iTAX – tax news

President Barack Obama spoke this week in the State of the Union message about creating “an economy built to last.” Who could argue with this admirable goal? It’s one all Americans should be able to get behind. But unfortunately, there’s a major obstacle to making progress toward it: the judgment capacity of the US Congress.

The two of us have been thinking a lot in the past year about how some organizations manage to be decisive—and wise—consistently over time. Our book, Judgment Calls: Twelve Stories of Big Decisions and the Teams that Got Them Right, comes out in March. Perhaps needless to say, none of those twelve stories features the US Congress as a hero of organizational judgment. In fact, it’s got to be one of the worst decision-making bodies on earth right now.

Consider the evidence: several weeks spent debating whether to pay our bills or not; “kicking the can down the road” for a couple of months on the payroll tax reduction issue; spending lots of energy on silly things (like HR 1022—”The Buffalo Soldiers in the National Parks Study Act”). And how about 23 short-term extensions of funding for the FAA since 2007—the latest one, passed yesterday, funding it for all of 3 weeks!

Dysfunction on this level is an inconvenient truth for us, given the advice we give organizations. We urge enterprises not to rely on the wisdom of a lone “great man” chief executive, but rather to create decision-making processes that incorporate data, diverse perspectives, and due deliberation. These would seem to the hallmarks of Federal legislation.

The question, then, is why these aren’t enough to make Congress work. What’s wrong with its decision-making processes?

Well, perhaps a blog post does not afford the room to answer that question. But here at least are six things—chosen because they might prove instructive to other organizations—that are impairing the lawmakers’ judgment.

1. Party-based factions: One of the findings from decision-making research is that, while debate is conducive to good outcomes, hardened factions definitely are not. And Congress, of course, has factions in spades. Thus, as Congress becomes more factionalized along party lines (with fewer and fewer moderates willing to cross the party aisle), it becomes less effective at making decisions.
2. Selfish money motives. Total spending on congressional races will likely top $2 billion this year, a new record. And the new SuperPACs are likely to distort decision-making in Congress as they are distorting the campaigns for the Republican presidential nominee.
3. Poor processes. The Congress has engineered itself a set of incredibly poor processes for decision-making. The Senate is particularly guilty here; a simple majority of votes in that body can accomplish almost nothing. A dizzying array of holds, pocket vetoes, and delaying tactics complete the picture.
4. Lack of accountability. US citizens disapprove of Congressional job performance by over 80% in most polls, but gerrymandering of electoral districts has made most senators and representatives relatively invulnerable to cross-party challenges. Over 90% of Congress’s members were reelected in 2010.
5. Unclear roles and responsibilities. Despite a couple of hundred years to get it right, there still isn’t agreement on which powers are held by the executive, legislative, and judicial branches in the U.S. Witness the most recent hubbub about whether Richard Cordray’s recess (sort of) appointment to the Consumer Financial Protection Bureau was constitutional or not.
6. Little inspiration to change. Just as Congress has become more factionalized, so has the rest of the country. One might argue that Congress’s dysfunctionality is mirroring—or at least responding to–that of the rest of the citizenry. Fewer and fewer people seem to want to listen to the other side and cooperate with them to help the country move forward.

It’s a daunting list. We can only hope the same factors don’t threaten your own organization’s judgment. The only good news here is that there seems to be consensus that there is a problem: Almost everyone—even those in Congress—agrees the institution is broken

So here’s an idea: why not convene a “blue-ribbon commission” to help the two houses make better decisions? And since Congress itself is unlikely to decide on passing the required changes, why not make the commission’s recommendations binding? That’s the only way that Congress was able to raise the debt ceiling. It may be the only way to raise the ceiling on its organizational judgment.

Google has been self-destructive recently. Last weekend, Google was exposed by engineers from Twitter, Facebook, and mySpace for interfering with their search results. Instead of apologizing and vowing to protect the sanctity of search, this week Larry Page announced that Google will soon integrate its products even further. On March 1st, Google will change its privacy agreement to allow the company to collect and unify user data across all its web properties. There is no opting out. Whether you want it or not, Google will be consolidating the data about what you search for, what you read in your email, and what you write in the cloud into a single profile that is you. Google wants to know everything about you with the intention of “improving” your Internet experience. Unfortunately, even with the best intentions, there’s something that Larry Page doesn’t seem to understand: delivering what he calls “Search Plus Your World” is going to create some problems.

