Measuring Up

Redefining loyalty

Employers everywhere continue to discuss how employee loyalty towards their companies has changed over the   years. Many feel that employee loyalty simply doesn't exist anymore. And, it makes them mad.

This New York Times article tried to offer a new twist on this topic by asking the question: Should loyalty be redefined? Although the headline is catchy, this article offers almost no new insights. Instead, it focuses on many redundant topics that we already know and have heard dozens of times.

For example, we know that loyalties are completely different now versus during the 1950s when an employee could be assured of a job and career for life. Now, there is no real job security beyond feeling that most employers still reward based on merit and real results. Meaning: Do great work and you'll probably still have a job (and may just be promoted as well).

We also know that the Baby Boomers have had the toughest time acclimating to this new reality. The article interviews a number of experts (and Boomers) who feel compelled to tell us just how difficult life is as they've been forced to move from job to job over the last few recessionary years. Nothing new there. Once a person in his/her 50s or 60s loses a job, it can be incredibly difficult. Age matters to most and that's a tough pill to swallow.

Perhaps the point that I'm most sick of reading about though is that this new group of Generation Y workers simply have no interest in being loyal to any employer. These young 20-something new entrants to our workforce are accused of generally having few corporate loyalties, little patience and a tendency to complain  about too much work on their plate.

This article tries to redefine loyalty about the Millennials focusing on how they are more faithful to their teams, co-workers, clients and even causes versus the employers they earn a paycheck from. It also highlights how these employees now move quicker from job to job because very few loyalties ever exist.

I can't say that this point isn't true (I've seen it at my own company). But, I also believe that ever since I've been in the workforce (that's more than 20 years), employees have jumped from one company’s cubicle to another. And, it's because many of the same reasons remain consistently true: more money, better opportunities and a lack of interest or challenge in one's current job.

Sure, maybe it's even worse now. But, one thing hasn't changed and this New York Times reporter failed to capture it. Not sure a new definition of loyalty even matters. What's more relevant is whether employers are making sure that employees are really challenged in their jobs. On top of that, it's how they demonstrate growth paths, as well as financial rewards for them so they won't be tempted to leave.

Be it now or 20 years ago, that's what most employees care about. And, while each new generation might be apt to quit their job for another a little quicker than the last, employers can still keep most of their best performers longer by creating fulfillment at work that they can't easily find elsewhere.

Haunted by their own past words

It's pretty funny to watch all the rhetorical grenades that the major wireless companies constantly throw at each other. What's interesting is that in light of all the consolidation now taking place and constant changes in this industry's pecking order, it makes each of the major players look like outright clowns in a circus.

For years, AT&T, Verizon, Sprint and T-Mobile have publicly battled over which network is strongest, reaches most consumers and provides the best, latest technology. They've lambasted each other's ad campaigns, sued one another for false statements and generally have done most anything possible to win consumer loyalty by claiming superiority over their competitors.

Now, as AT&T looks to acquire T-Mobile for $30 billion, these once hated adversaries find themselves speaking out of both sides of their mouths as they try to take back or reinterpret past comments made about each other. And, the other major players seem to look just as silly. For instance, T-Mobile's current parent, Deutche Telecom, ran a campaign last year making fun of AT&T's supposed inferior, slow speed. Now, its president is quoted as saying, "AT&T is the best solution for our customers. That's why we did this deal." What is the best solution...having really slow speed?

Another great example of how words can come back to haunt a company is delivered by Sprint. Sprint loves to promote how it was the first to offer extra fast 4G phones. It also touts how it still leads this category and that superior 4G technology is the most important benefit when choosing a carrier. But, After the AT&T/T-Mobile deal goes through, Sprint could be a distant fourth in the cellular war, finding itself far behind the pack in technological prowess in this 4G battle. I'd imagine that Sprint is wondering how its marketing messages need to change given the current environment. More importantly, will customers focus on the fact that an attribute it once claimed as critically important to its customers' needs won't ring true anymore.

