Buying a Chinese Internet Stock? You Might Want To Read the Fine Print Very Carefully

So, you thought perhaps the Chinese achieved their economic miracle through naivete? There is a perception in investment circles that buying Chinese securities is a way to get in on the Asian boom. Those who are actually familiar with Chinese government policy and cultural norms will tell you that they dont like giving up much influence to outsiders, of whom you are most likely one, let alone actual control.

Research is starting to show that the chances are investors are not buying equity in an operating company domiciled in China, as they would in a US or European company.

Joe Weisenthal reports in Business Insider:

"The current crisis facing Yahoo -- which just saw one of its prize Chinese assets slip through its fingers -- should make all investors in Chinese equity sit up straight.

We said yesterday that everyone should be asking themselves: What do you really own, when you buy stock in these companies?

So to start, you're not buying a Chinese company. You're getting a Cayman Islands company, which through a series of subsidiaries is connected to companies in Beijing that actually operate and run the business. But at least your Cayman Islands company owns those companies, right? Not really.

The F-1 explains:

We do not have an equity interest in 1Verge Information or Jiaheyi. However, as a result of these contractual arrangements, we are considered the primary beneficiary of 1Verge Information and Jiaheyi, and we treat them as our consolidated affiliated entities under the generally accepted accounting principles in the United States, or U.S. GAAP. We have consolidated the financial results of these companies in our consolidated financial statements in accordance with U.S. GAAP.

So your Cayman Islands company doesn't own the equity. It's just connected through contractual relationships, which in an ideal world would be a perfect analogue for equity (hence treating them as consolidated entities). The full post at StoneStreetAdvisors delves further into the contractual relationships, which is murky stuff that the average investor thinking they're buying the "YouTube of China" or the "Facebook of China" is never going to appreciate. But again, if even Yahoo can lose out -- and they own a stake directly in an actual Chinese company -- everyone's guards should be higher.

TVAdvertising Belatedly Recognizes Buying Power and Scale of Over 55 Age Group

This age group has the largest numbers and the greatest income. The weirdest thing is that it is a story at all. Why did marketers take 40 years to wake up to the fact that the Boomers and their slightly younger successors were the likeliest target for advertising expenditures?

Part of the answer is conventional advertising wisdom; younger people are considered less committed to anything, especially brands, so the thinking was that if you aimed ads at them, you could gain customers for life. It did not hurt that most advertising creatives were also younger and so, of course, loved aiming their work at the people they knew best - their friends.

Bill Carter and Tanzina Vega report in the New York Times on why marketers are now recognizing that the Boomer generation's size and wealth equals marketing gold:

"After 40 years of catering to younger consumers, advertisers and media executives are coming to a different realization: older people aren’t so bad, after all.

Marketers like Kellogg’s, Skechers and 5-Hour Energy drink are broadening their focus to those 55 and up, who were largely ignored in most of their media plans until recently. During next week’s upfront announcements, the annual preview of the fall television season, network executives are planning to introduce shows created to have broad appeal, including to older viewers, and the ad dollars they represent.

This amounts to a reversal in thinking that took hold during the 1960s, when advertisers first started aiming for baby boomers, the largest segment of the United States population. But the reasons for the shift are not just demographic, they are economic.

As a result of the recent recession, unemployment rates for younger age groups have been far higher than those for older Americans. The most recent unemployment rate for those 20 to 24 years old is 14.2 percent; for those 25 to 34, it is 9.4 percent. The rate for people aged 55 to 64 is only 6.2 percent.

Influence Is Just a Means To an End: - and Social Media Is a Bad Measure Of It

Opinion leaders, influentials, influencers: marketers sometimes think there is a wholesale answer to a retail question. And wouldn't it be lovely if we could find a short-cut around all the messy, complicated, indeterminate research that addresses but never quite provides the answer we - or our clients - are seeking?

Some people think social media is the key that opens the door to that big shortcut. But as Judy Shapiro comments in Advertising Age, that is a dangerous delusion. Social media is a useful tool in certain situations, but it is best understood as one part of a multiple-choice question, not the final arbiter of marketing taste:

"Chasing the "Influencer" set is a long standing marketing strategy - not a novel concept newly minted from the social media revolution. We may have called them by different names 20 years ago - thought leaders, trend setters, early adopters – but we always understood their disproportionate power to drive business.

Back then, it was not hard to know who influencers were (usually confined to public personalities) but it was hard to determine which "influencer," a.k.a. celebrity, was worth more than another. To solve the problem, a company called Marketing Evolutions introduced "Q Scores", a well-known popularity metric as one way (albeit limited) to compare one personality's influencer value from another.

Then, as social media "happened" - BOOM - brands had easy and really really cheap access to more influencers than ever before. The only trouble was sheer quantity made finding the "influencer diamonds in the rough" really - uh – rough.

True to Silicon Alley DNA, an early set of companies emerged to address this problem. Arguably, Technorati was the first company to measure a blogger's influence with its "authority" rating. Initially, it was a great tool but ultimately it rewarded media companies (e.g. Mashable) with high authority given the sheer quantity of content they can pump out. This left many highly credentialed but narrowly focused bloggers in the authority dust.

Next wave of influencer tech tools focused on simple Twitter "grader tools." Typically, Twitter users were given a grade from 1 – 100 (the higher the better) but these early attempts were fairly light weight in their capacity to predict an influencer's value. Not surprisingly these tools withered once more robust options emerged.

The first tech company IMHO to stake a claim to measure influence was Klout ("The standard for influence") and they always impressed me with their genuine desire to create a useful and game-proof solution to help standardize the business of measuring influence. Next, PeerIndex ("Understand your social capital") came on the scene with a similar vision but with their own spin on the individual social graph data they were scraping. Both companies have similar business models – giving brands access to influencers , the differentiator being the quality/ quantity of the respective networks and programs.

And then in an exuberance burst of technology bravado, Empire Avenue took this whole notion of social currency to its gaming conclusion and launched the first "Social Media Exchange where you can buy and sell your friends and own anyone on the social web!" Folks are still wrestling with the "WIIFM" factor – but at a most basic level – a stock worth a lot is going to be more of an "influencer" than a lower priced stock. They too monetize through a diversity of options including offering marketing programs.

Wow! I should be dancing the happy dance. In barely 24 months, here are three different yet interesting ways to help me tag and bag big game influencers – solving a decades' old problem.

Ah – if only it were so easy. The more I thought about it – the more something was bothering me about this whole influence measurement business on a few levels.

First, it seemed problematic to standardize a vague concept such as "influence" that is eminently impacted by time and context. When you poke at their methodology it becomes clear that, like Technorati before it, all systems disproportionately rewarded scale – in terms of amount of content and number of followers. One "thought leader" profile for instance, had 170,000 followers but was following 170,000 "people." I could not reconcile how "Twitter monkeys" (people who gain followers mainly through automated reciprocal following), would be viewed as thought leaders.

Post-Recession, The Rich Are Consuming Differently

Luxury brands are making a comeback, but surveys show that wealthy consumers are behaving differently. They are using coupons, waiting for items to go on sale and buying less expensive brands - just like normal people (whoever they are).

The reasons have to do with the fears experienced by the wealthy as they watched their investments lose value, jobs disappear and incomes decrease. Though some of that wealth is returning, the experience of having lived through it is still having an impact on behavior. The larger question is whether this is temporary or structural - and whether it betokens changing values or simply caution.

Christina Binkley reports in the Wall Street Journal:

"Bentleys and Hermès bags are selling again. Yet the wealthiest Americans are emerging from the financial downturn as different consumers than they were.

Lyndie Benson says she now mentally calculates the "price per wear" of designer clothing. As the wife of saxophonist Kenny G, Ms. Benson, a photographer, can afford what she wants. She used to make a lot of impulse purchases, she says. But when shopping in Malibu, Calif., recently, she stopped herself before buying a gray Morgane Le Fay suit she'd tried on. "I walked outside and thought, 'Hmmm, I don't really love it that much,' " she says with contentment.

A number of surveys released in the past six weeks suggest Ms. Benson's new selectiveness is widespread among the wealthiest Americans. Though many of these people might seem unscathed by the financial crisis—they didn't lose their homes, jobs or retirement savings—they were deeply affected by what took place around them. "If you're conscious at all, it just seeps in," Ms. Benson says.

What's showing up in the latest research is a broad-based caution—a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping. In Harrison Group's first-quarter survey of consumers with a median income of $275,000, 38% said they wait for items to go on sale, versus 31% in 2010

Facebook Needs Brands For Growth

Advertising and brand engagement are keys to Facebook's plans for growth and monetization of its network. Association with big brands builds network interest and commitment, driving further growth. Figuring out what a 'social ad' is and how it can deliver for its brand without alienating Facebook friends is the crucial quetion.

Sheila Shayon reports in Brand Channel on Facebook's Sheryl Sandberg and her thoughts on these issues:

"We want the whole world to use Facebook to share and connect," says Facebook COO Sheryl Sandberg in her cover story in the new issue of Bloomberg Businessweek.

She also wants brands to be part of that equation, as advertising is the key driver of monetization and growth as she scales the site and prepares for what's bound to be a landmark IPO in the next year.

With Facebook's user base booming, but the site's execs still figuring out the privacy balance of exposing what it calls a user's "social graph" to targeted advertising (from turning user activity into ads that may eventually appear on other sites, to brand-driven check-ins and now its latest foray: brand-tagging in photographs), the cover story is a must-read for anyone trying to learn from Facebook's ad strategy and business model, particularly "social ads."

According to the article,

Webtrends says that only around half of one percent of people who see these ads actually click on them; yet Facebook pulled in an estimated $2 billion in sales in 2010, Bloomberg has reported, and is on track to do twice that in 2011. Facebook executives argue that the click-through numbers are not that meaningful; they say that people remember ads better and are more likely to make purchases when their friends endorse products.

