algorithm, it should thus come as no surprise, why it is that B&O is closer to being a Zero Dollar Company soon than ever a Trillion Dollar Company in the future.

(Photo: Pixabay.com)

Turn on the jets

Thoughts

When the shit hits the fan, you have got a choice:

You can either panic and retreat. Hastily. Or you can grab the sword and fight your way out of it and count on that the other guys will choose option one and just head for the hills.

On that note now is the time to grab your sword and go out full swinging. Seize the opportunity of the moment and “turn on the jets” as professor Scott Galloway calls it.

Why?

Because the learnings and skills you get in a time of crisis will serve you super well, when things start getting back to normal. Because you will be used to fighting and (hopefully) winning everything else that follows will seem more like a breeze.

You will simply enter the next new normal at a higher level than those around you, who chose to bail or just do nothing. And that will be able to set you apart.

Furthermore, when you stand up and fight now, you will realize just how hard things are. You will be forced to look super hard at things, make tough decisions, go into full frontal mode and just face the challenges head on.

You will NOT cut any corners, not get lazy, not get into excess habits of spending both money and time on things that don’t really get you forward.

You will be able to stay laser focused while your experience grows – and you will come out of this…

Alive and kicking. With all jets at full throttle.

(Photo: Pixabay.com)

Don’t fall out of windows

Process

When somebody “accidentally” falls out of a window at a hospital or any ofter building after criticizing the government and their policy, actions – or lack thereof – you could argue that it could be seen as a ‘clever’ way of removing an opposing voice for good.

It is a tactic. A morbid but…eehhm…efficient one.

When suddenly people – in plural – start falling out of windows, and there is a common denominator in their background stories it starts to look more like a strategy than a tactic.

A poor strategy that is. Because it becomes totally evident to even the blind what is really going on. And then you have put yourself in a worse position.

The point?

That even if you’re efficient at the tactical level in your daily job, you are not necessarily by any means a good strategist. Rather the opposite.

Why?

Because you’re so caught up in what’s efficient in the moment, short term, that you completely miss out on the bigger, longer term picture.

And here is a news flash:

It is always the bigger, long term picture that decides how others look at and interact with you and your company.

So if you want to be good at tactics and strategy, bet on being good at strategy first.

(Photo: Pixabay.com)

This is real leadership

Thoughts

What is the difference between leadership and management? A manager is someone making sure you cut your way through the jungle. A leader is someone who makes sure we’re in the right jungle to begin with.

We’re in a time of crisis. Managers are busy making cutbacks, weathering the storm and looking at whether to retain employees or let them go. They are trying to optimize for the moment. To survive.

They’re not especially creative. They were not hired as managers to be creative or even innovative. Rather they are looking in all the usual places for all the usual plays, and as a result we’re likely to see more of the same going forward.

Underwhelming.

And then there are the leaders. The visionaries even.

People like Jeff Bezos of Amazon.

Who invests the entire profits of an entire quarter into Covid-19 related initiatives around testing, extra risk pay for employees – existing and new who are joining in droves to meet demand.

Giving the short term thinking analysts and shareholders the bird in the meantime.

Boom!

What’s he gunning for on the longer term?

The first virus-free supply chain worldwide. A safe alternative in a time of great turmoil and anxiety. Coming with a premium. Or maybe only available to Amazon Prime members.

Who knows?

But it is the difference between deadwood management and visionary leadership.

(Photo: Pixabay.com)

The FANG virus

Thoughts

Nothing is so bad that it isn’t good for something else.

If you’re an investor in FANG stock – Facebook, Apple, Netflix and Alphabet (Google) – and potentially Microsoft as well, you will probably have one eye on your portfolio, which is doing pretty well and have recovered what was briefly lost.

The other one you will be having on how the FANG companies use the lockdown and the uproar to create new opportunities for themselves and become even more dominant.

Case in point: Facebook is still getting stronger, Amazon is cementing it’s lead in e-commerce and almost anything else with its customers being under lockdown at home. And so on and so on.