Understanding how future competitive events might impact one's own company is not easy. But, if there's anything to learn here, these companies need to realize that bold claims can be used against them later on. And, when an entire industry changes the rhetoric so often, credibility is eroded and it begins to create misbelief among consumers. That impacts long term reputation, sales, stock price, etc.

I'm not sure if most people even listen to all the shouting that is aimed at them anymore. I really don't. All I care is that my phone works well. However, I do think this industry needs to become more sophisticated and less bafoonish about how it communicates and markets points of supposed differentiation to its customer. Lord knows its players spend enough money on advertising and promotions. It would be great to see a different strategy employed to build our confidence and loyalty.

Who can you really trust?

Yesterday, The Today Show ran this controversial  and damaging segment (see below) about the hotel and resort industry. Seems that some players in this industry are breaking rules and laws by writing phony reviews about themselves (and their competitors) on super popular review sites like Trip Advisor, Oyster and Frommers.  I wanted to comment on this news story, considering I just wrote a review about my own experience with vacation resort the Cancun Palace. My post was then linked  to Trip Advisor.

Visit msnbc.com for breaking news, world news, and news about the economy

If this piece is accurate, and fake reviews are as rampant as we’re led to believe, then I think this industry is quickly moving head first into a real crisis.  These sites are very popular. That’s because the masses who use them (like my wife) believe that other vacationers/travelers will offer up the most honest information and tips on so many important nuances within each hotel and resort. The plain cold reality is that consumers who use these sites are very fickle. Unlike most Internet surfers, many don’t mind spending lots of time on these sites because the reviews are chock full of interesting details on so many significant nuances. But, they are also a highly skeptical bunch to begin with on this very topic. The rationale behind using a Trip Advisor is that there are very few sources which can provide in-depth tid bits on everything from food, to service, to what the rooms are really like, like these sites. If they start to perceive (right or wrong) in any way that any of these reviews are hotel fed propaganda (or worse), a pack of lies, then these once helpful web sites will be panned very quickly.

On the Today Show piece, Trip Advisor and a few other reviews sites commented that they do have systems in place to ensure the accuracy of each and every review. If that’s the case (which right now is hard to believe), I suggest they aggressively start to communicate specifics on what their safe guards are before this spirals out of control. This should include going back to The Today Show and many other key media outlets to prove their case. They should also use their own sites to boldly explain how each safe guard works.

I don’t think anyone is shocked that this fraudulent activity is taking place. It happens all the time in other categories and industries and the web is a perfect medium to create and distribute fake content. But, that still doesn’t help these companies who are only valuable because their readers believe what they are digesting is both authentic and timely.

To Travel Advisor and all the other competitors, the clock is ticking. Now is the time to act. Readers are planning their next vacation and wondering whether they need to start looking for all new, reliable sources in place of you.

This Apple is bittersweet

The holidays are over. And, it’s back to work as usual.

This holiday season was pretty typical for my family. My kids received lots of gifts. And as usual, they each fell head over heels in love with one specific present that they were longing for. They absolutely adore their new iPod Touchs. In fact, they jumped for joy the second they found theirs under our tree. Then, for the next three hours, my wife moaned and groaned with frustration.

You see, my wife attempted to set up iTunes libraries for each of my kids on our two computers. The problem (which shouldn’t really be one) is that each of us has existing accounts already on our respective computers. What happened next was actually sad. A seemingly routine task of loading up an iPod turned into one that erased some of my files, synched all of our downloaded music/videos over and over again on each other’s accounts, and ultimately, had my wife pulling her own hair out in utter contempt for Apple. Even the Apple Help Desk couldn’t make it work (she actually called on Christmas, but was automatically hung up on twice because no one was working that day). When she went to visit the Apple store at our local mall the next morning, they informed her that this is not their domain. So, it was back to the Apple Help Desk…or some other alternative.