Has the US Military Adopted A Doomed Social Media Strategy?

The US military has decided to adopt a social media strategy that violates every tenet of communications ethics and best practice in hopes of influencing public opinion on Islamic extremist propaganda.

They are going to pay people - or create on their own - voices that will appear to support the US initiatives in the region, even though those voices will be false (or at least, bought and paid for as opposed to being genuine expressions of public opinion.

However supportive one may be of the US military and its efforts - and however opposed one may be to militant Islan, Jonathan Salem Baskin comments in Dim Bulb on why this is a bad idea politically, morally and strategically. :

"British newspapers reported in mid-March that the American military plans to manipulate social-media sites by flooding them with fake identities and propaganda intended to counter Islamic extremism. They've been working on it for a while. General David Petraeus told Congress last year that such activities were intended to "...ensure that credible voices in the region are heard."

You should care, as a marketing leader, and as a citizen.

This is dumb political strategy. It's like the government announcing that it's going to use advertising to lie to people, or issue a budget that proudly flaunts accounting standards. Our military has told the world that it plans to violate our oath in the court of public opinion. The practitioners of any industry so insulted would step up and not only explain why it won't work, but decry such sinister misuse of their tools. Lawsuits would be filed. Details demanded. Maybe they'd volunteer constructive alternatives.

What have we heard from the social-media lobby? A yawning silence. My hope is that they don't know what's going on (though it would be odd that all those highfalutin monitoring mechanisms could miss it). My fear is that they just don't care or, worse, don't see a problem.

The military's plan is to enable up to 50 controllers each to manage "sock puppets" -- false online personalities -- and use them to counter pro-extremist content by inserting pro-American content into conversations conducted in Arabic, Farsi, Urdu and Pashto. It is part of a $200 million psychological warfare program called "Operation Earnest Voice." Its $2.76 million price tag is being spent with a company called Ntrepid (which didn't seem to exist before it got the gig, and might be perfect for the job since the contract specifically requires "excellent cover and powerful deniability").

This plan violates every principle of online peer-to-peer social experience. Authenticity. Credibility. Direct connections. Truth. These aren't ideals that we can consider sacrificing in the pursuit of a greater good; rather, they're the nuts and bolts of how social media work, according to what the experts keep telling us, so abusing them reduces the likelihood that the military's campaign will succeed. We have extensive proof that this is true, as big brand names like Walmart have learned through painfully embarrassing experience.

Boeing's Brand Journalism

If you are not an advocate for your own company's story, rest assured that no one else will be.

Russell Working reports in Ragan.com on how Boeing has used compelling stories from its own everyday challenges to humanize the workings of a multi-billion dollar global corporation and why that is important in projecting a supportive image in a highly competitive industry:

"Producing a catchy website might not seem like a major priority for an aerospace giant that competes for multibillion-dollar contracts from governments and airlines.

After all, a defense ministry evaluating various fighter jets isn't going to Google up a supplier in the way you'd locate a Thai restaurant or a discount flight to Las Vegas.

But the Chicago-based aerospace giant Boeing has embraced the practice of brand journalism, which uses storytelling techniques to highlight its work. The website is part of a broader communications strategy that makes use of a practice with its roots in newspapers and newscasts.

"It's all about reputation," says Todd Blecher, communications director of Boeing's corporate office and a former Bloomberg Pentagon reporter.

To be a successful global company in this industry, Boeing—whose 2010 revenue was $64.3 billion—wanted to strengthen its relationships with decision-makers among its customers and to be recognized as a good corporate citizen that people wanted to see succeed.

Not a link farm

The website used to be what Blecher describes as a "boring, bland link farm" that contrasted with several content-rich sites to which it was referring people through its advertising.

Following a reconsideration of its digital presence, Boeing relaunched its site last year to highlight what was going on within the company. Communications staff felt that the website—augmented by Twitter, Facebook and other social media tools—should highlight its successes for the public.

The Filter Bubble: How the Web Gives Us What We Want To See - And Why That Is Not Necessarily A Good Thing

Alorythms versus the serendipitous power of curating may be an important cultural decision-node in the way we select and analyze information.

Maria Popova comments in Brain Pickings on why web-based customizing that is derived from what we have selected previously may be limiting our knowledge and our ability to adapt(hat tip Thierry de Baillon):

"Most of us are aware that our web experience is somewhat customized by our browsing history, social graph and other factors. But this sort of information-tailoring takes place on a much more sophisticated, deeper and far-reaching level than we dare suspect. (Did you know that Google takes into account 57 individual data points before serving you the results your searched for?) That’s exactly what Eli Pariser, founder of public policy advocacy group MoveOn.org, explores in his fascinating and, depending on where you fall on the privacy spectrum, potentially unsettling new book, The Filter Bubble — a compelling deep-dive into the invisible algorithmic editing on the web, a world where we’re being shown more of what algorithms think we want to see and less of what we should see.

The Math of a Hit TV Show

The basic math is daunting: 500 pitches by TV writers result in 70 scripts being commissioned by studios. Of those 20 pilot TV shows will get made of which 4 to 8 new series will be 'green-lighted' for scheduling. 1 or 2 of those will see more than one season.

Amy Chozick reports in the Wall Street Journal on what considerations go into that decision-making process - and why:

"To a television network executive, the pitch sounds irresistible. "Dark but fantastical cop drama about a world in which characters inspired by Grimm's Fairy Tales exist."

This idea for a TV show has the ingredients the industry is seeking this year: a comfortable set-up (the cop show) with a slight twist (fairy tales). It beat out about 500 other pitches. Then it survived months of second guessing, rewriting, and testing with focus groups. "Grimm" is one NBC is considering adding to its fall prime-time lineup.

Network executives are currently meeting to decide which new shows to pick up and will announce their choices next week. After a year of perfecting each show, almost all of them will fail.

In the running for this fall, ABC has a remake of "Charlie's Angels," this time set in Miami. Don Johnson stars in the NBC pilot "A Mann's World" about a male salon owner. CBS will bring "Buffy the Vampire Slayer" star Sarah Michelle Gellar back to the small screen with "Ringer," a thriller about a woman on the run from the mob. On Tuesday, Fox picked up "Alcatraz" about a present-day team of investigators looking into the mysterious reappearance of the prison's 1960s inhabitants.

"People ask me why we don't take more risks. There's inherent risk in everything we do," says CBS Entertainment President Nina Tassler.

All kinds of things can turn a promising idea into a flop. Casting may not click. A story line that made for a compelling pilot can't hold an audience's interest for 22 episodes a season, a fate that befell ABC's "FlashForward." Overly acquiescing to focus groups can lead to a bland finished product, producers say. Last season didn't lead to a single breakout success.

Does Neuroscience Tell Us the Human Brain Has An Inherent Sense of Justice?

Are humans born with an inherent sense of right and wrong? Or to put it another way, are we hardwired to understand right and wrong separate from our cultural upbringing?

Swiss scientist Ernst Fehr wrties in PLOS Biology that evidence suggests that is the case (hat tip Barry Ritholtz):

"It is well-established that emotions influence decision making. One way of studying this relationship is the Ultimatum Game, which has revealed that subjects punish unfair behavior in others in spite of receiving a concomitant economic loss. Previous brain imaging studies have suggested that this decision to punish involves complex cortical processing. However, punishment also involves an instant aggressive emotional response, a behavior often linked to subcortical structures such as the amygdala. In this study, we present a model that joins these views. We designed a paradigm that allows us to measure the activity of subcortical brain regions during decision making in the Ultimatum Game, while at the same time using a pharmacological approach that can suppress emotional responses and amygdala activity. The pharmacological treatment made subjects punish unfair behavior less, and decreased brain activity in the amygdala in response to unfair proposals, without changing the subjects' feeling of unfairness. In the control group, punishment was directly linked to an increase in amygdala activity. Thus, immediate punishment of unfair behavior involves the amygdala and is not solely driven by cortical processes, as previously suggested. Our results show that a commonly used drug influences autonomy and decision making, which may have ethical implications for its use.

Imaging studies have revealed a putative neural account of emotional bias in decision making. However, it has been difficult in previous studies to identify the causal role of the different sub-regions involved in decision making. The Ultimatum Game (UG) is a game to study the punishment of norm-violating behavior. In a previous influential paper on UG it was suggested that frontal insular cortex has a pivotal role in the rejection response. This view has not been reconciled with a vast literature that attributes a crucial role in emotional decision making to a subcortical structure (i.e., amygdala).

In this study we propose an anatomy-informed model that may join these views. We also present a design that detects the functional anatomical response to unfair proposals in a subcortical network that mediates rapid reactive responses. We used a functional MRI paradigm to study the early components of decision making and challenged our paradigm with the introduction of a pharmacological intervention to perturb the elicited behavioral and neural response. Benzodiazepine treatment decreased the rejection rate (from 37.6% to 19.0%) concomitantly with a diminished amygdala response to unfair proposals, and this in spite of an unchanged feeling of unfairness and unchanged insular response. In the control group, rejection was directly linked to an increase in amygdala activity. These results allow a functional anatomical detection of the early neural components of rejection associated with the initial reactive emotional response. Thus, the act of immediate rejection seems to be mediated by the limbic system and is not solely driven by cortical processes, as previously suggested. Our results also prompt an ethical discussion as we demonstrated that a commonly used drug influences core functions in the human brain that underlie individual autonomy and economic decision making.

Alabama Power Finds Twitter Was Info Lifeline During Tornados and Post Storm Power Outages

During and after the tornados that devastated the southern US two weeks ago, hundreds of people were killed and power was knocked out across large swaths of the affected region.