Allow me to explain. At the beginning of my career, I worked on something that resembles the “Search Plus Your World” project. In my first job, I was asked to build a fairly complex algorithm to help a big retail pharmacy identify customers with a potential to have hazardous drug interactions. From my clients’ perspective, the last remaining hole in their drug screen came from patients who did not buy all their medication from one chain. Without a full purchase history, the pharmacist couldn’t identify patients at risk.

My job was to use patient purchase histories and flag patients who were “switchers” — those who alternated between pharmacy chains. I thought if I could figure this out, I could do a whole lot of good for patients. All the data showed that patients who consolidated their medication with one pharmacy were less likely to overdose on medications or have hazardous drug interactions. It was a win-win.

Eight months after starting the job, we’d built the algorithm and were rolling out a counseling program to thousands of stores across the country. On paper, the program looked fantastic. We were identifying tens of thousands of potential “switchers” a week by looking at nothing other purchase information in our own stores. Once we’d identified patients, we’d send contact lists to pharmacies and ask the pharmacists to gently remind patients of the health benefits that came from consolidating their medication. It turned out that we were pretty accurate. Of the patients we’d identified, about 70 percent were actually picking up medication at other pharmacies, and missing important hazardous drug screens.

But in practice, it was a disaster. The problem? We never took into account patients’ expectations. As you might imagine, patients expected their health data to be treated as sacred. Imagine walking into a pharmacy, proceeding to the pharmacy counter, and asking for your monthly supply of Lipitor. Normally, you’d expect to simply pick up your prescription and go home. But instead of simply paying for your medication and leaving, the pharmacist comes over from the other side of the room to chat. He asks whether you are currently picking up your prescriptions from two different pharmacies. He explains the benefit of consolidating. Not so upsetting. At least, it’s not upsetting until you ask yourself “Why did I get the sudden counseling session?” The pharmacist explains that someone from his pharmacy noticed odd behavior in your pickup history.

And that’s when the problems start.

For most patients, the counseling sessions were matter of fact. But for a handful of patients, the counseling sessions felt like an enormous violation of their privacy. They’d never opted into a program that examined their purchase history, they didn’t want to participate, and they were certain they were more than capable of handling their own medication management. The patients were upset; they threatened to leave. Some caused real scenes. It made pharmacists, techs, and other patients uncomfortable.

When we designed our program, we imagined how the world should be from our perspective. We didn’t consider how the world was from their perspective or the importance of our implicit agreements in their minds. We had their personal information. With it came their trust. We lost it. What we didn’t understand then is what Larry Page seems not to understand today. Google is about to have their own “switcher” program.

Google’s new initiative could be very valuable for users. Their integration of social into search could produce very relevant results. For many customers, leveraging user information to unify an experience across Gmail, Documents, Search, News, and YouTube could yield the best functioning products Google has ever made. Unfortunately for Google, when we hired the company to deliver all those services, we expected to be involved in any subsequent changes. We expected that we could say “no” if Google wanted to roll out an update we didn’t want. And what can we do now — stop using Google? We’re captive. As a result, what Google is doing feels like a violation. It feels like the company responsible for cataloging the world’s information should display the most relevant information, regardless of its source. It feels like I should be able to read my email in private. It feels like Google is taking advantage of me. And at the end of the day, that feeling is all that matters.

Employee happiness is becoming a hot topic among CEOs and in boardrooms, and it’s about time. The current issue of Harvard Business Review, which includes a series of articles focused on employee happiness, is just one more sign of the growing recognition that happy, engaged employees are more productive and generate better outcomes for their companies.

But there’s also a risk in all this attention to “happiness.” Happiness for its own sake is not the right outcome to seek. If you want happy employees, you can just pay them more. You can give them more time off. You can give them free lunches by celebrity chefs. Only a few of the things that make employees “happy,” however, result in real, sustained benefit for the company. As Gretchen Spreitzer and Christine Porath note in one of the recent HBR articles, “It’s not about contentment, which connotes a degree of complacency.”

My colleagues and I agree with that. We have been studying the links between employee engagement and customer loyalty for a few years now, and we’ve found that the only route to employee happiness that also benefits shareholders is through a sense of fulfillment resulting from an important job done well. We should aspire not just to make employees “happy,” but to do so by helping them achieve great things. In short, we should earn our employees’ passionate advocacy for the company’s mission and success by helping them earn the passionate advocacy of customers.

