This article raises some strong points on what is necessary to establish a successful "freemium" model, whereby a small percentage of paid users are enough to earn profits from a product which most customers opt to use for free. Evernote provides the evidence that such a model can work when the necessary elements exist. The key elements needed are:

1 - a massive potential audience
2 - very low operating costs
3 - "gotta-have-it" value to some consumers
4 - high retention rates

The business model of Evernote lends itself well to this approach, and it is phenomenally profitable with only ~6% of its long-term users opting for the paid version. The business was designed to be profitable at just a 1% conversion rate, thus keeping operating costs low. The service it provides becomes even more essential the more you use it, to the point where some customers just can't walk away from it. And, over time certain features have been cleverly designed and offered to only paid customers, thus enticing them to stay and maintaining retention rates.

This article in Strategy + Business (click above to visit) makes a strong case for considering the impact that the growing economic clout and empowerment of women around the world will have on your business over the next 10 to 20 years. So much of the "growth market" focus has been on China and India that this shift has gone largely unnoticed. Interestingly, this is not strictly an "emerging market" (geographically speaking) phenomenon, as there are millions of women in developed economies who will also see greater opportunities by 2020.

One point the article makes is that the growing economic activity of women should help to ameliorate future recessions. That is because this evolution is more widespread than typical "emerging market" conditions, making the benefits easier for a wider range of companies to enjoy. Additionally, the reduced number of children combined with more aggressive tendency of women to share the benefits of economic gains with their children mean that future generations can be lifted through this trend.

So how do you capitalize on this in your business? A few ideas:
* Consider the impact on your workforce planning - how can you make your company more attractive to women, especially in developing economies?
* Can you offer products aimed both at educating and enabling women and serving them as new consumers?
* What impact will the broader social and legal / regulatory changes that may result from the growing clout of women have on your business?

Leadership promotes new directions; management executes existing directions.

The function of management

Management can do much more than merely keep things ticking over. It manages complex projects ranging from making a major movie to putting the first man on the moon. Managers can use facilitative skills to foster innovation. By sticking to a purely functional definition, we leave completely open the question of style. This liberating move means that managers can be inspiring. They can empower, nurture and develop talent. An inspiring leader influences us to change direction while an inspiring manager motivates us to work harder. Managers needn't be restricted to mechanical control, transactional rewards, bureaucratic methods or relating without empathy. Portraying managers in such negative terms was an accident of history that we now must put behind us.

To get the best out of knowledge workers, managers might set up self-managing teams. Here, the classic functions of management (planning, organizing and controlling) are delegated. But the function of management is still operating even though the manager is not personally doing it. This should dispel the myth of the manager as a control freak or bureaucrat.

By removing all style connotations, leadership benefits as much as management. No longer needing to be inspiring cheerleaders, leaders find it possible to exhibit quiet, factual leadership. This is essential in technical contexts, where a hard business case often moves stakeholders more than an inspirational delivery. Not being committed by definition to any particular style, both leaders and managers are free to use any style that works for the context in which they want to make a difference.

The function of leadership

Leadership needs to narrow its focus to promoting new directions as one-off acts to promote a better way...

...Key features of leadership reinvented

• It consists in showing a better way, either by explicit advocacy or by example.
• Those who are led may not report to the person showing leadership, even informally.
• No implementation is entailed. This is management's domain, getting work done through others, motivating people, developing them (more on management below.)
• It does not involve managing the people led or getting things done through them.
• It comes to an end once the target audience buys the need to change. It sells the tickets for the journey; management drives the bus to the destination.
• It relies on influence; since it’s not an actual role, it can't decide for the group.
• It can promote ideas developed by others; no need to be creative personally.

This is a very interesting assessment of the role of "leadership" and "management" abilities in an organization, why both are important, and why, in particular, it is time to re-elevate the view of management as an essential skill set for getting things done. Perhaps the best line in the paper is an analogy:

(Leaders) sell the tickets for the journey; management drives the bus to the destination.

This line emphasizes that both processes are necessary to achieve success. It is time to reduce the stigma associated with "management" - the belief that it is rooted in bureaucracy, a lack of creativity, and a defense of the status quo. Effective managers develop organizations, motivate teams, plan for contingencies, and, in many cases, provide warning when a goal is unachievable. Better management (specifically of risk) at big banks would have mitigated the depth of the recent financial crisis. Make sure that your organization is recognizing and rewarding managerial skills as opposed to becoming overly enamored of "one-off" leaders, lest you find yourself full of great ideas that remain unrealized.