In the state of Alabama, the major public utility power provider, Alabama Power, discovered that the best way to reach out to customers was not through television, which many of its customers could no longer see, but through Twitter. This will probably effect how companies and customers approach emergency communications for the future.

Matt Wilson reports in ragan.com:

"There was a time—not so long ago, in fact—when the only way people in the middle of a power outage could get news was through the radio. But the advent of smartphones has provided an entirely new avenue, one that communicators at Alabama Power put to use late last month as tornadoes ripped through the state.

"Smartphone connectivity was much better than you'd expect," says Ike Pigott, a spokesman for the utility and manager of its Twitter account.

As the storms raged on, and in the days following, as the company rushed to restore power to 412,229 customers, Pigott and his team tweeted away, but with caution.

"We tried to be very careful about not making promises about specific days or specific times of recovery," he says. "In many cases, we didn't know how bad it was until we were right there looking at it."

The response to the Twitter effort was huge. Alabama Power added 1,335 followers looking for information about the storm and the cleanup. The utility's response to the crisis has given it a roadmap for future crisis communications, as well as how it might handle customer service.

Has the Recession Killed the McMansion For Good?

New home building has collapsed along with the economy. Evidence suggests that when it returns - though who knows how many years that will take - the oversized McMansions of the financial bubble era will be a not-so-fond memory.

The reasons? The government will no longer subsidize mortgages for houses costing more than $750K, heating and air-conditioning costs are astronomical in this era of rising energy prices and, culturally, we appear to be somewhat abashed as a culture by what those houses represented.

Witold Rybczynnski comments in Slate:

"The U.S. housing market is going through an adjustment of historic proportions. Before 2006, when the housing slump commenced, American home builders regularly built as many as 2 million new houses annually, rarely less than a million. This amount was needed to keep up with new household formation, immigration, homeowners moving up, and replacement due to obsolescence. Since then the number of new houses built has dropped drastically—the seasonally adjusted annual figure announced by the federal government in February 2011 was about 400,000! What's going on?

The recession, obviously. High unemployment and unease about the economy have made potential first-time homebuyers leery of entering the market, and many have decided to wait on the side lines. Although house prices have fallen, few are convinced that they have bottomed, and no one wants to buy a house and see its price decline. The large number of foreclosed (or about to be foreclosed) houses on the market, which account for no less than four out of 10 sales of existing homes, likewise dampens demand for new houses. And those willing to take the plunge discover that, despite low interest rates, lenders who were burned by the subprime mess now require large down payments. The other chief cause for weak demand is a slowdown in household formation—the U.S. Census reports that the rate of household formation is currently lower than at any time since 1947, as people put off getting married and starting a family. According to my colleague, real estate economist Peter Linneman, the marginal household size, which has historically hovered around two or three, shot up to more than six in 2009 and 2010, the result of doubling-up and moving in with relatives

Driving Is Why You're Fat

There are cultural biases associated with obesity and attention is being focused on the health care cost implications.

Ariel Schwartz reports in Fast Company on a new study that suggests America's car culture may share a big portion of the blame for this trend:

"Obesity is a complicated disease. It can be caused by your mom's pregnancy diet, genetics, your KFC Double Down habit, or some combination of all three. But why has the problem reached such epidemic proportions in the U.S.? Researchers at the University of Illinois think our car culture may be to blame.

After analyzing national statistics from between 1985 and 2007, the researchers found that vehicle use (measured in annual vehicle miles traveled) correlated approximately 99% with annual obesity rates. The more we sit around doing nothing in our cars, the fatter we get.

Of course, cars and roads aren't going anywhere, but we could stand to drive just a little bit less. If every licensed driver in the country cut down on travel by just one mile each day, in six years the obesity rate would drop 2.16%--cutting down on the number of obese adults by almost 5 million people, according to PhysOrg.

This may be an impossible goal; tearing Americans away from their cars is almost as difficult as detaching them from their cell phones. There will be a lot of kicking and screaming involved. But initiatives like Bike to Work Day make a difference, as do increased public transportation routes and better telecommuting work policies. And there's an added bonus to cutting down on driving: Fewer car miles means less gasoline is used in the U.S. overall, which means staving off our energy crisis just a little bit longer.

China Challenges Germany's Heavy Equipment Predominance

China continues to challenge companies in industries known for their strength and technological prowess rather than picking easier targets.

This is a bold strategy that heightens China's transition from a 'brawn' country to a 'brain' country. The implication is that they are pursuing higher margin, intellectual capital intensive businesses that will solidigy the country's dominance of key business sectors while offering higher margins sooner than might otherwise be expected given its developmental position.

Mary Lane reports in the Wall Street Journal:

Growing competition from China is spurring German machinery makers to reassess how to preserve an edge that has made their industry a linchpin of the country's export-driven economy.

Chinese rivals are gaining ground in their home market, unnerving German producers about the competitiveness of a sector that accounts for 7% of the German economy. The German companies find themselves up against a state-driven industry growing in large measure through acquisitions and inexpensive labor and building on lessons learned two decades ago in the textile industry.


Color China Photos/Zuma Press

Martin Herrenknecht says his tunneling-equipment company entered a joint venture in China, rather than fight for intellectual-property rights. Above, he toasted the 2007 opening of a project in Chengdu, China.
."Germany needs to focus on quality and innovation because when it comes to mass-market machinery, China will soon have the upper hand," says Bernd Reitmeier, a former member of the German Chamber of Commerce in China.

Many industry experts say Germany's reputation for engineering quality and reliability should help the sector counter Chinese challenges for leadership in high-end machinery, such as drilling and factory equipment, and other engineering sectors. Still, the momentum behind China's companies underscores the long-term obstacles German companies face in maintaining an innovative edge as the supply of home-grown engineers and other skilled workers dwindles.

An Apology For Interruption of Service for the Past 24 Hours

Blogger, the service that supports this blog site suffered a 24 hour interruption of service which began yesterday afternoon and ended a couple of hours ago. I am sorry this happened. We are hopeful that service is fully restored and that normal operations have resumed. Thank you for your patience:

Why Do Famous People Keep Getting in Trouble on Twitter?

They just cant seem to help themselves, can they? Otherwise cautious people seem to think no one is watching and say stuff on Twitter they would never say in front of a TV camera, let alone in front of their families. It's like they think the 140 characters and small screen give them some sort of cover. Of course plenty of flamers grab it with both hands, too. But why the lack of self-editing?

It may simply be that celebrities think they can provoke a reaction on Twitter with a greater degree of safety than on TV or radio. Hopefully, they are learning otherwise, but in the interim, it's like shooting fish in a barrel for the rest of us shameless voyeurs.

Jack Shafer comments in Slate:

"Pittsburgh Steelers running back Rashard Mendenhall lost his endorsement deal from Champion sports apparel last week for tweeting his doubts that the World Trade Center towers were brought down by hijacked jetliners and for expressing his sentiments that we had "only heard one side" of the Osama Bin Laden story.

Mendenhall quickly backed off from the pair of tweets. He deleted the 9/11 remark and published a blog post explaining that he wasn't a Bin Laden supporter. But it was too late. He had already joined the ranks of high-profile users who've been burned by microblogging.

Keith Olbermann previously stepped in it with a tweet stating that conservative commentator S.E. Cupp was "a perfect demonstration of the necessity of the work Planned Parenthood does." This was interpreted by some as a wish that Cupp had been aborted, which Olbermann denied. Journalist Nir Rosen suffered almost universal condemnation when he joked about Lara Logan's sexual assault on Twitter.

Comedian Gilbert Gottfried lost his Aflac gig when he directed his dark humor at the Japanese tsunami. More than a year ago, Washington Post Managing Editor Raju Narisetti gave himself a Twitter timeout after tweeting this view: "We can incur all sorts of federal deficits for wars and what not. But we have to promise not to increase it by $1 for healthcare reform? Sad."

Others tripped up by Twitter's spontaneity include Octavia Nasr, who got fired by CNN for praising Hezbollah's spiritual leader upon his death, and New York Times reporter David Carr, who untweeted something he quickly decided was in poor taste. Tucker Carlson got in trouble for tweeting, "[Sarah] Palin's popularity falling in Iowa, but maintains lead to become supreme commander of Milfistan." He formally apologized and deleted the tweet.

Behavioral Economist Appointed To Senior Position in US Consumer Financial Protection Bureau

The appointment of a Harvard behavioral economist to a consumer finance regulatory leadership role was a bit of a head-scratcher for many in the mainstream media, but it makes tremendous sense. A big part of the problem with mortgages and consumer lending packages was the psychology used to convince guileless borrowers what a deal they were getting.

Professor Mullainathan and his colleagues will be able to apply their insights to determining what sorts of marketing appeals are appropriate and which are abusive. Despite financial sector misgivings, this benefits the entire economy. It could help prevent the practices that led to the financial crisis and it helps the banks, as well. Voters have made it clear they will not tolerate another banker-friendly bailout, so the risks taken previously are not likely to be cleaned up at tax-payer expense next time around. A little knowledge of brain science could go a long way to ending that destructive cycle.

Justin Lahart reports in the Wall Street Journal (hat tip Barry Ritholtz):

"The Treasury Department announced the hiring of senior leadership for the Consumer Financial Protection Bureau. Among the hires: Harvard University economist Sendhil Mullainathan.

The leading behavioral economist of his generation, his research has focused on how people’s biases and weaknesses lead them to make bad economic decisions. He is also a founder, with Esther Duflo and Abhijit Banerjee, of MIT’s Jameel Poverty Action Lab.

His research has provided much of the intellectual foundation for the establishment of the CFPB, which is tasked with making “markets for consumer financial products and services work for Americans.”