That’s an ambitious goal, of course. And it necessarily links employee engagement to customer outcomes, the ultimate source of a company’s success. Most companies’ approaches to employee engagement fail to achieve the right sort of engagement. Here’s some of what’s needed:

1. True ownership by line managers. Most large companies depend on HR to measure and manage employee engagement. HR collects the feedback, analyzes it, and then “cascades” it through the organization, beginning with the CEO and then at progressive levels down to the front line, along with recommendations for improvement. But this keeps control, ownership, and responsibility firmly in the hands of a central team.

Real engagement — passionate advocacy — comes from making customers’ lives richer, and there isn’t much that HR alone can do to help employees achieve that. So Apple stores, JetBlue Airways, and others deliver employee survey results directly to operating managers, who can then sponsor shop-floor change initiatives. Perhaps more important, they feel full ownership of the results and for making progress. At Apple, for instance, employee focus groups identify key themes and issues from the surveys; employee teams then help develop solutions, which they present to store management. By the time the next survey comes around, managers can see whether the solutions have had the desired effects.

2. Simpler measurement. Most companies gauge employee satisfaction through the time-honored annual survey, managed centrally and comprising a huge number of questions. They often result in tremendously detailed reports across a large number of metrics. But many companies are taking a page from the Net Promoter playbook: They survey employees more often, ask just a few simple questions, and simplify the reporting. How likely would you be to recommend this company to a friend as a place to work? How likely would you be to recommend the company’s products or services to a potential customer? What’s the primary reason for your response? These companies allow employees to use their own words to identify opportunities and issues. The feedback can be difficult to hear — employees tend to be tough graders. But it can be much more powerful as a motivation to take action.

3. Direct feedback from customers. The most important step, of course, is providing a steady stream of feedback from customers and then “closing the loop” quickly by sharing it directly with employees in its most raw form. When frontline employees and managers hear directly from customers — when they see how customers scored their experience, when they hear what went right and wrong in the customer’s own words — the effect is dramatic. Applause in the form of positive feedback inspires them to keep up the good work. Criticism often inspires employees to improve their performance on their own or to seek additional coaching so they can do better next time.

And it isn’t just customer-facing personnel who can learn from customer reactions. Logitech, for instance, compiles Net Promoter scores for each of its products and ensures that the engineering teams responsible for each one see and hear what customers think. When one new keyboard got negative reviews, the company was able to identify the problems and quickly bring out an improved model.

Loyal, passionate employees bring a company as much benefit as loyal, passionate customers. They stay longer, work harder, work more creatively, and find ways to go the extra mile. They bring you more great employees. And that spreads even more happiness — happiness for employees, for customers, and for shareholders.

For the past two and half years, we have been interviewing executives in multinationals around the world about their biggest challenges. One recent interview stood out. Tomas* is a regional vice president in Santiago, Chile He works for a European company with operations throughout the globe. When we met, he expressed deep frustration with his home office in Germany. Executives there had repeatedly shut down his attempts to develop a modified product for the Latin America market. Despite the negative response, Tomas kept trying. He explained to us why the product needed to change, why the modification would benefit his company, its distributors, and most importantly, its customers. Listening to him, it was clear he is passionate about his idea. He believes the new offering would revolutionize not only his region, but other markets as well. Given his extensive experience in the industry and with the company, it is hard not to believe him. So why don’t the home office executives?

Tomas’ experience is all too common. We’ve heard from countless managers like him who have seized on what they believe to be a game-changing innovation that they cannot get senior leaders to pay attention to. The reality is that in many organizations, most transformative ideas are never even heard.

In the September 2011 issue of HBR, we published “Finding Great Ideas in Emerging Markets” to share our findings about this conundrum. The article was the product of a two-year exploratory study intended to better understand how organizations can tap external innovations and implement them in their existing businesses.

Since the article came out, we have continued to refine our research through interviews and executive training. In this ongoing work we’ve learned that we underestimated how pervasive the need is, across various markets and organization sizes, to improve the way ideas are scouted and sold into an organization. We have heard from even more executives around the world who are struggling to adapt their old organization to the operational realities of a wildly dynamic business climate. These managers realize that most transformative ideas developed in emerging markets are filtered out by their existing structures and they want to remedy this situation. To help them, we created a supplement to our article that helps executives ensure their organizations are successfully scouting and implementing ideas from the field. In this Idea in Practice, we share in detail one story of a manager at Conoco Phillips who discovered an idea in the marketplace and successfully integrated into the company’s lubricants business.