It appears that at some point this year, if current trends hold, Apple's revenues will surpass Microsoft's. In essence, then, Apple appears to be winning the second war between these two companies.

The post from which this graph appears sounds some dire warnings for Microsoft, specifically stating that it has become too focused on defending its core and lost any momentum on expanding into new markets. As the graph shows, once a company's revenue growth stalls, it is difficult to re-start it. Can Microsoft be one of the rare companies that manages to reinvigorate it's growth? It seems to be behind in any logical market into which it could expand (consumer electronics, smartphones, etc.).

• The hierarchy is a circulatory system for messages of authority; specifically, for anything that can be expressed as a number. It is the means by which the organization seeks scale. It flows from and to the top: the CEO and then the shareholders or owners. It might be analogous to muscle coordination.
   
• The network conveys knowledge — in the form of gossip, guidance, information about opportunities, and anything else that people talk about easily. It is the means by which the organization develops its capabilities. It flows from and to a broad base of people throughout (and outside) the company. It might be analogous to neural networks.
   
• The market is the exchange of goods, services, and money within an organization and its value chain. It is the means by which the organization manages its workflow. It transmits anything that can be bought, sold, or traded, flowing ultimately to the customer. It might be analogous to the cardiovascular system.
   
• The clan is the family or community-like circulatory system, operating below the surface of every organization (and often subconsciously). It is the means by which a company’s culture is maintained, with a “core group” of its most important people at the center. The organization establishes its view of legitimacy through the clan. It might be analogous to the endocrine system.

Boy, this list just sums it all up. And I hate to say that not only have I heard all of them, I've probably used a few myself. We probably all have, when it's more convenient to move on rather then just consider a new idea. Sit and watch this and be hit by how often you see this happen around you. I've seen a lot of #4 lately, plus a side dish of #5.

This article in strategy+business covers an important, yet still highly underappreciated, trend whose ramifications will shape the world for the next half-century, and that is the shift in demographics, driving an aging population in the developed world and continued rapid population growth in the developing world. Far more than global warming, this trend has the potential to destabilize existing economies and upset the "world order," with all the potential chaos and, far too likely, violence that such change portends.

You can't fight demographics, and the figures that will shape the next 50 years have already been established. Japan, Europe, and (to a lesser extent - only because of higher immigration) the US will see an aging population, creating huge burdens on government coffers and the younger workers who will be expected to provide the tax revenue. This has been discussed for years but, since the consequences are still many years out and the elderly form such a powerful consumption and voting block, it is difficult to formulate a strategy to respond.

The interviewees discuss a range of ideas but only a few touch on the need to provide incentives to change behaviors. It is only through firm incentives that people, businesses, and government will change their everyday choices. Some practical (if admittedly difficult) ideas offered include:

• Delaying benefits from social insurance to encourage people to work later in life
• Encouraging retirees to move to lower cost-of-living regions to stretch the impact of their retirement benefits (though encouraging them to leave the country sounds a bit harsh)
• Using tax incentives to encourage larger families (to increase the future working population)
• Loosening up immigration policies
• Improving (perhaps subsidizing) child care coverage to encourage women to remain in the workforce
• Providing credits to encourage the hiring of older workers (where the alternative may be offshoring, where there are insufficient younger workers fill the necessary jobs)

And if you think that sounds challenging for the developed world, consider the challenges of developing economies, whose resources are, in many cases, insufficient to support their existing population. Some of the statistics shared are frightening:

• The population of Yemen will more than double from 17M to 39M people by 2020.
• Pakistan will add one-half the current population of Germany, or 38M people, over the next decade.

In such countries that already fight to maintain stability (and, in Yemen's case, lose), the potential for unrest is enormous. It is only by eventually moving beyond China and India and finding opportunities in Africa and the Middle East (which will represent over 20% of global population by 2050) that we can hope to provide an environment in which such countries can grow without violent disruption. This is not an altruistic wish, and it is my hope that the necessity of finding new markets will drive businesses and governments to focus their future efforts on Africa.

This post summarizes the results of a study by the Hay Group to discover the top 20 companies at developing leadership skills and practices. The qualities they use to determine the results include:

Active management of succession plans
Career growth opportunities clear to employees
Use of corporate social responsibility program in recruiting
High proportion of women in senior leadership
Easy for employees to work from home
Strong internal talent pipeline

With such familiar names as GE (my first employer), P&G, Accenture, and 3M on the list, seems likely that it's a relatively stable group. Obviously, its tough to rapidly improve your performance in these categories, but these are worthy goals for any company that wants to sustain strong long-term performance.