And there is reason to be optimistic (if you’re an investor, that is), because what does the FANG companies have that many others don’t at this point?:

Cash. Piles of cash.

In a situation where cash is king, those with an abundance of cash can go on the offense, when everybody else is forced on the defense.

Right now the only thing stopping FANG from using this pandemic to dominate the online space even more – infect, even – than before is regulation.

What are the odds of that happening any time soon?

I thought so.

(Photo: Pixabay.com)

The Norwegian Real Madrid

Thoughts

When you think about how hard the Covid-19 pandemic is hitting you, think about how you would have felt, if you worked at an airline or a company affiliated with one.

*GULP*.

People are not allowed to travel, your planes are grounded, you have high recurring costs for leasing aircraft, a valuable, sizeable staff you want to hold on to as much as you can and a cashflow resembling a one-way street in the worst possible way.

What’s not to be deeply distraught about? I know people who work at airlines, big and small, and it is really, really tough out there. And I am so happy, I am not in their shoes.

One of the hardest hit ones is the Norwegian low-cost carrier, Norwegian. They are working extremely hard to save the company from going under, and they are hoping for both a restructuring of their massive debt and an aid package from the Norwegian government.

Even though they are ‘Up S*** Creek’, I want to put forward the prediction that they will make it in some shape and form. But not because it is a healthy company. For psychological reasons:

Years ago there was a saying that the only reason the football club Real Madrid could keep existing with massive signings and massive debt was that there wasn’t a living banker who would have the guts to send this massive club, and their fanbase with them, into receivership.

Same goes for Norwegian, the airline.

The Norwegians are proud people – national attires, cowbells and all. I don’t think there is anybody in government or parliament with any appetite for reelection or his/her place in history who wants to be the one pulling the rug from under the wheels of essentially the Norwegian flag carrier. I mean, the name alone thrown into a dumpster fire?! Not going to happen.

But there may be one or two left who think about the one old naming rule for warships:

Never, ever, EVER (!!) name a warship after your country for the fully justifiable fear of what it being sunk in battle would mean for morale and publicity.

(Photo: Pixabay.com)

Nothing is that far-fetched

Ideation

The other day I was revisiting our list of potential ideas to explore further. It is a list we keep in our Studio team to jot down ideas and problems for potential future exploration, and – who knows – a new, exciting startup.

As I went through the list I was reminded of some of the thoughts that went through my mind, when I made the original list and how some of them at the time seemed very far-fetched. A very good example of this is this one:

Virtual vacation.

When I wrote it down in autumn 2019 it seemed pretty sci-fi. Now, nobody can travel, and tourist destinations are equipping locals with strap-on cameras to assist people in remote exploration of now in-accessible places. And it is being louded as breakthrough innovation.

This just goes to show that what may seem far-fetched today may be totally relevant and a real opportunity tomorrow. Therefore, don’t ever hold yourself back from having those borderline crazy ideas. You may in fact be on to the next big thing.

(Photo: Pixabay.com)

Corona thoughts, part 5

Thoughts

Jeffrey Katzenbergs new mobile streaming service meant for the commute, Quibi, has finally launched. And is getting killed by the reviewers. You can be excused for thinking that the timing couldn’t be worse when no-one is commuting right now, but in general the service seems to be a product looking for a problem, where there is none.

The fate of Quibi might suggest that now is the time for ‘The Great Sanity Check‘; the time where you look hard at what you do and use the opportunity to really ask yourself the hard question: All fanfare forgotten, does what I am trying to build really make any sense at all?

Can you see a path to a real business? Or – perhaps better yet – can you see an accelerated path to becoming a real business utilizing what you now know from the corona outbreak as things to factor into your plan? Can you adjust to life post-corona and come out on top? It is worth spending some serious time thinking about because in all probability it is going to be your reality, whether you want it or not.

(Photo: Pixabay.com)