There are several key lessons to be learned from Conoco Phillips’ experience and the other companies in our study, including:

Companies must better utilize their managers as critical sources of primary data. In the overwhelming majority of the companies we’ve studied, transformative ideas came from managers who saw market gaps and opportunities, not from surveys or aggregated studies. On the ground intentional observation of customers, suppliers and competitors spark insights. The best in class companies task their managers with scouting ideas and provide them with the skills they need to bring the idea back to the organization and make sure it gets heard.

The life cycle of a transformative idea is fragile and must be protected. Even ideas that gather organizational support are likely to die before ever being implemented. The most successful firms in our study recognized this and created structures that improve the likelihood of implementation. They ensure that home office managers have the right skills and political capital to champion the best insights from the field. They “pre-fund” the most promising recommendations so that managers are incented to put their best ideas forward. They avoid the common mistake of launching disruptive insights within traditional business units.

It is quite possible that a strategic recommendation your firm needs is sitting in an office somewhere. If not in Santiago, Chile, maybe somewhere else. To learn more about what you can do in your organization to give the best innovative ideas a chance, read the Idea in Practice. What are you doing to ensure that great ideas are scouted and implemented by your organization? We would love to hear from even more organizations and managers about how the model discussed in the Ideas in Practice works for you.

*not his real name

Last week, I moderated a “Super Session” at this year’s annual National Retail Federation “Big Show.” Seated with me on stage at one end of a long and cavernous room in New York’s Javits Center, my panelists were Jennifer Hyman of Rent The Runway and Doug Mack of One Kings Lane. To say that Boeing could have built its next 787 Dreamliner in this space would be no understatement. I suspect that the nearly 4,000 registrants attending our “intimate” session would have agreed.

The panel made one thing clear: just when any sensible person might have concluded that e-commerce business models had finally reached maturity, we are witnessing a veritable explosion of new ones. Powered by local, mobile, and social media, online retail is becoming something that no long-time, card-carrying NRF member might reasonably have anticipated. Consider a few emerging models:

Private Sales: “Old Europe” can still surprise us. Vente-Privee, a private sale site that now does over a billion in Euro sales annually, invented the private sale (or flash sale) business. When GILT Groupe imported the model, a word-of-mouse sensation ensued. In GILT’s wake, there followed a host of competitors (RueLaLa, Ideeli). But One Kings Lane (OKL) takes a different approach. While GILT and its rivals sell across verticals (apparel, home, travel, kids, local), OKL deals in just one big one: home. In less than two years, it has attracted three million “members” who collectively spend over $100 million a year. With six to eight boutiques opening every day, at prices 50 percent below retail, Mack says the goal is to make every day “Black Friday” — without selling out too fast given the 72-hour lifetime of each boutique. This is the virtue of a business that answers the questions of both “Why buy?” and “Why buy now?” Private sales spark demand by creating perceptions of urgency and scarcity; they work because the perceptions are real. That drives some seriously intense emotional engagement with the site.

Access over Purchase: Rent The Runway makes couture fashion available to shoppers who lack deep pockets to buy couture. Like Bag Borrow or Steal (another rental player), RTR enables time-sharing of merchandise. With over 40,000 dresses and 4,000 accessories available from 200 top designers, the site offers multi-day plans starting at $40 for dresses and $10 for accessories. Talk about the democratization of high fashion. But Hyman doesn’t wax eloquent about renting fashion — the basic activity of her business. She speaks passionately about helping her customers experience emotionally charged “Cinderella Moments.” In our social media immersed and over-exposed lives, fractional ownership has its advantages. Who would want to be seen in the same outfit twice by friends? If you buy a dress, you run a risk: someone posts snaps of you in your fancy garb on Facebook, and the images accelerate the obsolescence of your “look.” Maybe ’tis better to borrow than to buy, especially at 90 percent below retail.