“He’s more or less exactly what the CFPB should be: evidence based, appropriately suspicious of concentrated interests, and he understands that real people can make mistakes,” said Wharton School economist Justin Wolfers.

Mr. Mullainathan, 38, got an early lesson in how regulatory changes can affect people’s lives, and how fragile their livelihoods can be when a new rule in the 1980s disallowed foreign aerospace workers from doing defense-related projects. In practice, this meant that foreign workers couldn’t work on aerospace at all, since the delineation between defense and nondefense projects was fuzzy. His Indian father, an engineer at McDonnell Douglas, lost his job.

“There was this feeling of fragility, wow if my dad doesn’t get a job, then what?” Mr. Mullainathan recalled in a recent interview. “I still have that feeling very strongly, I understand it. It informs my thinking on this stuff and my motivation to work on it.”

This Summer, Hollywood Could Use a New Hero (or Two)

It's only May and the film industry is already sporting a $500 deficit. The reasons? High ticket prices, competition from better quality home entertainment systems and a decrease in the teen-and-tween demographic who are the industry's most profitable repeat (and repeat) customers.

Consumers are buying fewer high-margin DVDs because they can rent more inexpensively and the studio's offerings are tailored primarily to younger viewers despite the ageing boomers cohort size.

What will happen to revive sales? The studios are betting on big budget action flicks to bring in the repeat teen customers but savvy marketers recognize that they have to get seniors back into the theaters if they are going to make their numbers.

Michael White reports in Business Week:

"Hollywood studio chiefs were all smiles after the Vin Diesel-Dwayne Johnson testosterone fest Fast Five kicked off the summer box-office season with an $86 million opening weekend on Apr. 29. That was Hollywood's biggest debut since November, when the seventh Harry Potter movie took in $125 million. Fast Five also helped shore up hopes for an end to the slump in ticket sales that's dogged the industry since Christmas.

"I think we've jumpstarted the summer," says Nikki Rocco, president of distribution at NBCUniversal's Universal Pictures. "I'm very enthusiastic about what the future looks like for the rest of the year."

Despite all the Tinseltown buzz, it may be premature to break out the champagne just yet. The industry is starting the key summer movie season—increasingly dependent on teen fare and expensive action and sci-fi blockbusters—about a half-billion dollars behind last year's cumulative box-office level. Through May 1, U.S. motion picture ticket sales were down 14 percent, and attendance was off 15 percent. Studios and theater operators will need a lot more outperforming openings if they are to resume making annual box-office gains after last year's slight drop.

The studios also need to keep theatrical revenues growing to counter the continuing decline in home video, long among the most lucrative of a movie-maker's revenue streams. That's one reason why Hollywood is so aggressively pushing 3D and IMAX widescreen versions of this summer's films; moviegoers pay $3 to $6 more per ticket to see those enhanced releases.

The One-Click Digital Wallet: Visa Looks Beyond the Card

One-click means it works for e-commerce, mobile and social networking. What's after that - vending machines? The point is that the major credit card companies see mobile, digital commerce as a key to the future of their franchise and they are moving fast to create a dominant position.

That Visa beat American Express could be significant or it could mean that AmEx gets to learn from Visa's mistakes. Either way, the cards are making it clear that this is strategic turf and they aim to seize it. The retreat announced last week by the phone companies for exactly this franchise suggests that the cards position is well-nigh unassailable since the telcos were the obvious deep-pocketed rival. For consumers, this news is a mixed blessing; convenience will build on convenience (the good news). The bad news? The card cos charge premium prices. This set of services will not come cheap.

Ryan Kim reports in GigaOm:

"Visa is starting to put its big payment acquisitions to work with a new a digital wallet offering that looks to bring one-click transactions to e-commerce, mobile and social networking sites. The wallet, which offers users a simple sign-in instead of entering payment information for purchases, will help consumers checkout faster and should reduce online abandoned shopping carts for retailers.

The digital wallet, which will be introduced this fall in the U.S. and Canada, leverages Visa’s high-profile acquisitions in the past year of PlaySpan and CyberSource, two online payment solutions that have been active in facilitating online payments for merchants, social networks and digital goods sales on gaming sites. The move also shows how Visa is ramping up to compete in the payments space and is ready to take on companies like PayPal and a bunch of other providers.

Visa said the wallet and services platform will store Visa and non-Visa payments accounts including PayPal information and will support NFC payments through Visa’s payWave application. The card network sees the wallet being used for everything: e-commerce, mobile shopping, micropayments, social networks and personal payments.

Some of the big features for the digital wallet will be the ability to make payments using an email address or sign-in and password instead of typing in a credit card number, address and expiration date. In addition to using multiple payment options, users will be able to set preferences for which account will be tapped for certain purchase amounts and merchant types. And Visa said the digital wallet will hold loyalty card information and will offer the opportunity to receive opt-in discounts or offers from participating merchants.

Raj Rajaratnam Convicted on All Counts for Insider Trading: What Are the Implications for Business?

The jury took almost two weeks to decide, but in the end they came down hard on billionaire hedge fund manager Rajaratnam.

The implications for business are several. There remains a tremendous reservoir of mistrust and illwill towards the financial sector. They can not expect the benefit of the doubt given the three years of disclosures about greed, corruption and self-dealing. The Justice Department and other arms of the government will continue to prosecute where they believe they can make a case, in part to make up for the political obstacles to legislative solutions posed by the power of financial sector contributions to Congress and Presidential candidates. High frequency trading and other maneuvers that are ostensibly legal but raise questions about fairness will receive scrutiny. The financial sector will continue to receive outsize compensation and will retain great power as it plows some of that back into lobbying, but the freewheeling days of yore are gone.

All of this means that there is a public presumption of guilt when it comes to banking and finance, which portends further investigations. Pressure on compensation will remain. Any bankers who thought that this would blow over and that finance would regain its iconic reputation were delusional.

Katya Wachtel reports in Business Insider:

"The verdict is in: Galleon founder Raj Rajaratnam has been found guilty of all counts.

After almost two weeks of jury deliberations, he was charged and found guilty of 14 counts of securities fraud and conspiracy: 9 of those counts pertained to insider trading, and the remaining 5 counts were on conspiracy to commit fraud.

Under federal sentencing guidelines, Raj could spend the rest of the his life in prison. His defense says it will appeal the verdict. Raj sat "stoically waiting" as the jury entered the room according to a CNBC reporter who was inside the court.

Skype: The Growing Market Value of Intellectual Property Is Confirmed - Twice In Two Years

Whether the acquisition of Skype by Microsoft adds strategic and financial value to MSFT, it has confirmed the rising market value for intellectual property.

The implication for entrepreneurs and corporate executives is that the value of patents, copyrights, licenses and trademarks is becoming less of a mystery and more of a mainstream transactional negotiation. Welcome to the dawning of an intangible era.

Joff Wild comments in IAM:

"Who remembers the dispute between Joltid and Skype that erupted a couple of years back? Joltid was set up by Janus Friis and Niklas Zennstrom, the two men who originally developed the online communications system, and found itself in a major IP war with the consortium that purchased Skype from eBay, as well as with eBay itself. Copyright and patent infringement were alleged, amid accusations that eBay had not acquired much of the IP underpinning Skype when it bought the company in 2005.

The case flared up in 2009 around the time the consortium paid eBay a reported $2.5 billion for a majority stake in Skype. Surveying the carnage back then I said it made a very strong case for the chief IP officer position. With a CIPO in play, I wrote, it would have been much more likely that the significant IP issues at the heart of all the Skype transactions would have been dealt with in a way that would have prevented subsequent litigation; something which, in turn, may have allowed eBay to do more with what it bought and to sell it on for a higher price when the time came.

In the end the litigation went away after a settlement in which, among other things, Friis and Zennstrom bought a 14% stake in Skype and joined the company’s board. Today comes the news that Microsoft is planning to spend $8 billion plus on acquiring Skype. Clearly, this will make Friis and Zennstrom a fortune, as well as all the other investors that bought into the company back in 2009. Even eBay will make some money, given that it retained a 30% share.

Inevitably, people will ask whether Microsoft is paying too much. More pertinent, perhaps, is whether eBay sold for too little. Unlike eBay, Microsoft does have a chief IP officer. You can bet your bottom dollar that Horacio Gutierrez and his team have been heavily involved in the due diligence that must already have taken place, and will also be in the thick of what comes next. They will check every patent, copyright, trade secret and other right to make sure that Microsoft is getting exactly what it is paying for. If eBay had done the same thing in 2005, it may have been in a much stronger position to charge the 2009 consortium a higher price, or to generate interest from other parties.

As for Friis and Zennstrom, they have each made hundreds of millions of dollars directly as a result of creating, and then ensuring ownership of, valuable IP. They are individuals who had an idea and, thanks to patents and copyrights, have been able to develop it to create a product used by countless people around the world. And they have monetised it not once, but twice. Don’t tell them that IP is only for big corporations.

Brands At War: Beretta Wins Race To Capitalize Bin Laden's Death. One Problem: The Seals Tested Berettas But Then Chose Another Brand

When you make what is hopefully a strategic decision to tie your brand to a prominent current event, it is generally thought preferable to be sure that the facts support the connection you are hyping. The danger, if you do not, is that your dubious claim beccomes the story, thereby detracting from brand equity and calling into question the value of your advertising expenditures, to say nothing of your strategic intelligence and ethics.

Beretta is the first company to tie its brand to Bin Laden's death. Unfortunately for Beretta's flawed strategy, the SEAL's tested but then rejected the Beretta in favor of another weapons brand.

Abe Sauer shoots down Beretta's claim in Brand Channel:

"In the race of brands looking to capitalize on the death of Osama bin Laden, we have a winner.

