• Patronizes Wal-Mart for a decent sum of money ($1,300);
• Goes outside the store dressed as Santa;
• Hands out the cards to customers walking into the store, which pretty much guarantees that those customers are going to buy something inside the store;
• Is told by some clueless Wal-Mart manager that he needs to cease and desist;
• Walks away from Wal-Mart and tells a local news outlet about the incident, which gives Wal-Mart bad press; and
• Is approached by Target, a major Wal-Mart competitor, with an offer to share good-will outside of Target on Target’s dime.

All of this spells “bad public relations” for Wal-Mart; it’s not quite as bad as one of their employees getting trampled to death by shoppers with sub-simian civility on Black Friday, but it’s still bad. Why the stupidity, Wal-Mart?

Command and Control Management Structure

Many large retailers like Wal-Mart, Best Buy, Target, and others operate under what is called a “command and control” management structure. Command and control is militaristic in it’s origins: you take orders from higher up in the hierarchy and follow them to the letter, without question, 100% of the time. Here’s an idea of how a command and control company operates:

So why am I talking about this management structure nonsense when I began the article talking about Wal-Mart throwing an impromptu Santa Claus out on the street? Because this structure is responsible for the stupid incident and the bad public relations voodoo that ensued.

Command and control management structures are useful because they:

• Maintain a consistent quality of output from labor;
• Enable managers to quantitatively measure the quality of output;
• Ensure a high level of throughput at the lowest possible cost;
• Enable companies to higher lower quality employees at lower costs who can still perform at high levels; and
• more often than not eliminate lapses in judgement from its employees.

However, this is an instance where command and control may have been counter-productive; command and control companies tend to be more lax in who they hire, because any moron can follow a business process without screwing it up, assuming that the guys higher up on the totem pole train the process properly. You don’t need to hire quality people who can think on their feet and think critically.

Instead, command and control companies prefer to hire middle managers and lower level employees who behave like drones: they follow the highly optimized business processes without question and those processes generally enable the store to run more efficiently and cost-effectively than a decentralized system would.

However, when something “outside the scope of the processes” arises, like an unemployed mortgage executive in a Santa Claus outfit handing out free Wal-Mart gift cards to Wal-Mart shoppers, these drone-like employees apply the most similar process, which in this case was the one that they use to deal with solicitors. I can assure you that whomever made the final call on whether Santa would stay or go did not think for one moment “hey, this might create a PR fiasco for Wal-Mart if I apply our solicitation policy to this Santa Claus.”

The popular belief is that you do not need critical thinkers at the middle-low levels of a command and control company, because standard processes defined by the executive team remove the need for decision-making at said levels, but clearly that’s not the case. There’s never a process for the uncommon case, and that’s when you need critical thinkers. Had one person with a brain (and authority to use it) said “what? treat him like a solicitor? That’s idiotic, let him stay” then Wal-Mart would have been able to avoid this buffoonery.

Sheesh.

Ultimately bad reviews and stories from these sites force companies to stay honest by hitting them in the pocket book, and that’s one of the beautiful things about the Internet: the complaints of a few “average Joes” can be leveraged successfully against powerful companies.

But what happens when an army of misinformed consumers use these sites as echo chambers for false claims about small businesses? What happens when a small business is caught in a self-feeding storm of inaccurate, yet damaging buzz with no opportunities to defend itself?

This hit close to home for me recently - we had a negative review pop up on Amazon, one that also happened to be grossly inaccurate and speculative. The details of the review wouldn’t make such sense here unless you’re familiar with our product, but the spirit of the article was something along the lines of someone who didn’t understand why this product didn’t work like an entirely different product aimed at a different market.

Imagine if someone bought a rider lawn mower and complained about how it was a pain in the ass to push - that’s the level of inaccuracy that went into the review about our product.

Of course, being that most of the people who came to check out our product on Amazon have never actually used the product they have no inhibitions about voting up the review, and that has quickly made the review the most popular. I also suspect that there’s some psychology at work here - I think a lot of people want to be talked out of spending money on a product, even if it’s good, and are relieved as soon as they see a negative review which gives them a legitimate excuse for not purchasing.

We’re not the only ones who’ve had this problem - Dino Esposito, a prominent .NET author, has had issues with trolls writing zero-substance digs at his books since 2004.

I wonder how many sales have been lost to totally inaccurate reviews; probably a lot. Amazon began using the Real Names engine a while back in order to eliminate trolling, and that’s a good start, but it still doesn’t do anything to enable companies to fight back against inaccurate reviews written by real people.

Why should a company lose tons of potential sales because a customer couldn’t figure out that you’re supposed to sit on top of a rider lawn mower and drive it per my absurd example? Giving customers a voice is a great but when that voice starts shrieking inaccurate information, aren’t companies entitled to clear their names?