Ultra-Specialization: Ultra-specialist sites unlock latent demand. A leading example is Zulily for new moms and kids. Launched in 2010, by mid-2011 the site was marketing 2,200 brands (including clothing, toys, furniture, plush animals, knapsacks, and even lunch trays for kids, along with lifestyle products for new moms); the site showcases brands with curated collections of merchandise and richly developed editorial content. Zulily has been adding 40 to 50 new brands a week. Its latest funding round last year established a company valuation of $700 million. If traditional retail is all about location, location, location, sites like Zulily are all about focus, focus, focus, which enables the brands to connect emotionally with shoppers.

Extreme Service: Not long ago, Net-À-Porter, the full-price fashion site acquired by Richemont in 2010, represented the ultimate in service: beautiful packaging; personal shoppers, new selections every day. The Italian online fashion retailer, Yoox Group, upped the ante for luxury shoppers in China. Yoox struck a deal: when FedEx delivers its packages, agents wait for each shopper to try on her purchases. She keeps what she likes, and she returns the rest — by handing “undesirables” to FedEx for returns on the spot. Such strategies have taken online convenience to a whole new level. Yoox wins loyalty as a result.

Gamification of Shopping: While some auction sites like Swoopo have bit the dust, TV-shopping retailer HSN uses online games to deepen engagement with online users. While not all games on “HSN Arcade” are retail-related, there are several — like those introduced on NRF’s trade show floor – that are intimately intertwined with retail. One featured example: compete with celebrity chefs to outdo them when it comes to making the very best pizza — using products sold by HSN.

Behind such “reinvention” of retail, several themes rise to the fore.

• Curation is increasingly critical to success. Making everything available — à la Amazon and iTunes — is a game very few can, or should, play.
• Gone is the age of “feature, function, selection and price.” Now, e-retail is fueled by emotional connections between sites and users.
• The Web isn’t dead (as Wired Magazine proclaimed a year ago), but it has become just one of many touch points — with tablet apps moving to the fore.
• Realizing the advantages of curation and emotion (served on the right device) depends critically on having in-depth knowledge of site users. As Doug Mack says, this is a strategy that only those who have built-in know-how about Big Data, Social Media, and the Cloud can exploit.

All of which begs the question: Won’t every retailer who isn’t thinking along these lines find themselves significantly threatened or, worse, simply swept aside?

Who are you when you go online? That’s a question that goes way beyond how you feel in your own virtual skin, and affects how we perceive and relate to one another in the world of social media. I recently gave a TEDx talk based on my HBR post, 10 Reasons to Stop Apologizing for Your Online Life. When that talk appeared on sites like The Atlantic and Slate, the comment threads revealed that many people have already embraced their online lives as real — which is why we need to stop using the acronym IRL (In Real Life) to refer to the offline world.

But many wonder whether online people are real. Those who remain reluctant to engage online often blame the frequently confrontational, hostile, or even cruel tone of online conversation. That rudeness might be a sign that we aren’t our real selves online, but some kind of demonic creature that is unleashed by the computer. Or it might be a sign that we are all too real online, liberated to be our real selves by the remove or anonymity of online communications.

The truth, of course, is that people are their real selves online — but they make wildly divergent choices about which part of that real self they’re going to share and project. Some of us may get real by becoming angels: letting down our defenses, sharing our creativity and insights, or even our most personal experiences (sometimes by getting real anonymously). Others get real by becoming devils: losing the sense of diplomacy or offline inhibitions that restrain their brusqueness, narcissism, or cruel sense of humor.

Most worrying, people are often utterly aware of whether they’re being angels or devils. They read their outbound emails through the lens of their own good intentions, their clever tweets as funny rather than mean. Online, the human struggle to honestly understand your own strengths and weaknesses is intensified by the newness of our online customs and interactions.

Fortunately, we have some offline tools that are designed to compensate for our natural inability to see ourselves as others see us — most notably, the 360. The 360 is a widely-used HR and leadership tool in which a range of colleagues, friends, and family offer their different perspectives on your skills, talents, and character, to provide a 360-degree view of who you are.

While the 360 is sometimes criticized for its limitations, undertaking an online 360 offers a huge advantage over the way people usually evaluate their online personas (either not at all, or using a dubious indicator like Klout).

To get a clear picture of your online persona — and make no mistake, the variety of ways you communicate online define your online persona in the eyes of the people who know or follow you — send an online 360 to people who know you both on- and offline, as well as to people who know you online only. (Ideally you’ll also do a 360 of people who know you offline, so you can compare your online persona with your offline personality.)