As details of the terrorist leader's death, and the SEAL team that shot him in the face, continue to come to light, Beretta Defense Technologies issued a statement. The weaponsmaker said it "wishes to thank the brave men of Navy SEAL Team Six who, together with our warfighters, selflessly risk their lives each day to make this world a safer place."

The statement comes complete with a banner ad that celebrates the "job well done" by SEAL team six. Of course, several commenters have pointed out one irony: the SEALs tested but did not choose the Beretta as their weapon of choice.

While thanking the SEAL team for making "this world a safer place," the brand doesn't pass up the opportunity to mention its own SEAL role:

"Beretta shares a close association with the U.S military, particularly Navy SEAL Team Six, having intimately collaborated with members of the team during the initial design phase of what would become the venerable M9, the official sidearm of the U.S. Armed Forces. The SEALS recognized Beretta’s skill, experience, research capabilities and resources, and it is those same benchmarks that Beretta Defense Technologies continues to utilize today as they strive to serve those who defend freedom around the world."

See, indirectly, Beretta took out Osama bin Laden!

The ad offered the opportunity on gun blogs for a competitor's brand to get a little effortless advertising of its own. As one commenter noted, "This is QUITE humorous considering their official sidearm is a Sig [Sauer] not a Beretta." Indeed, while the Beretta has long been the sidearm of many military agencies, the SEALs use a Sig Sauer model.

The Problem With Communications Planning

Communications is not just a strategy, it is a craft. And it takes time to learn how to do it well.

Greg Satell's comments in Digital Tonto are iconoclastic, in that he believes the communications profession may be losing sight of the craft because they are driven, like so many other businesses, by the pressure to put up impressive numbers that contribute to some sort of return that may well be tied to someone's compensation package and, less certainly, to the long term strategic interests of the entity in question.

He may or not be fair - or right - but he raises a provocative point about how this crucial profession is managing itself and its clients:

"What is communications planning? I don’t mean to be cheeky, but I would assume that it should have something to do with communicating.

However, it seems clear that communications planning, as practiced, has focused mainly on targeting consumers and very little on communication. That’s quite an oversight.

In order to fully understand today’s communication environment, marketers need to rediscover media in it’s entirety and go beyond just what shows up in research databases. The transformation will mean a return to old skills long discarded.

What is Media?
If you work at an agency or a major marketer, you might think you know about media, but you probably don’t. Media, after all, is not a GRP. It is also not an ad ad page or a banner. Neither is it a target group or one of the “good bubbles” in a cluster analysis.

Media is what informs, excites and inspires. It’s why people will happily spend $20 to be overcharged for popcorn. It’s what can make driving to work by yourself fun. It’s the news you trust (or that makes you angry). It’s TV shows that define eras. Media, at it’s best, makes our lives lives infinitely more rich and enjoyable.

Of course, a lot of it is also crap. That’s why very smart, capable and committed people spend their entire careers learning to master the principles of creating it. Steven Johnson, in his book Why Everything That’s Bad Is Good For You, chronicles how these principles have changed over past decades and it has nothing to do with actors, target groups or even subject matter.

Media User Experience
So what determines media success? User experience.

The Distribution Democracy and the Future of Media

The democratization of distribution is based on a very simple concept: convergence of sources, content and audiences means that eventually - and not too distant from now - there will be one channel. You press a button on your computer and your message is instantly distributed as broadly or narrowly as you like.

This means that media companies are going to have to redefine what they do because distribution is not going to be the value added service it once was. AOL's purchase of the Huffington Post was an acknowledgement of that future direction, though whether it will prove to be sufficient remains a good question.

Om Malik comments in GigaOm on the further implications of this structural change for media strategy:

"The problem with most media companies is they define themselves by the product they hawk. Music television, CNN, Breaking News, The New York Times, The Wall Street Journal, ESPN or whatever — these are all products that define the media companies behind them.

And therein lies the problem. Unless media corporations stop defining themselves by their products, they are going to be unable to navigate the big shift that is changing the rules of the game — what I call the “democratization of distribution.”

The Distribution Democracy
Let’s talk about the television business for a minute. During the early days of television, access to spectrum determined who owned and operated the networks. CBS and ABC became the gatekeepers of attention — whether it was through 60 Minutes, Wide World of Sports or some other such program. Hit programs essentially ensured that viewers “attention” switched from one channel to another, and with it, the advertising dollars.

Then came analog cable and we saw the emergence of more media entities — for example, HBO, ESPN and CNN — which siphoned away attention from broadcast networks to all these new entities. With digital cable, attention got sliced and diced even more, but still the scarcity of “spectrum” inside the cable network pipes meant that there was finite amount of channels available.

Then came broadband, which essentially removed any channel scarcity. The distribution, which had been in the hands of a few large media conglomerates, was suddenly available to everyone. Today anyone, even talentless acts such as Rebeca Black can upload their video to YouTube and become instant celebrities. Justin Bieber, too, is a product of this channel-less revolution.

Just like television, we have seen the same drama unfold in the music, radio, newspaper and magazine industries. The gatekeepers of attention have been disrupted.

Beyond Obama's Bin Laden Bounce

Messaging and the polls that drive it can be ephemeral in business as well as in politics. That is why watching the Presidential campaign unfold is fascinating from a business and marketing perspective as it is for those who care deeply about political campaigns.

The bounce that President Obama has received was not large by historical standards, but it may be lasting. Research by Predictiv, my firm, has shown that messages and themes continue to make impressions on public attitudes and on stock price performance for weeks and in some cases, even months.

As Nate Silver comments in the New York Times, if the President receives only a 1% increase in approval as a result of the Bin Laden raid, it may be enough to assure his victory in 2012. The same goes for any corporate communications theme whose immediate impact may appear minimal but which has lasting value:

"A week after the news broke of the American raid that killed Osama bin Laden, bettors at Intrade, a political futures market, are barely any more likely to think that President Obama will win re-election.

As of this writing, Mr. Obama’s Democrats are given a 60.3 percent chance of winning next year’s presidential election. By contrast, the day before Bin Laden was killed, the market’s estimation of the Democrats’ chances had been 59.7 percent. That’s less than a full percentage point worth of improvement. Is this the appropriate reaction?

The “bounce” in Mr. Obama’s approval ratings has been fairly small — probably about 5 or 6 percentage points on average, although with some variability from survey to survey. I had been expecting a somewhat larger reaction.

At the same time, as I’ve repeatedly advised, the bounce is not necessarily the right lens through which to perceive the long-run electoral impact of the news.

The attraction of bounces is that they seem easy to quantify. Mr. Obama’s approval rating in the Gallup tracking poll improved from 46 percent before the Bin Laden announcement to a peak of 52 percent, before ticking down to 51 percent, where it remains now. A few other things have been going on — the release of Mr. Obama’s long-form birth certificate, the tornadoes in Alabama, various economic reports and so forth. But the Bin Laden coverage (rightly) has dominated the news, and there’s no doubt that most of the movement in Mr. Obama’s polling is attributable to it.

As time passes, however, the bounce will become blurrier, for two reasons. First, its magnitude will become smaller. And second, other events will intervene, and will either favorably or unfavorably affect Mr. Obama’s numbers.

Google's Other Multi-Billion Dollar Business

That stealth business is display advertising. The message here is that Google is relentlessly searching for business opportunities that leverage its expertise and technology. This improves speed to market, assures bigger margins and enhances the potential for sector dominance.

There is a point at which the Law of Large Numbers takes over. An entity simply becomes too large to grow at the same pace. Google is working hard to put that time off as long as possible - and they are succeeding so far.

David Goldman reports at CNN/Money:

"Google became a $30 billion company on the back of search advertising -- but the company thinks its other multi-billion-dollar advertising business will be its growth engine of the future.

That other business is "display" advertising, which includes banner ads, video ads and in-app mobile ads. Google (GOOG, Fortune 500) has only been in the market for three years. That's why it stunned just about everyone in October when it announced that its display business is on pace to bring in $2.5 billion in annual sales.

"It's quite revolutionary, and the numbers are indeed astonishing," says Karsten Weide, analyst at IDC. "It has become a very important business for Google."

The company approaches the display market in a very different way than its competitors, which include Yahoo (YHOO, Fortune 500), Microsoft (MSFT, Fortune 500) and AOL (AOL). They sell the vast majority of their display ads manually.

Google automates the process. Anyone with a credit card and a campaign to upload can buy display ads online. Right now, Google's footprint in the space is relatively small. Unlike search, where the company grabs 60% of the advertising revenue in the U.S. market, Google has just a 15% share of the display market's sales, according to IDC.

Managing Disruptive Innovations

Disruptive innovation became a buzz phrase during the dotcom boom. It was frequently considered shorthand for the new tech way is smarter and better than the old-fashioned traditional business way.

The problem was and is that very few people actually know how to manage a situation like this as opposed to theorizing about it. Ease of access and convenience, features at the heart of the debate about security versus productivity, turn out to be crucial competitive advantages that attract customers in the first place, then bind them to product and services.

What follows is a learned disquisition from Irving Wladawsky-Berger who comments in his blog (hat tip Thierry de Baillon):

"The management of disruptive innovations is very different when looking at relatively simple or self-contained technologies, products or services versus highly complex platforms and infrastructures. A lot of the hype you often hear when new innovations come about is the result of people not properly understanding the different dynamics that apply to simple versus highly complex innovations. Unrealistic predictions are then made about the near term impact and rate of adoption of the new innovation, because the innovation in question is quite complex in nature, but the predictions assumes that it is on the simpler end of the spectrum.

Let me illustrate what I mean by giving a few examples of different kinds of disruptive innovation across the spectrum from relatively simple to highly complex.