Sometimes, “some other alternative” ends up being the better answer (though) because my wife’s friend Barrie was finally able to explain how each account now has to be operated manually when downloading any new purchases. Although the manual download takes an infinite more time (and patience) than the normal way, it’s critically important to each individual library, or my seven year old son could be stuck listening to Led Zeppelin and watching The Departed. Not good…

I don’t get Apple. On the one hand, this company is simply incredible from an innovation standpoint. It continually leads the market place by developing really cool and amazingly appealing products that consumers and businesses simply don’t want to live without. Then on the other, it baffles customers by creating mind boggling, backwards technology protocols that are so frustrating and completely unfriendly to consumers. It truly makes no sense.

Either Apple is purposely trying to make it difficult for any one computer to have more than one account, or the company simply doesn’t give a damn.  I thought about those theories and then decided to research a few blogs to find out if others are having the same issue and why they believe Apple allows it to happen.  What I found were dozens of posts from many Apple and iPod haters (I actually didn’t realize so many are so disgusted with the company). More to the point of this post, I read through a mish mash of various points of view which educated me some, but didn’t paint an either/or conclusion on why Apple does this. Instead, the truth lies somewhere within both my theories.

According to many, Apple just doesn’t care. It has a monopoly on this category (iPods). And therefore, it knows that these frustrations will not repel the masses from continually buying the next greatest versions when they come out. Others write about the more reasonable business rationale that Apple really doesn’t want its library content to be shared among family and friends (or it will lose money on sales). That’s why it is extremely difficult for families to successfully load more than one account on any given computer.

My guess is that the latter viewpoint is more realistic. But, either way it stinks.  Companies that sell products/technology which aren’t consumer friendly lose market share quickly when true competition begins to heat up in their industry. 2011 should be the year that Apple faces just this. Let’s see what happens…

BP translates to Brutal Pattern

I haven’t jumped on the BP bashing bandwagon. Just felt that the media and thousands of other blogs have pretty much covered this disaster ad nauseam. But, I just can’t stay away from covering the latest debacle from yesterday because, in totality, I don’t think I’ve ever seen any one company consistently screw up its public relations efforts so badly in dealing with a serious disaster.

You’ve probably heard the latest. BP’s chairman stood up on the White House lawn and told the world “We care about the small people.” Amazingly, he reinforced that phrase over and over again. And, the reaction was… ? Just what you would think. Thousands of outraged citizens in Louisiana and other affected states were angry, feeling that this big corporate tycoon was incredibly condescending. I heard a few quotes from gulf fisherman that included words such as “humiliated,” “who does he think he is?” and “on top of everything else, this disgraceful phrase (small people) continues to put us down.”

OK. Maybe we should cut the guy some slack. After all, he is Swedish and English isn’t his first language. Right? And, a few hours later he did apologize telling the world again that he didn’t intend  for ‘small’ to be taken in any derogatory way. It was instead meant to describe all the working class people who have been greatly affected by this horrific disaster.  Under normal circumstances I would agree that this bad play on words is simply a mistake. And, should be forgiven.

But with BP, a real pattern has emerged that is unlike anything else I’ve seen in some time. Just about every few days, some senior BP official (usually it’s CEO Tony Heyward) makes an offhanded, negatively received comment to the press, online or to some constituent audience, which simply shows how pathetically ill-prepared the company is on the communications front. Adding to these insults is the fact that BP often communicates one thing (such as how transparent the company will be with media) and then actually does the exact opposite.  The result is turning this company into a complete laughing stock everywhere.

Having been on the side of BP’s public relations experts many times, this reality just should not be happening at this point in the crisis. Senior executives should be completely consistent with their messages/statements and they should only be communicated with the understanding that whatever they say (or tweet) will actually be the reality of what they do. We all see that BP is handling the crisis with the opposite philosophy in mind. In the case of yesterday’s “small people” remarks, some senior PR official should have worked with the chairman to make sure that whatever words he chose actually had the right meaning when used among the American people. Come on. This is crisis PR 101… and BP should be kicked out of the class for its reprehensible communications efforts.