Ask your respondents to provide a scaled assessment (1= never, 10=always) on the following:

1. Is polite and respectful in their emails, tweets, or other online communications
2. Provides useful or informative content in their online contributions or comments
3. Makes effective use of their time online, and responds to online communications (e.g. emails, messages), comments (on blogs or in Twitter mentions) and feedback in a timely and effective way
4. Provides constructive feedback and generous appreciation in their online comments, replies, and other online communications
5. Is transparent about their relationship to or financial interest in the brands, companies, and products they discuss online
6. Makes thoughtful and appropriate choices about which on- and offline communications channels to use for different purposes or in different circumstances, and inspires or encourages others to do the same
7. Builds online relationships that support their own work and their organization’s goals
8. Is an online leader within their field

Combine the results of your 360 into a single tally that gives you your average score on each indicator. When you look at your average numbers, don’t worry if you’re not a 10 on all eight indicators. What’s actually most useful is to look at the relative variance across each dimension: if you’re strong on content and leadership, but weaker on politeness or constructive engagement, that tells you your persona is recognized for expertise more than conversational style. If the same is true for your offline 360 — perhaps people describe you as a smart person who can be brusque in pursuit of a goal — then your online persona may be a very accurate and consistent reflection of who you are, period.

But if your personas diverge — if you’re known for your personal touch offline, but come off as a bull in a china shop online — you may want to think about how you can translate your face-to-face interpersonal skills into your online relationships, or conversely, how to speak so that the authority and expertise you hold online is also recognized by the colleagues who work down the hall.

Just like your offline personality, your online persona now forms a significant part of your professional identity. Understanding how those personas align, diverge, and complement one another is crucial to ensure your professional effectiveness, on- and offline.

An interview with Kareem Abdul-Jabbar, basketball legend, New York Times best-selling author, and filmmaker. For more, read the Life’s Work section in the January-February issue of HBR.

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Few companies faced bigger self-created challenges in 2011 than Netflix. Last summer the company tried to split itself in two, creating separate websites and pricing structures for its legacy DVD-by-mail business and its newer, growing streaming video service. Consumers and the media went nuts; company founder Reed Hastings was even parodied on Saturday Night Live. The company ultimately scrapped the dual-website plan but stuck with the price increase. In response, the company’s stock cratered, and some observers even wondered if the company would survive.

In fact, two new sets of data show that criticism over Netflix’s pricing moves has been overblown, and that the company is performing better than expected.

Netflix’s latest earnings data, out Jan. 25, shows that its pricing move didn’t hurt the company nearly as much as people thought. In the six months since the price increase, Netflix lost 405,000 domestic paid subscribers — not the 800,000 subscribers often touted, which included free subscribers trying the service out. This represents a 1.7% decrease in paid subscribers, which is meaningful if the trend continues but is not doom and gloom per se. Revenue per paid subscriber went up 11.9%. This was the first time revenue per paid subscriber went up since 2009, which is a good thing overall for the business. Quarterly revenue and contribution profit went up 10.0% and 15.4%, respectively, from Q2 to Q4 2011.

On the whole, the way to look at Netflix recent performance is that a more modest price increase (vs. the supposed 60%) led to double digit sales and profit growth with 1-2% volume loss. The most recent quarter actually showed a slight gain in domestic paid subscribers, reversing the negative trend.

One of the lessons of Netflix’s travails is that price increases are an exceedingly difficult process to manage. In a previous HBR blog post, we noted that nearly two thirds of categories/companies that raised prices recently saw sales and volume decline. This put Netflix’s pricing move near the top tier of category pricing moves out of more than 100 other categories. Most companies would declare this pricing action a success.

A second set of data shows more reason for optimism regarding Netflix. At the core of the pricing issue has been a simple question: Is its streaming product compelling enough to command premium pricing? If you’re hoping to watch recent, top-rated movies, then the Netflix streaming service is sorely disappointing. If, however, your demand for content is more for TV series (such as Mad Men or Lost) and you love viewing it on multiple platforms (online, iPhone, iPad, Xbox), then Netflix likely makes you happy.

The key question for Netflix is the size of the latter group, who should be thrilled with what it offers. In 2011, CBS, The Nielsen Company and The Cambridge Group collaborated on a study quantifying consumer demand for media, called “The Future is Now: In Pursuit of a More Efficient and Effective Media Strategy.”