When transistors first appeared in the marketplace in the 1950s, they quickly replaced vacuum tubes and paved the way for smaller and cheaper radios, televisions, calculators, computers and many other products. After a few years, no new products were developed with vacuum tubes, except perhaps for highly specialized one. Transistors took their place.

Similarly, flat panel displays replaced CRT monitors and televisions once their prices dropped to the point that many could afford them. Flat panel technologies have been around for decades. They are clearly much lighter and thinner than CRT-based products. But initiatlly, their costs were too high, so they were only used in consumer products that required relatively small panels, such as laptop computers. But now, the vast majority of monitors and TVs use flat panels displays regardless of their size.

Manufacturing Renaissance? Higher Chinese Wages and Smarter US Factories May Be Changing the Production Equation

The impact of higher Chinese wages has been addressed in several recent posts in this space. However, the quiet renaissance in US manufacturing capability has been, until recently, a source of more speculation than fact.

The renaissance is due to productivity increases brought about by innovative application of technology, changing organizational design and better worker training. The mixed part of the blessing has been that US workers are suffering from a decline in wages, job availability and power vis a vis business. The war for talent, if it ever really existed, is way over. That said, those with the background and the interest are able to take advantage of new types of work which offer stimulation, advancement opportunities and somewhat better pay than is generally available in the service economy. Businesses are using this advantage to make themselves more competitive by investing in technology and making sure the workforce can use it optimally. The result is a potentially exciting opportunity for economic rejuvenation.

Peter Coy reports in Business Week:

"Do factory workers have a future in the U.S.? David Laws thinks so. The muscular, tattooed South Carolinian has a prized job with General Electric's (GE) Greenville Airfoils Facility in Piedmont, S.C. One of his tasks is to use a computer-controlled machine tool to burn tiny cooling holes electrically in 3-inch-long turbine blades for aircraft jet engines. The 300 holes in each blade, most of them thinner than a human hair, are engineered to spread a coat of cool air over the spinning blades so they aren't melted by 3,000F exhaust gases.

The pay is good—$31 an hour—but what Laws really likes is the sense of empowerment at the non-union plant. Hourly team members like Laws are responsible for choosing new colleagues. Before deciding who gets hired, they interview job candidates and observe them in a game that involves cooperatively building a toy helicopter from LEGO blocks. Teams can adjust the line operation as they see fit to remove bottlenecks and maximize productivity. Recently, two teams came up with different ways to speed up the washing of turbine blades. The plant leader, rather than picking one way as the winner, approved buying equipment for each team to wash the blades its own way.

"At other jobs I've had, it was just a paycheck. Here, you actually feel like you have a say-so. Out of all the places I've worked, I'd say this is by far the best one," says Laws, 34, who is married with four children.

Manufacturing still contributes 11.7 percent of U.S. gross domestic product. Yet when footloose corporations can choose to locate factories wherever in the world they want, the only hope for American factory workers to save their jobs is to be so skilled and productive that they can justify the pay multiple they earn vs. their counterparts in South Korea or China or Mexico. (Roughly half of GE's manufacturing jobs, as well as overall revenues, are outside the U.S.) For Americans, earning premium wages will require focusing on sophisticated products that can't be made in lower-wage nations—and outsmarting foreign rivals with the kind of ingenuity and teamwork that are on display at the South Carolina airfoil plant.

A study scheduled to be released on May 5 by Boston Consulting Group argues that the U.S. is headed for a "manufacturing renaissance" over the next five years. The mainland's pay advantage over the U.S. is eroding because Chinese wages are rising about 17 percent a year and the yuan is gaining in value, according to BCG. And an "increasingly flexible" U.S. workforce is willing to accept non-union wages and benefits, and state and local governments are raising incentives to attract factories, the firm says.

Thinking of Becoming A Lifestyle Brand? Hold That Thought

It once seemed that combining the pedestrian functionality of a common product with a person's need for meaning and community was the answer to a marketer's dream. Cementing the call of price and utility with desire and values seemed like a good way to build brand equity and repeat business.

A new study suggests that may be illusory and that bringing unrelated characteristics into the brand equation may actually create less loyalty and more cross-category competition which is difficult to combat.

Karl Greenberg reports in Marketing Daily (hat tip Carol Phillips):

"At first blush, lifestyle branding might seem like the sort of gambit that has no downside. After all, what could possibly be wrong with finding new ways to connect with people by transcending the limits imposed on a brand by the reality of its products or services? In the choppy seas of consumer sentiment, don't a company's products need as many mooring lines to a consumer as possible?

A new study from Northwestern University's Kellogg School of Management suggests there are dangers inherent in creating a lifestyle brand. The most serious is that by transcending the strict categories defined by the actual thing a brand is built around such as razors, beer, and motorcycles, the brand also opens itself up to a much wider field of competitors -- other lifestyle brands whose products may be in totally different segments.

Alex Chernev, Kellogg marketing professor and lead author of the study, "Competing for Consumer Identity: Limits to Self-Expression and the Perils of Lifestyle Branding," said that by switching to lifestyle positioning, "brands might be trading the traditional in-category competition for even fiercer cross-category competition."

The study says that lifestyle branding creates more competitors, not less. "The open vistas of lifestyle branding are an illusion," said Chernev. "Focusing on lifestyle puts brands like Gillette, Abercrombie & Fitch, Harley-Davidson, Starbucks, Apple, and Facebook in direct competition with one another."

So That's Why They Want It! How Businesses and Government Agencies Are Using Mobile Location Data

The debate about mobile location tracking continues to rage. Opponents are concerned about privacy and civil liberties violations. Proponents envision the emergence of new services that will make peoples' lives easier.

As more information becomes available about the types of services being developed, the scope and scale are quite impressive. Discounts tied to location and driving record, accessible data to make shopping or legal arguments or sports fan-dom more productive and enjoyable, and information to make store, mall or document design more user-friendly based on previous usage patterns all seem possible.

Government agencies admit that they are using some of the same apps to monitor behavior and catch scofflaws. This concerns libertarians but offers relief to those worried about personal security. The implications are complex but there seems little reason to believe that once out of the bottle, this set of genies will be re-corked.

Jennifer Valentino-DeVries and Julia Angwiner report in the Wall Street Journal:

"Cellphones that collect people's locations are only the tip of the iceberg: Auto makers, insurance companies and even shopping malls are experimenting with new ways to use this kind of data.

Location information is emerging as one of the hottest commodities in the tracking industry—the field of companies that are building businesses based on people's data.

Some companies are using the data to build better maps or analyze traffic patterns. Others send users advertisements for services near where they are located. Some insurers hope to use the data to provide discounts to better drivers.

The Wall Street Journal reported that iPhones and Apple were collecting such data even when users had turned off location services and that Android phones were transmitting similar information to Google several times an hour, even when location apps weren't in use.

On Tuesday in Washington, D.C., a Senate Judiciary subcommittee plans a hearing to consider whether a federal law is required to protect consumer privacy on mobile devices. The hearing was spurred by the public outcry over recent findings that Apple Inc. and Google Inc. gather location-related data from iPhones and Android phones. Both companies are set to testify.

In March, researchers found Apple's iPhones were keeping a database of nearby Wi-Fi networks and cellular towers, stretching back months. The Wall Street Journal reported that iPhones and Apple were collecting such data even when users had turned off location services and that Android phones were transmitting similar information to Google several times an hour, even when location apps weren't in use.

Is Corporate Venture Dead - and Can Open Innovation Replace It?

Corporate support for research and development is down. It has been deemphasized by market imperatives focused on short term returns and compensation schemes based on metrics that require extremely focused investment.

The question is whether this injures the entire economy by withdrawing from circulation ideas that might benefit from operationally experienced corporate oversight rather than more financially driven venture investment. Collaboration such as the contract research organization (CRO) in pharmaceuticals is one answer. But in the networked present, there is hope for open innovation. The challenge is to what degree that distributed model can work in sectors beyond tech. There is reason to be hopeful, given the rise of collaborative software and a more permeable corporate culture.

Stefan Lindegaard comments in 15inno (hat tip Greg Satell):

"Once upon a time, we had many corporate venture units that invested in external projects as well as in internal projects from the corporate groups that they belonged to.

The number of units declined steadily during the last decade and it continues to do so in the aftermath of the financial crisis. One company that I have always admired is Danfoss Ventures, which is the corporate venture arm of Danfoss, a group with 26,000 employees working with refrigeration, air conditioning, compressors and more.

Unfortunately, Danfoss Ventures – my role model on corporate venture – is now dead. According to Executive Vice President at Danfoss, Nis Storgaard, this is about prioritizing resources where they make most impact.

“The past few years’ development has sharpened our understanding of how important innovation is – but also of how important it is to prioritize investments where they make most difference. And for us this is in our core businesses that have the knowledge of customers and markets as well as the required competences to turn innovative ideas into good business,” Nis Storgaard says.

I have heard similar explanations over the years and this makes sense. Or does it? It definitely raises some questions.

History has shown us that companies will only continue to grow and prosper in the long run if they are capable of morphing into new business areas. This does not have to be totally new business areas or industries. Core adjacencies could work if the borders are pushed continually.

A key benefit of a corporate venture unit is that it can create a safe heaven for smaller, entrepreneurial projects that otherwise would be killed by the larger group and it’s bureaucracy. In theory, a corporate venture unit should be a perfect model to make this happen and thus help companies morph into new business areas. I have been a strong believer in the corporate venture model. Now, I have second thoughts.

In the Future Your Car Is Going to Be Made More From Plants Than From Steel and Plastic

The cost of oil is beginning to make itself felt in curious new ways. Auto companies are acutely conscious of the decreasing availability and rising cost, not just as it affects mileage but how it impacts the cost of manufacturing.