It’s hard to say whether senior management simply doesn’t listen to their PR counsel. That often happens at first. But, typically when a disaster reaches this epic proportion, they begin to see the light and understand just how vital the right type of PR is. Or maybe in this case, PR counsel is woefully inadequate. To this candid outside observer, it feels as if both realities are taking place. Either way, something has to change. It’s bad enough that we’re in day 59 and the spill continues to ravage the gulf. The least these big time executives can do is figure out how to stop this amateur level of crisis communications.

“I take full responsibility”

When is the last time you heard a U.S. President actually say that in the context of admitting a mistake?

Can’t say that I remember W ever using words like that around Hurricane Katrina. And I certainly could be wrong, but I doubt former Presidents’ Clinton, Bush and Reagan ever did either throughout the handful of major crises they blundered through.

Last night, President Obama held a closely choreographed press conference to discuss the latest with the BP oil catastrophe. Within this speech, he threw out some typical political rhetoric by blaming a variety of parties for not plugging the leak (front and center, of course, was BP). But, he also conceded that real mistakes were made on his watch and he owned up to the fact that “there wasn’t sufficient urgency in terms of the pace of how those changes (to stop the leak) needed to take place.”

I find the President’s remarks refreshing. Sure, any cynic will immediately counter my point by stating that the President’s remarks were purely politically driven. He had to say something because of how poorly his administration has looked over the last few weeks in its inadequate response to BP’s failure. I’m sure, to a certain degree, political posturing could have been one of many reasons why he offered contrition.

But, the cynic’s rebuttal is probably the exact reason why I feel good about his remarks. You see, past Presidents did everything and anything possible to never have to admit any mistakes… even when it was so overwhelmingly obvious that they were wrong. Just look at W (again) around Katrina. During the worst of those times, the American public had their eyes and ears peeled and pressed wide open, just hoping that our President would come forward and explain how and why under his watch things could have possibly become so bad. Yet, we never heard anything. To most Americans (with the exception of those die hard conservatives), we lost just about all respect for this leader because, in the end, he took absolutely no responsibility for the outcomes of this hellish disaster.

Obama’s concession was not only a smart political move, but it also shows that even when he (and his administration) isn’t in tune with the sentiment of the American people, he somehow finds a way to regroup, recover and make the right communications decisions before falling into a political abyss.

By the way, this is ironic because yesterday I was a few seconds away from writing a post about how our President has become tone deaf through this latest gulf shore debacle. And, of course, apologies (in the greater scope of just how much devastation this spill has caused) really mean very little to thousands of fisherman who have lost their livelihoods and all the wildlife life that has been lost. That is what really matters now. Still, I’m glad that I decided to wait a day before writing a post that would have typically taken just another jab at our President.

The Worst Generation?

That’s the often discussed bad rap given to Generation Y workers these days. I’ve listened and taken part in many business leader conversations about this topic. Some complain that their workers have a less developed work ethic than past generations. Others just feel that a real sense of entitlement exists. But, is that really fair?

Yes, says new research that actually yielded data to back up this theory. In a series of studies using surveys that measure psychological entitlement and narcissism, University of New Hampshire management professor Paul Harvey found that Gen Y respondents scored 25 percent higher than respondents ages 40 to 60 and a whopping 50 percent higher than those over 61. In addition, Gen Ys were twice as likely to rank in the top 20 percent in their level of entitlement – what he refers to as the “highly entitled range” – as someone between 40 and 60, and four times more likely than a golden-ager.

In one recent article about this study, Harvey was quoted as saying, “As a group, Gen Yers are characterized by a very inflated sense of self that leads to unrealistic expectations and ultimately chronic disappointment.” He went on to further elaborate, “Making matters worse, today’s 20-somethings have an automatic, knee-jerk reaction to criticism. They often tend to dismiss it, even if they fail miserably at a job… they still think they’re great at it.”