It shows there are very different — yet not an infinite number — of media consumers, need states (viewing occasions) and media “palates” (programming preferences). The primary audience of the study was advertisers, and CBS has made the study public in the effort to help transform the media/advertising industry.

The data also provides powerful insights for other media players like Netflix. Importantly, it points out that while content is king, platform may very well be queen. The CBS work shows that two demand segments have high demand for multi-platform streaming content, and that 40 million households fit into these segments. Given that Netflix has 20MM paid streamers, it may still be in a category growth mode. In other words, Netflix has only tapped half of the existing market for viewers with demand for streaming content, and that market is presumably growing.

Netflix’s success in streaming will come down to a few things. Can it precisely understand the media and content demand of its current — and future — subscribers? Can Netflix estimate the pricing power the new content has? Can Netflix use precise demand insights and Moneyball principles to not overpay for content, especially as content costs escalate? Can they use them to know when to create their own content vs. buy it?

While these questions are keys to Netflix streaming, there is an even bigger question that will determine Netflix’s overall long-term viability. It’s hard to imagine streaming is the final end game given that its 11% profit margins are a fraction of the legacy mail DVD’s margins, which are nearly 5x higher. Netflix was a clear category creator with subscription-based DVDs by mail and again with subscription-based streaming. The question is: Can they do it again? What is the next new category creation opportunity for them? Might they jump on the digital trend of multi-channel (merging digital and bricks and mortar), by bringing its subscription-based media model to re-invent the local movie theater? Imagine for a fixed subscription price, you get to watch all the movies you want, as many times as you want, with your favorite drinks, candy and popcorn waiting for you at your reserved seat at your local theater.

One of the biggest sources of competitive advantage for all companies in the decade to come will be intellectual property. Streaming could be the near future for Netflix — or it could be the intellectual property engine for a new category of media delivery that Netflix has yet to create.

Every well trained manager knows about the “four P’s” of marketing. To make a sale, a company must offer the right product to meet customers’ needs, and at the right price. It has to be offered in a place they find convenient and, in order for them to know about it and how it can help them, it has to be promoted well. New research by my colleagues and me, however, suggests that another “P” is growing in importance. Customers also care who the parent of the product is. Provided with plenty of comparable alternatives, and facing plenty of discretionary purchases, they’ll choose to patronize the brand owned by the company they hold in higher esteem.

As one Chinese consumer we surveyed put it, “The company is like a parent to the product; and only good parents educate good kids.”

This is a new phenomenon. As recently as a decade ago, a marketer could safely assume the institutional parentage of even a well-known brand was unknown—and of little interest—to the buying public. Marlboro was Marlboro and Camel was Camel. Who knew which came from Philip Morris and which from R.J. Reynolds? Pre-Internet days, if you asked your neighbors who was the company behind your favorite smoke, they’d scratch their heads or just assume the brand name was the company. They’d be just as unlikely to have opinions, positive or negative, on those parent corporations’ reputations.

For all kinds of reasons, that has changed. People have become increasingly concerned with business’s impact on the world, and search engines like Google or Bing make it trivially easy to find out who makes a product and how, where they operate, who they have offended, and what causes they have supported. Social media makes it easy to learn more, and spread the word. Suddenly, a brand’s paternity is not only easy for customers to discover, it’s important to them to consider. And they have no trouble boycotting products from companies that they believe fail to live up to their standards.

The research just conducted [pdf] by Weber Shandwick and KRC Research confirms this. When we surveyed consumers in four developed and emerging markets (U.S., U.K., China, and Brazil), no less than 70 percent of consumers claimed to have actively avoided a product because of its parent company. Almost as many, 67 percent, said they check product labels to determine the company behind the product before buying, and 61 percent become annoyed if they can’t determine what company that is. Surprise about a product’s parentage does not usually work to a brand’s benefit. When consumers learn that a product or service they like is made by a company they do not like, surprised consumers are twice as likely to stop buying the product as they are to continue buying it.

Parent companies are learning fast how to manage their new consumer relevance. Aware that information about them can be a key stroke away, they are disclosing more in the name of transparency. For example, Altria, Philip Morris’s parent (and grandparent of Marlboro), is front and center in educating consumers about the products that it sells, where it sells them, why it sells them, how it makes them, and what principles and causes it stands for.