In response, the auto manufacturers are increasingly using organic bio- materials to reduce their reliance on steel, whose production is energy inefficient and on plastic derived from oil.

This signals that manufacturers, who have often led other businesses in terms of innovation and specifically in technology adaption are taking seriously the opportunity provided by research into bio-based materials. While this bodes well for the environment, the impact on food costs as agricultural land is taken out of grains production for other commercial uses may yet be a concern. Nations are going to have to rethink land use policies and tax structures so that the economy can accomodate this without causin unintended hardship.

Ariel Schwartz reports in Fast Company:

"Car companies haven't come up with a plant-like replacement for vehicle engines, but they are using more bio-based materials in their vehicles--because the automakers of the world are more aware than anyone that the world is running out of oil.

This week, Ford--the auto industry's plant cheerleader--announced that it is researching the use of dandelion root in parts of its cars' interiors. That's just one biological element you might start seeing in Ford's cars.

"In theory, anytime you can grow something as opposed to paying for it to be shipped, the better the economic cost," explains Angela Harris, Ford's lead research engineer, in an email to Fast Company.

The dandelions will be used as a rubber replacement in the car company's cupholders, interior trim, and floor mats. The key to the research is a species of Russian dandelion, Taraxacum kok-saghyz, that contains a milky-white substance which could could be an ideal replacement for synthetic rubber.

"This variety of dandelion is much hardier than the kind typically found in our backyards,” Harris says in a press release. "It’s strange to see weeds being grown in perfectly manicured rows in a greenhouse, but these dandelions could be the next sustainable material in our vehicles."

Ford has also replaced petroleum-based foam with soy foam in many of its vehicles. The feature has helped the company reduce its annual petroleum oil usage by over 3 million pounds.

Why CEOs Are Overpaid - And Football Players Are Not

In the post-crisis recession from which the global economy may or may not be emerging, there is justifiable concern about whether there are two sets of rules: one for the financiers, the CEOs and other corporate insiders, and one for everyone else.

In a new book from University of Toronto Business School Dean Roger Martin, he argues that the reason has to do with poorly designed and executed 'pay for performance' schemes that are heavy on stock options, but light on accountability. This has increased risk without requiring the sort of offsetting processes that would mitigate it, because the entire enterprise is designed to optimize compensation.

Martin makes the point that by comparison, professional athletes, particularly football players are not overpaid because their compensation design is straight forward. Martin's point of view is consistent with research on risk management conducted in the post crisis period. However, until the political will to mandate changes becomes evident, it is likely to stay as is. Football, we might add, is currently experiencing a strike/lockout as the players and owners attempt to address this very point.

Eric Schurenberg interviews University of Toronto Business School Dean and author Roger Martin in BNet:

"Every time there’s a stock market meltdown big enough to wreck the real economy—and we’ve seen quite enough of that recently, thank you—the hunt for scapegoats leads to executive compensation. We pay our top executives too much, goes the argument, and worse, we give them all the wrong incentives. We reward leaders for taking risks and fudging numbers and then are shocked when reckless leverage and shady accounting cause a crash.

Roger Martin, dean of the Rotman School of Business at the University of Toronto, agrees in his new book Fixing the Game that executive compensation is a key culprit. But the reason we get comp wrong, he argues, is not just that we give too much of it but that we give too much of it in stock and stock options. That alone transforms corporate chiefs from stewards into gamblers—and disaster, he says, has to follow. He explained why in an interview with BNET editor in chief Eric Schurenberg.

Giving stock to executives is supposed to align their interests with those of the shareholders. What’s wrong with that?

It makes sense, in theory: Managers get rich only if shareholders get rich, too. But look at how it has worked out. Over the past couple decades shareholder returns went down, volatility went up, and we’ve had massive bubbles and massive accounting fraud. You’d have to conclude there’s something wrong with our model

Mobile Mischief: Illegal Immigrant Smugglers Using Cell Phone Webs To Avoid Border Crossing Detection

Technology enables human ambitions once again. The increase in US surveillance and patrols along the Mexican-US border has fostered a coevolutionary response from immigrants and smugglers. They are employing mobile-equipped observers on both sides of the border to help immigrants avoid discovery, thereby raising their success ratio and increasing productivity. Just like real businesses!

The implication is that just as an earlier post today described how the military is using off-the-shelf technology to change strategy, so groups with more pedestrian aims are innovating to improve performance. The lesson is that people are adaptive when circumstances demand it. Observe, learn, process the wisdom received and react. It applies to every aspect of human endeavor.

Marc Lacey reports in the New York Times:

"A group of migrants was hustling north through the southern Arizona desert the other night when one of their cellphones vibrated with a text message. “Watch out,” it warned. “Things are hot up ahead. Take cover in the bushes.”

The message, signaling the presence of the Border Patrol, was sent by a smuggler watching the group’s progress through binoculars from a hillside on the Mexican side of the border, members of the group said later. It was part of what border officials and immigrant activists say is an emerging trend in illegal border crossing — the use of what is being called the cybercoyote.

“I’ve crossed eight times, and this is the first time they’ve directed me with my cellphone,” said Sandra Silva, 30, a native of Guadalajara, Mexico, who was on her way to Phoenix. “It’s like a guide through the desert.”

Increased enforcement has made it difficult to sneak into the United States, officials say. And repeat offenders caught in the act are more often receiving stiff prison terms, making smugglers more cautious about risking arrest themselves.

Guides still accompany the bulk of the migrants crossing the border, activists and Border Patrol agents say. Those guides are in regular radio contact with confederates, who warn of trouble ahead. But the Border Patrol has been noticing cases of migrants crossing alone but in cell contact with guides, said Mario Escalante, a spokesman for the Tucson office of the Border Patrol.

Shared Electric Car Rental Service Coming To Paris

Combining environmental goals with business savvy, the City of Paris has awared French busines magnate Vincent Bollore a franchise to offer shared electric cars. This is similar to the ZipCar concept, with the all-electric battery fleet and charging stations being the primary difference.

Paris' experiment with bicycles has demonstrated both that there is demand for shared transportation and that maintenance costs due to damage and theft are far higher than predicted. The Autolib' service, as it is called, will provide far more locations than similar services in the US and the price will be lower. The question is whether that will be sufficient to change consumer behavior based on ownership. The acknowledged hassle of parking in Paris is the incentive, Autolib's backers hope will make it successful.

Max Colchester and Ruth Bender report in the Wall Street Journal:

"Vincent Bolloré, the French mogul who has invested in palm oil, a French newspaper and global advertising, this year is making what might be his boldest gamble: a shared-electric-car project for the City of Lights.

If all goes as planned, hundreds of electric cars financed by Bolloré SA will be available by December at thousands of specially designed charging pods across Paris. For a small subscription fee and per-use charges, residents will be able use the cars and return them to any charging station.

For Paris, which granted a contract to Bolloré, the venture is an attempt to curb congestion and pollution. By using electric cars, offering convenient drop-offs and keeping fees very low, the program differs from the cut-rate rental services in some cities. And analysts say Autolib', as the Paris program is known, is more extensive than the car-sharing programs in cities such as London and Austin, Texas, which mainly use gasoline-powered cars.

For Mr. Bolloré, Autolib' is a way to test a €1.5 billion ($2 billion) several-year investment to develop an electric car and battery. He says it will cost his company another €200 million to get Autolib' running.

Microsoft Is Close to Buying Skype for @$7-8 Billion and That's Good Because...

Umm, eBay tried this and it didnt work out so well. Why does Microsoft think it will have better luck?

Well, they are already in the mobile business so this could really help their competitive position, assuming they can figure out how to make Skype's lower cost model available at the scale they need to have a real marketing impact. And let's face it; the Microsoft management team is not dumb. They may be flailing a bit as they try to figure out what replaces the Windows operating system as the next big cash generator, but you have to give them credit for trying. This is not a 'Hail Mary' like AOL's purchase of Huffington Post, but its value remains to be extracted from operational execution of the strategy that led to the deal.

Dean Takahashi reports in Venture Beat:

"Microsoft is close to a deal with Skype to buy the internet phone company for $7 – $8 billion, according to the Wall Street Journal.

If it’s true, it would be an aggressive move by Microsoft to become a big player in the convergence of communication, information and entertainment. The deal could be announced as early as Tuesday, according to sources cited by the Journal. Microsoft and Skype declined comment to the Journal. The rumor of the deal was first reported by GigaOm.

The deal could still fall part. Including Skype’s long-term debt, the value could be about $8.5 billion. Skype allows users to make calls for free to each other over the internet. The service makes money when those users want to connect to someone with a land line or hold a video phone call with multiple parties.

Microsoft could use Skype’s name value to build out a bigger consumer business and integrate the popular service with its Xbox Live online gaming service. The deal could be one of the biggest that Microsoft has ever undertaken in hits 36-year history. In 2007, Microsoft bought aQuantive, an online ad firm, for $6 billion. And it almost bought Yahoo for $48 billion nearly three years ago.

While Microsoft has successfully moved into video games, most of its profit still comes from its Windows and Office franchises. Microsoft has a a communications platform called Linc, which ties together email, instant messaging, and voice communications into a single application. Skype could help enhance that. But for the most part, Skype would be a major diversification for Microsoft.

Perhaps the biggest benefit of buying Skype will be to help out Microsoft’s Windows Phone 7 platform, which could use a free calling technology to compete against Apple’s FaceTime on the iPhone and Google Voice on Android.