Of course, we all know that there’s another side to this coin. Although entitlement might exist, Gen Yers exhibit a much greater sense of idealism than other generational groups and demonstrate this through a commitment to giving back to our society. Right? Not so, according to another study which will be published in the Journal of Management in September. Co-author Stacy Campbell, an assistant professor of management at Kennesaw State University, says the study revealed “That when it comes to work, the two things Gen Yers care most are a) high salaries and b) lots of leisure time off. “ All of this data comes from an ongoing survey of high school students conducted annually since 1975 by the University of Michigan.

After reading through these studies, the question I asked myself (over and over again) is why? Where exactly does this over blown feeling of privilege come from? I continued to conduct some more research and then also used a little common sense from what I live through on a day to day basis with my kids, to offer up my own subjective conclusions.

For starters, the author who I referenced above (Stacy Campbell) presented up an interesting anecdote. She believes that one symbolic answer can be found in the simple way that children’s songs are reworked. As an example, the words to age old elementary school song “Frere Jacques” have been changed throughout many school systems. Instead, children sing “I am special, I am special” to this familiar tune. Campbell believes that entitlement “gets ingrained in the formative years” because society is so focused on constantly reinforcing to all kids just how great they are. Personally, I think positive reinforcement to children is important. But, I understand her point about how this sometimes unwarranted building of self-esteem can hide the ugly truth that not everyone is great.

In my world, I see other manifestations that have me concerned. When I was a kid, we started to compete in sports and even in our studies at a fairly early age. For example, I can remember as early as fourth grade, the fun addition and subtraction math quizzes our class would take every week. Our teacher would time us to see who finished a 50 question quiz the quickest with the fewest mistakes. The kids who came in first, second and third would receive some type of prize and we’d all have fun going through the exercise. Our sports programs did much of the same by handing out trophies to those teams which typically came in the top four spots in the leagues. A special, larger trophy was always given to the first place team.

I believe that this early competition was important because it created a critical trait needed in life – the will to win. More importantly, it ingrained key attributes in our head, like working hard and playing as a team. Those would be critical factors needed to be able to win.

Today, I see the exact opposite philosophies being taught to my kids. And, I don’t like it. Kids as old as 10, 11 and 12 years old are involved in some sports teams where no one keeps score, no one loses and everyone is taught that “you are all winners.” In the end, everyone receives a trophy for anything… even if that kid never shows up. Sorry, but that just doesn’t work for me. Sure, I understand that too much competition at an early age can be detrimental. Believe me, I am not one of those fathers that makes sure his kids win at all costs. That’s absurd. But, I truly believe that this “everyone is a winner” principle has gone way too far and now we’re seeing its effect years later in some of our Generation Yers.

For example, in some cases, instead of focusing on whether they are helping to play a role in ensuring that their  company win, there is too much focus on “Why am I not being promoted or making more money?” And, instead of showcasing the necessary skill set to compete successfully in the corporate arena, some simply spend too much time worrying and complaining about why others are ‘winning’ faster than them.

Last Saturday, I gave a speech to business students at Drew University on the topic of leadership in uncertain times. The students there also had to give presentations to us on a specific business each had researched thoroughly. In a fun American Idol format, each had to overcome a specific organizational challenge by convincing us how the business would be turned around to compete more successfully. I loved the day and thought the presentations were smart and insightful and, more importantly, these young adults showed us that they really were ready to compete. Although most of my speech was focused on management leadership, I did take a few minutes at the end to give some thoughts on why “perspiration is just as important as inspiration” in our workforce. I told them that life isn’t fair. And, they shouldn’t expect anything to be handed to them in the business world. I also stated that just as the generations before them had worked extremely hard to rise to their positions, they expected the same from them over the next few years. The students seemed to appreciate my candor.

I really don’t believe it when CEOs tell me that this is the worst generation. And, I certainly see real positive examples at my firm every day that support this. I’d just like to see a little less focus on “me” and a little more care about “we” in the years ahead.

A good ol’ fashion witch hunt

I really hate politics. Always have.

And, I just shake my head in disgust with this completely politically motivated move to label Goldman Sachs as the evil witch that Congress is now trying to burn at the stake.