As company reputation and product brand reputation become indivisible, we’ll see more such disclosure. Brand promotions will seek to assure consumers that the company standing behind the brand is upstanding, ethical, and responsible. The kinds of information once communicated by investor relations and government affairs will be directed toward consumers. Market research will ask potential customers not only about the product features they value but about the corporate behaviors they admire.

Shoppers are seeing the choices they make in store aisles not only as votes of confidence in product quality but as votes of approval of corporate conduct. Just as in their charitable contributions, they want their money to support institutions known for integrity and for values they share. Appealing brand messaging will probably always catch their eye—but before making any serious commitments, they’ll insist on meeting the parents.

People have different natural talents at interviewing for jobs. But even the most talented can fail to get offers if they don’t prepare. This goes beyond arriving on time, dressing professionally, being polite, and preparing to discuss every detail of your resume. Of course, these things are important. But get ready for interviews in a way that makes you stand out. Adopt a different mindset — theirs.

An employer’s purpose is to help determine who best fits the job opening and who will improve the organization’s capability in that position. The interview is a test. To stand in the shoes of the people who are interviewing you, imagine what they need to know to decide whether to make you an offer.

Consider these six steps to align your interview skills with an employer’s mindset:

1. Learn all you can before you meet. Interviewers bring their experience to the interview. Nothing can substitute for knowing where they’re coming from. Master the available information on the institution. Read everything you can find about the company and the job — from public sources, the company web site, and anything they send you. Study the written job description and the requirements for candidates. Interviewers expect candidates to know this material. It’s the admission ticket.

But you can do better. Try out their products. Meet people who once worked there, as well as suppliers, customers, or others in the industry. Ask about the company and how they think the job would work. If you know similar jobs at other companies, consider how they might differ.

This foundational knowledge leads to all the other steps.

2. Prepare your own questions. Thoughtful questions show the interviewer you’re thinking deeply about the job. They show you’re a serious candidate. Among the most impressive lines of questioning are those that address how the organization operates. Get beyond the basics. If you’re interviewing at a company known for consumer marketing, for example, don’t ask, “Do you do much market research?” If they’re known for marketing, you can be sure they do market research. Instead, perhaps this: “How do market research findings influence product design?” Or this: “What are the differences in careers involving market research compared those in brand management?”

3. Make your case. Link yourself to the interviewer’s needs in the job. Come to the meeting with two elevator speeches — one if you have one minute to describe yourself and another if you have four or five minutes. Start with your personal value proposition (PVP) and tailor it to the job. Ask yourself this question: “If I get this offer, why might that be?” The answer includes your elevator speech.

Imagine questions interviewers may ask and how you’ll answer. Some may be about how well you match the job requirements. Others may be prompted by your resume. Are there gaps against their criteria? If so, how have you overcome gaps in the past, or how would you in the job?

4. Show how you’d succeed. Especially in later interviews, help interviewers judge how you’d do in the job. Show how you’d deal with the job’s challenges. Don’t suggest you have the answer to a complex situation they undoubtedly know better than you do. Introduce your ideas as a way to imagine how the job would be, and ask for their reaction. (“I assume the situation’s like this…If that’s right, then I’d need to do this to succeed…”) Do this well, and they’ll be thinking more about how they’d work with you than whether to make you an offer.

This line of discussion is important for everyone, and it’s essential for senior roles. CEOs and boards expect new senior people to hit the ground running.

5. Prepare for special interview formats. Consulting firms and others use case interviews. Interviewers at some companies use imaginary problem-solving situations, asking questions like, “How many marbles could fit in that jar?” If you’re pursuing these jobs, you must do well in these formats. The only way to build those interviewing skills is to prepare and practice. Several books show how to do that, including Are you Smart Enough to Work at Google? and Case in Point.

6. Synthesize along the way and adjust. You’ll prepare for the first interviews from an outside-in perspective. In later meetings, interviewers will assume you’ve learned from earlier discussions. They’ll expect more sophisticated insights and questions.

What more have you learned about the company? Have they suggested that you think about anything? What have you learned about your strong points and soft spots? Reset your elevator speech. Prepare a new set of questions.

A winning PVP will set your direction, and your network can surface good possibilities. But you still must get the offer. The best way to do that is to think like the interviewers do and prepare in that light.

What do you do to prepare for interviews?