Kevin Potts' Wrap From Phoenix — AMR Research Champions the "Content Economy" …

... but the question remains, who's going to pay for it? Last week, I (Kevin Potts) attended AMR Research's annual Supply Chain Management Conference. The theme of this year's event was "Captains of the Content Economy". Below is a not quite fifty thousand foot view of the event... on my flight back to Boston.

This morning, we'd like to welcome a lengthy but excellent analysis from Emptoris' Kevin Potts who just got back from the annual AMR Research Supply Chain conference. Please join me in welcoming Kevin back to Spend Matters and thanking him for sharing his thoughts from the event.

A truly comic affair

As I boarded my flight from Boston last Wednesday on my way to the conference at the Phoenician Resort in Scottsdale, Arizona, it was pouring down rain and the high temperature was only 55 degrees. Walking off the plane at Phoenix Sky Harbor Airport, a western sun was shining and the temperature was 99 degrees. For the next few days, I felt like I had stepped out of my real world and into a comic book story. Where was the incessantly gloomy economy, so much the topic on the front page of The Boston Globe for the last year? This conference showed no signs of an economic recession. The key note was standing room only, the evening barbeque at the Jokake Inn offered first class food and drink, and a rock band serenaded festive partiers well into the evening. According to Tony Friscia, AMR's CEO, this year's event sold out weeks ago, and it drew a larger attendance than last year's conference. So much for reality.

Another humorous difference was the theme of this year's event. Unlike previous years' dominant focus on "the perfect order" and moving physical goods in a global supply chain, this year's event put "digital content" and the "digital supply chain" front and center. To support the theme -- "Captains of the Content Economy" -- the backdrop to the main stage itself must have come straight out of a Marvel "graphic novel". Even the key note address had a comic book feel -- coming from Michael Eisner -- former Disney CEO and current owner of Topps, Inc. You remember Topps from childhood -- baseball cards and Bazooka Joe comics wrapped around hard pink bubble gum?

Mr. Eisner's keynote was titled "Winning in the Content Economy". He spoke of "creativity inside the box". That is, unleashing creativity to build the right kind of product is required, but financial constraints (i.e., the box) must be adhered to. He entertained the audience with many movie clips such as the opening scene from The Lion King. Who can forget that -- where all the animals march out of the jungle to praise, welcome and bow in submission to the King's new son? Shivers went down my spine as I heard "Circle of Life". In the film's U.S. release, a soprano rings out in English the heart-warming song. What I did not know, and what Mr. Eisner explained, was that the movie was translated into over fifteen languages, yet the voices of each woman singing "Circle of Life" in each language sounded identical. In the clip shown at the conference, each verse was in a different language, yet I could not tell it was not the same woman singing. His point -- Disney had to control the "content" to ensure the best user experience despite the song being sung in English, Spanish, Korean, Hebrew or Swahili. He credited that control of creativity as part of the film's overwhelming international success.

He also entertained us with a clip of the famous scene in Raiders of the Lost Ark where a worn-out Harrison Ford is in the Bazaar in Cairo searching frantically for his old girl friend who has been abducted. He is confronted by a bigger than life Arabian sword fighter dressed in black wielding a sword blade larger than my Marine Corps Mamaluke. Mr. Eisner explained the back story of that scene. Harrison Ford was very sick, and Steven Spielberg knew he would need to stay on location for another day or two if he adhered to the original script, which had Indiana Jones fencing with this sword fighter. Staying on location would cost $100's of thousands per day, so they got together to think of a creative alternative rather than break the budget. And what do you know, the financially creative solution also created the most memorable and funny scene in the whole movie as Indiana Jones conveniently pulled out his pistol and shot the swordsman dead. Oops, hope I didn't ruin the movie for anyone.