In short, there was no valid reason to make the Goldman CEO (and other firm executives) get slapped silly again in front of what felt like a McCarthy-like hearing yesterday. I should offer up that we do represent companies which are financed by Goldman. But, that has no bearing on why I'm writing this post.

Let's review the facts:

* Goldman is just one of many, many players who created and benefited from the subprime market. Yes, Goldman might have profited more than any of the rest, but were those actions illegal? So far, we've seen nothing to demonstrate this.

* Yes, I agree that the industry needs to be reformed because (in this case), excessive greed without any checks and balances almost killed our economy. Those in the industry should feel bad and need to change. The new regulations should help in some way do this (which of course, is always the major challenge). But, all the giant bank CEOs were already admonished in front of Congress over a year ago. They received a real beating. So, why do this again to one firm as a further example? Makes little sense to me except that Congress has to waste our time seeking out another villain for the recession we're living in because that will feed their constituents' need for revenge.

* I can't speak to the merits of this civil suit by the SEC. But, when was the last time business people (or anyone) were forced to appear on a televised hearing in front of a Congressional circus for a civil legal proceeding? Just ridiculous.

* I've heard a public outcry to create regulation that would end derivatives. The public and congressional members who are aggressively calling for this just don't have a clue. And, that's scary. Maybe they should do their homework. Then they'd see that most derivatives certainly aren't bad. In fact, entire industries (outside of Wall Street) would suffer immensely if we curtailed this important finance tool. Do they know that companies like Jet Blue must utilize derivatives (in a very challenging industry) to compete. By betting on the future of oil costs, Jet Blue can obtain it cheaper. This lowers Jet Blue's overhead which indirectly impacts the ticket prices we pay when flying. Likewise, manufacturers like Hershey, Nabisco and others do the same by betting on the future cost of sugar and other commodities. These are examples of derivatives that are staples for many businesses, providing lower costs in a similar way. Ironically, I should also add that higher costs for these companies would mean fewer jobs. An issue that no politician wants to deal with in his/her district.

* Finally, if we're going to make one participant in this economic meltdown sit on the hot seat, why not include everyone else who shares some responsibility? That's only fair.

I laugh at the bitter irony of how politicians like Chris Dodd and Barney Frank are attempting to now lead the formation of tighter regulations. Well, that's kind of funny since these two led the charge in the 90s to force through laws that made organizations like Fannie Mae give mortgages to people who neither had the credit or money to ever be capable of owning a house. This lack of common sense created the necessary legal environment for a new market to sprout that eventually blew up. Let's give the Goldman seats next week to Chris and Barney and ask them what on earth they were thinking way back when.

The problem is that the media and politicians (I call them the wolves) always have to find someone to blame. That's the culture we live in. Goldman was certainly a willing participant in this mess. But, yesterday's eight hour hearing was pure theater for the masses. And, that's just sad.

A celebration or abomination?

This ballooning crisis that Virginia Governor McDonnell faces because his state is officially “celebrating” Confederate History Month is well deserved. Media, bloggers and many others are up in arms because he initially removed anti-slavery rhetoric in the official charter behind this month. The stupidity of that act is honestly hard to even understand.

So, of course, he recently apologized to a national audience by inserting language to demonstrate that he (and his State) do not support slavery in any way. Bravo Governor. A third grader would have probably made that same next move if given a multiple choice exam, to contain the damage. However, to me, the problem of this Month runs much deeper.

Quite simply, why would any government within these United States pay homage by celebrating a confederacy that supported human slavery? In my mind, extolling the Confederacy is completely incompatible with a multi-tolerant, racially diverse democracy, and ultimately, patriotism itself. The Governor is misguided. He became a Saturday Night Live joke when the man declared that slavery just wasn’t a significant aspect of the Civil War. Reread your history books, man. While, the war also focused on state sovereignty by trying to gain independence from a federal government it didn’t agree with, don’t forget that infamous line given by a sitting president not too long ago, “It’s the economy, stupid.” Slaves were critical to the South’s booming agriculture products. Ensuring that African Americans stayed in bondage was a foremost priority to keep the South’s economy prosperous.