I say “yes.”

As it turns out, the costs of the 3G iPhone are actually higher than the service plan & hardware of the original iPhone. I personally was planning on buying one (despite how much I hate the Apple fan boy culture) until I read article after article about the pricing discrepancies. I know there were plenty of other people who felt the same way I did.

Watching the 3G iPhone buzz erode from early June when some of the deceptive pricing bubbled to the surface of the blogosphere to disastrous iPhone App Store debacle was like witnessing a train wreck in slow motion.

Apple’s marketing campaign had all of the potential to be just as big of a blockbuster as the original  iPhone launch; look at what we consumers were promised:

• Support for high speed cell networks (3G)
• Support for enterprise business applications (Exchange)
• GPS
• And an application store.

But yet the 3G campaign ended up being a horrible comedy of errors when launch day arrived. What the hell happened?

• Pricing disaster - Protip for AT&T and Apple: if it’s easier for me to calculate all of my living expenses for two years than it is for me to figure out how much your phone + service will cost me over the same period of time, you’re doing it wrong. The data plan doesn’t cover text messages, the syncing features cost extra, existing iPhone customers can’t figure out if they’re going to have to pay the full price or $199, and the beat goes on. It’s easy to figure out who screwed this one up:  Apple let AT&T dictate the pricing in the usual giant telecom conglomerate fashion which is to say “vague and unintelligible.” This pricing fiasco deters people not because they’re unable to pay the costs of the phone, but because the apparent disorganization of the pricing makes potential customers insecure. I can’t fit a new wireless service plan into my budget if I can’t figure out how much it costs.
• Apple killed the goose that laid the golden eggs - Most of the people lined up around the street to buy the damn phone were the same fanboys who threw down $599 for the original iPhone, many of them already pissed off about AT&T/Apple’s deceptive pricing. Apple made it abundantly clear that it does not give a shit about these people; let’s review:
  • Apple dropped the price of the original iPhone by $199 not long after the first release, and their “store credit” apology was not well-received even by many hard-core Apple acolytes.
  • The new 3G iPhone pricing is revealed, and guess what? New AT&T/iPhone customers get a better deal than the same folks who already got screwed over once before by the price drop.

  The same hard-core user base who kept Apple alive during the dark days of the mid-late 90s are the same ones who’ve gotten slapped in the face with every update since the iPhone release, and you know what? I think that this time Apple actually killed the goose that laid the golden eggs, and for what? 1 million units sold on one day? What about a lifetime of sales from loyal Apple customers? If Apple starts an annual product cycle for its line of phones then I don’t think we’re going to see as many people line up so enthusiastically next time. They’re not going to drop Apple like a bad habit, but I don’t think those same people will be so quick to shell out money for a new unit every year.

• Apple’s “Bluescreen” moment, the App Store Activation Cock-up - Face it: the opening day activation process for the iPhone was an unmitigated disaster. This is something that we’ve come to expect from Microsoft, not Apple! What happened? Poor scalability design, which is insane given that Apple knew the exact number of maximum activations, which is to say every iPhone old and new. This epic failure is to Apple as what Bill Gates’ infamous “bluescreen moment” is to Microsoft.

Maybe if AT&T figures out its pricing I’ll revisit the possibility of buying a 3G iPhone, but I have to admit, when my service plan with Verizon expires in December I am awfully tempted to buy another Treo.

On that note, what are all of you buying? iPhones? Gphones perhaps?

Joel Spolsky was an early pioneer in the field of Gillmor translation, but as you can tell it’s a rather difficult field of study - right up there with deciphering hieroglyphics or cuneiform.

Amateur Hour at TechCrunch?

I completed a 5-panel MS Paint last Saturday called "The Adventures of Steve Gillmor" but I couldn’t publish the whole thing since it was a little over-the-top. However, the panel that I am using in this post illustrates my point beautifully: doesn’t Steve Gillmor’s work make the entire TechCrunch staff look like a pack of crayon-wielding amateurs?

Here are my grievances against Steve Gillmor:

• Gillmor’s outrageous claims are shrouded by so much bad writing that it takes hours for TechCrunch readers to figure out what parts of the story pissed them off most;
• Gillmor routinely attacks his own readers in an immature, puerile style;
• Gillmor’s evangelism makes Robert Scoble look like a web 2.0 cynic; and lastly
• Gillmor has not hired Joel Spolsky to translate full-time.

As TechCrunch reader (and Marketing-Ninja reader) Tom put it:

It comes across as pretty hypocritical for Michael Arrington to bash the mainstream media for shoddy work while publishing this type of thing on his blog.

That is the single best way to summarize the Steve Gillmor effect - Steve’s work simply undermines the credibility and authority that has taken years for Arrington to establish. Why does Arrington let this guy keep publishing?