The economy has not lost its way ... it has found it

The conference challenged me to rethink the "rules" for winning in the Twenty-first Century economy. AMR summed up the new rules as follows:

· Owning plant, property & equipment (PPE from your accounting text) matters less
· Content is king
· Art and ideas (human creativity) provide the path forward
· Owning real assets is a distraction
· Real wealth is built on media, not manufacturing
· The 20th Century profit model built on the internal combustion engine (think highways, suburbs, fast food) is dead
· Supply chain focus can no longer be on how cheaply a drug can be manufactured, but rather on how well the embedded science is controlled

As a software marketing professional, I felt good at first about AMR's brave attempt to get away from the tried and tired themes like the "Impact of Globalization" or "Surviving in a Down Economy" or "Just Be Green -- it's the Right Thing to Do". Perhaps I was comfortable in my company's role in the "content economy". However, for AMR, the theme was not without risk, especially with so many manufacturers in the audience wondering how they will ever make money in the digital economy. AMR cited "content economy leaders", leaders like Google, Twitter, FaceBook, Amazon, and eBay, and noted they got there not by selling technology (so much for the hardware and software vendors in the audience) but by controlling content assets they don't own. It was truly an interesting choice of companies to highlight because other than Amazon, these companies don't have physical supply chains (so much for the manufacturers in the audience). Interestingly enough, I did not run into employees from any of these companies in the audience.

For some, the shoe did not fit

After Mr. Eisner, other presenters seemed forced to use a shoe horn to fit their "content" into the show's theme. Kraft talked about providing an Apple iPhone download to deliver recipes and coupons. Wal-Mart cited sponsoring a mother's blog to understand the challenges of today's Middle America mom, and Samsung described how it's developing an open platform developer network for its mobile devices that will rival Apple. All were very interesting and entertaining, but were these strategies and tactics central to the supply chain executive's daily agenda? One of the better presentations came from HP, but the speaker barely gave a nod to the "content economy theme". Instead he focused on the control of physical assets -- batteries, memory, panels -- as critical in HP's rise to becoming the number one computer maker.

AMR's Top 25 -- is Apple the next Dell or Wal-mart?

Remember how five years ago, in no matter what supply chain study you read, Dell and Wal-Mart were always the two companies cited as "Best in Supply Chain"? After awhile, I just stopped reading these studies because the outcome was so predictable. Well, at the conference, AMR announced its vaunted Top 25 Supply Chain winners. I wonder if the top company this year will grow to be another Dell or Wal-Mart? The winner was Apple -- for the second time in three years if I recall correctly. No one can doubt that Apple understands how to compete in the content economy. But, will there be another "product" company with the success of Apple in the "Content Economy"? Or will Apple be the pro

of point we all cite for success just like we used to point to Dell? What is also not clear to me is whether Apple sees "supply chain" as a core competence? I don't recall whether employees from Apple attended this event.

Whether the other 24 companies in AMR's Top 25 understand how to compete in the content economy is less clear. A few -- notably Nike and J&J (pharmaceutical) -- were held up as leaders in the "content economy" and rightly so. But for others, the jury is still out on how effective they will be at monetizing a digital supply chain. At the lunch tables and inside hallways, manufacturing executives were quietly asking, "But how will we make money in content"?

Some final thoughts:

Personally, I was very excited about AMR's forceful acknowledgement of digital content as a key enabler for 21st century differentiation and value. It was audacious and thought provoking. I was also gratified to see so many Emptoris customers recognized in AMR's Top 25 Supply Chain. It made me think about how customers use digital content to drive physical supply chain performance. For example, how the content in one company's spend analysis is helping to segment suppliers by performance and risk; how supplier-provided bidding suggestions are analyzed by another to identify the optimized lowest cost, most resilient direct materials supply chain; how digitizing contracts is exposing a customer's material risks in the supply chain; and how tracking procurement of professional services and outsourced IT contracts is exposing the risk of supplier failure when large service and outsourcing providers (like Satyam) go under.

Well, some new content is on my mind. The inflight movie is about to start, so I am going to wrap this up, get out my headphones and lean back. I hope you enjoyed reading this as much as I enjoyed writing it.

Kevin Potts
Vice President Marketing and Product Management
Emptoris

Spend Matters would like to thank Kevin for sharing his thoughts on the conference (and missing the first movie on the flight back to do it).

Discuss this:

Your email address will not be published. Required fields are marked *