The Governor claims that this entire idea was implemented to simply bring greater tourism to his state during a bad economic time. The problem I have is that this backwards Confederacy should never be celebrated at all. Instead, it should be understood because the War provides great insights into a host of socially, political and economic issues. But, that’s a major change in nuance that someone should have thought about first. Already, the South romanticizes too much about what some still call the “War of Northern Aggression.” Highways, statues and schools were named and created in honor for Lee, Stonewall Jackson, Jefferson Davis and others. Say what you will about honor, glory and anything else they might have thought they represented, these men fought to keep slavery intact and that’s an affront to the African American community and so many others who immigrated to Virginia since the Civil War. What kind of mixed message does it send to our children when people say that these were great men who also supported the continuance of human bondage?

As an analogy, should there be a day, week or month named to remember and understand the Holocaust? You bet. We should always remember. But, think about how Jews around the world would feel if Germany decided to create a “Holocaust Celebration Day”, or a “German World War II Pride Day,” instead. I could just see those busts of Hitler, Himmler and Goering lining the streets of Berlin, now. Oh, what a wonderful dedication…
This governor has certainly gotten himself into quite a pickle. Maybe some good will come from it though because crisis often brings about change. If enough citizens speak out, we may just be able to keep that word ‘celebration’ from ever being associated with the Southern Confederacy again.

If I can't understand it, why would I trust it?

Ever hear of the online small business review site known as Yelp? I hadn't until recently when it became the subject of some pretty harsh public scrutiny and a few class action law suits, to boot.

You see, Yelp's value proposition is that reviews are based on a very intelligent "algorithm" that crunches hundreds (or thousands) of opinions from people who have directly experienced specific small businesses everywhere. These businesses are everyday neighborhood restaurants, retail shops, and a host of service companies. The more customers enter their opinions on such topics as price, service, quality and brand appeal, the more relevant Yelp becomes to any consumer who wants valuable information before deciding to buy from a particular small business.

Here's the catch. Yelp makes money by selling advertising on its site to small business owners. Many of these small business owners are up in arms (and have been posting their angry comments on Internet chat boards) because they claim that Yelp sales representatives are pressing them to buy advertising with a clear threat that if they don't...the reviews will be manipulated in a not so flattering way. Talk about a conflict of interest and a serious legal dilemma, if in fact, these accusations are true.

Last Sunday, this Q&A with Yelp's CEO appeared in The New York Times (link to Talking to the Chief of Yelp, the site that businesses, love to hate). You can see that Jeremy Stoppelman tries to diffuse the crisis by answering a number of very pointed questions about this small business owner claim (which he flatly denies ever took place) and a variety of other misunderstood issues regarding Yelp and its model. The company has also recently posted direct answers to these heated questions on its blog and this video tries to simplify what Yelp is all about by proactively answering a variety of questions in a very friendly tone with explanations that are also easy to understand.

With the exception of one critical flaw, I commend Yelp for moving quickly to try and diffuse this situation through open, transparent communications to all stakeholders. Unfortunately, this flaw is something I can't overlook, though and it focuses on Yelp's nebulous algorithm. Yelp's entire positioning is to provide the consumer with trustworthy reviews that can be counted on. Yet, the algorithm used to calculate this information is murky. And, when Jeremy is asked (in The New York Times article) to explain how this algorithm (or filter) is used to determine whether a review is trustworthy, he refuses to reveal anything. In fact, his answer is downright patronizing ("I really can't be very specific. The more that we explain the algorithm, the less effective it becomes"), as if we (the readers and his consumers) are too small minded to understand it.

I'm a firm believer in measurement. But, whether one uses formulas, algorithms are anything else to get at an end outcome, the methodology has to be something that can be implicitly understood. If not, why should anyone believe that the actual score (or in this case, review) is verifiable. Jeremy's absurd answer stopped me in my tracks and turned me off to Yelp. That's kind of ironic since it's the lesser of the issues that this company is actually dealing with right now.

I think that Yelp still needs a little help...