Of course, Skype has been part of a failed diversification in the past. The company was founded in 2003 by Niklas Zennstrom and Janus Friis, the creators of the Kazaa file-sharing technology that was associated with music piracy. Skype was disruptive, offering free phone calls when most carriers still charged for such service. Then eBay bought Skype for $2.6 billion in 2005, presumably so buyers and sellers could communicate in eBay auctions. That didn’t work out.

eBay sold a 70 percent stake to Silver Lake Partners, Index Ventures, Canada Pension Plan Investment Board and Andreessen Horowitz. Skype hasn’t had the best of luck making a profit. The company posted revenue of $860 million in 2010 and a net loss of $7 million. It has debt of $686 million. Skype had been planning to go public since last August, seeking to raise $1 billion.

At the Front: Technology Is Changing Military Strategy

Military experts are looking at developments in consumer and commercial information technology and studying how to apply those advances to modern warfare. In some cases, they already have: drones are already changing the nature of air forces. The fighter jets and pilots who have dominated air war strategy may soon be replaced by less-expensive drones and the less-expensive people who operate them.

Data has always been a feature of warfare: trajectories, logistics, the advantages of small-unit organizations and the mathmatical implications of mass versus speed. Those factors are now being pushed, as they are in business, by the desire for more specific applications, used closer to the face of battle. If a PDA or iPad can identify a tune's name and artist, why can't the same app identify a terrorist's or opposing general's name and characteristics from a photo of his face?

At the strategic level, there is a debate in military and intelligence circles as to whether the powerful new technologies should simply be used for armed power projection or whether they are better applied to identifying and eliminating the conditions that cause conflict before it appears. There will be plenty of experimentation but technology's central role is not a question.

Daniel Dombey, James Blitz and Peter Spiegel report in the Financial Times:

"It is on course to become one of the abiding images of Barack Obama’s presidency. Crammed into the White House situation room, the president and his defence, intelligence and foreign policy chiefs gaze at screens detailing the operation to kill Osama bin Laden thousands of miles away in Pakistan. The nervousness in their expressions is palpable. While the video was not a real-time rendering of the al-Qaeda leader’s assassination, it is likely to remain the symbol of the end of the biggest manhunt in history.

In the immediate aftermath, the world was focused on the implications for global jihad; relations between the US and Pakistan; and the boost to Mr Obama’s domestic standing.

But the significance of the operation stretches far beyond these factors. For this is an illustration, one of the most striking to date, of how the US is engaged in an increasingly sophisticated form of warfare – one that fuses the intelligence services and highly sophisticated military specialists. It is being conducted in large part through spies, special forces and drone strikes in battlegrounds such as Pakistan and Yemen.

“There has been an astounding change in the nature of warfare,” says John Nagl, a counter-insurgency expert and former US Army lieutenant-colonel, who heads the Washington-based Center for a New American Security. “As technology continues to advance and people like al-Qaeda use that technology against us, a national security system that was designed to confront other states is increasingly having to adapt to a world in which our most likely threats are non-state actors – individuals and small groups.”

At the heart of this new warfare is high-tech co-operation between intelligence agencies and the military that, in the words of one US defence official, “uses the IT revolution to push the ability to use data right up to the edge of the battlefield”. The new approach focuses on using huge amounts of information gathered by unmanned aerial vehicles, or drones; and signals intelligence from satellites. One goal is to write algorithms that allow the face or location of a terrorist suspect to be identified just as an iPad can identify a tune

Publishers Cut Deals With Apple and Work To Sell Advertisers On Tablet Subscribers

If you can't beat 'em, join 'em. Magazine publishing conglomerates are rushing to negotiate deals with Apple to make their output available on iPad and other tablets. They, like the movie studios facing tv and other content providers facing computers, iPhones etc, are recognizing that letting the trend be your friend in order to garner additional market share is more sensible than fighting new technology.

For its part, Apple, which usually maintains an attitude of lofty disdain and non-negotiable demands has recognized that it, too, can reap advantage from signing up subscribers now, even if at a slight discount, so that the hassle and cost of switching later will keep them in the Apple fold.

Advertisers are still not certain what sort of a market this will turn out to be. Early returns as mentioned in this space previously, suggest iPad buyers are affluent opinion-leaders (or young-ish opinion-leaders to be) so this may never become a huge market but it should certainly be a profitable one.

David Carr comments in the New York Times:

"If you wanted to get your message in front of a reader of The New Yorker, it would cost you $141,174 for a full-page ad in the magazine’s glossy pages.

What would it be worth to reach the same reader if he or she were on an iPad? More, less or the same?

That is the one very pertinent question after an active week in magazine publishers’ fitful effort to be part of, rather than run over by, the digital revolution. Hearst Magazines struck a deal to sell three of its magazines — Esquire, Popular Mechanics and O, the Oprah Magazine — for the iPad, using Apple’s subscription model, beginning in July. Hearst is the first major publisher to agree to sell multiple magazines in the app store.

The Hearst announcement comes on the heels of word that Time Inc. negotiated an agreement with Apple in which subscribers to Sports Illustrated, Time and Fortune would be able to read their magazines on the iPad free as long as they verified their identity. (Both deals were first reported in The Wall Street Journal.) And there are indications that Condé Nast, the third part of the triumvirate, will actually be the first to market among major publishers with iPad subscriptions to some of its bigger magazines.

Consumption Capital: China's Rising Wages Drive Price Increases In West

There is good news here for western companies: their products will become more competitive in their home markets and they may even realize increased market share in China. The reality is that this had to happen and the global economy will benefit.

Foxconn and the other companies that raised compensation to stave off suicides and the attendant bad publicity are moving production to China's interior, raising living standards there. The economies of the coastal provinces will move up the value chain.

Shai Oster reports in the Wall Street Journal:

"Wages are rising in China, heralding the possible end of an era of cheap goods. For the past 30 years, customers would ask William Fung, the managing director of one of the world's biggest manufacturing-outsourcing companies, to make his products—whether T-shirts, jeans or dishes—cheaper. Thanks to China's seemingly limitless labor force, he usually could.

Now, the head of Li & Fung Ltd. says the times are changing. Wages for the tens of thousands of workers his Hong Kong-based firm indirectly employs are surging: He predicts overall, China's wages will increase 80% over the next five years. That means prices for Li & Fung's goods will have to rise, too.

"What we will have for the next 30 years is inflation," Mr. Fung said. "A lot of Western managers have never coped with inflation."

The issue is likely to hover behind talks Monday, between Chinese and U.S. leaders in Washington at their annual Strategic Economic Dialogue. Currency and debt issues are expected to dominate the agenda. But there are signs that the low labor costs—and cheap currency—that led to China's huge trade surplus with the U.S. could be reaching a tipping point. This comes amid pressure from rising wages as China's working-age population begins to decline.

For decades, plentiful Chinese labor kept down costs of a range of goods bought by Americans. Even as politicians in Washington accused China of hollowing out the American manufacturing sector, cheap DVD players, sweaters and barbecue sets were a silver lining for consumers who grew accustomed to ever-lower prices. China also kept down the value of its currency, giving domestic exporters a competitive edge.

"Inflation has been damped pretty dramatically in the U.S. because it exported work to China and other places at 20% or 30% of the cost," said Hal Sirkin, a consultant at Boston Consulting Group. The years of dramatic reductions in costs are over, the firm says

Roll Out the Barrel: Polls Show Public Blaming High Gas Prices on Oil Industry, Not Politics

Sometimes all the spinning in the world can't change a basic assumption. Despite furious efforts to pin skyrocketing oil prices on restrictive government drilling policies, CNN polls are showing a majority of those polled believe the oil companies are to blame. The truth, of course, is more complicated than that and one wonders what would happen if someone were able to cut through the media clutter and deliver a convincing meme about the role of financial trading in creating the increases. However, good communications strategy says keep your villains simple and contained so the oil barons will have to take this hit alone. This is good news for their PR and ad agencies, however cynical that may seem.

The equally interesting messaging and framing issue, as the article points out, is that Republicans welcome this debate. That is because they believe they win any policy battle in which they can charge the other side with raising taxes. It will be fascinating to see if the public buys that line this time given the dramatic effect gas prices are having on family costs of living.

Greg Sargent comments in the Washington Post:

"With a political war brewing over the effort by Obama and Dems to harnass public anger over gas prices to end subsidies for the oil industry, you’d think these new CNN poll numbers would be somewhat encouraging for Dems.

The CNN poll finds that a sizable majority, 61 percent, think that oil companies deserve a “great deal of blame” for rising gas prices. Twenty seven percent say oil companies deserve “some blame.”

Meanwhile, only 25 percent say Obama’s policies deserve a great deal of blame, and 36 percent say Obama’s policies deserve some blame.

That’s far from a slam dunk for Obama: A majority says Obama deserves a great deal or some blame. But the public seems far more inclined to blame the oil industry.

That seems like favorable terrain for the Dems’ latest move: This week, Senate Dems are likely to hold a vote on ending tax breaks for the oil industry and diverting the resultant savings to deficit reduction. The high levels of public blame directed at the oil industry would seem to make it a ripe target for the Dems’ latest initiative, making it hard for Republicans to oppose it.

But Republicans don’t appear worried by this attack line, and they’re already out denouncing the Dem proposal to end tax breaks for oil companies as a tax hike. Which highlight an underappreciated fact about our politics: Republicans just don’t take this type of polling seriously. Just as in the debate over the Bush tax cuts for the rich — which majorities oppose — Republicans proceed from the assumption that any debate that allows them to accuse Dems of hiking taxes is a likely winner for them. It hands them a simple, concise message and feeds the larger narrative they’re perpetually telling about tax-and-spend Democrats — one that transcends the intricacies of the political skirmish of the moment.

This isn’t to say that Dems shouldn’t pursue this latest attack. I’m just taking a stab at explaining why Republicans are unlikely to shrink before it. If a debate contains the word “tax” in any way, shape or form, Republicans are pretty much always willing to engage.