6 am pacific

I get most of my reading done via twitter. I follow a bunch of smart people who essentially filter all that’s out there to what is truly worthy of reading. My feed reader is getting less and less airtime nowadays. But there are some bloggers who don’t tweet their posts so one has to go visit Google Reader once in a while.

In spite of these new age consumption methods for news and opinion, I still get the odd email newsletter. One of them is from the Wall Street Journal Online. But I don’t click on the stories much. In fact on most days, I delete the emails unseen.

The WSJ email newsletter is put together for the sole purpose of inserting ads and generating revenue. The ad, as you can see in the image below, occupies pride of place. Most people I know don’t allow automatic download of images in emails. So basically you have a big blog of nothing right at the top of the email.

To the left of that big blob of nothing is, wait for it, another big blob of nothing. Whoever designed the email, decided that the first topic could be next to the ad, but the second topic must begin way below.

The email signup takes up most of the rest of the space above the fold. Its kind of funny that users are signing up for email newsletters in which the first and almost only thing they see in the email is an invitation to sign up for email.

I could go on you know. The use of all caps. The general ugliness of the email. But you get the drift. It sucks.

On the other hand, here’s an email newsletter from GigaOm. This is how its done.

At the top of the email is a list of the top headlines, that is well designed and pleasing to the eye.

If you click on a headline, it doesn’t take you directly to the website. Instead, it takes you to a short blurb about the post that you clicked on, within the email. You read the blurb and if you want to read more click and go to the website.

Isn’t that a little counterintuitive? If the user has clicked on the title, just take him to the website, no? Each click is X ad impressions. Each ad impression is worth $Y…

Actually, no. I like the fact that I get a little bit of a blurb within the email. This saves me from the costly (in time) visit to the website, if I was curious about the title but wasn’t sure what it was about. And this makes me click more.

The fundamental difference in the approach is that GigaOm wants the newsletter to be useful for readers before they start making money on it. WSJ sees it just as a source of revenue. In fact they probably handed it over to the ad sales department to design. It certainly looks like that.

The hearings on the Galleon insider trading case have begun. Two of the accused Anil Kumar (turned witness) and Rajat Gupta are former McKinsey consultants. So naturally, there is light being shone on McKinsey and management consulting.

John Gapper in the FT

The calculation every client makes is, in the words of Christopher McKenna, a professor at the Oxford university’s Saïd Business School who studies professional services firms, that “consultants will carry information in and information out. The client has to decide which of those flows is worth more.”

Indeed, one of the main reasons companies hire consultants is to make sure they do not fall behind what their competitors are doing – in return for parting with their own secrets, they gain access to their rivals’ suitably disguised “best practices”. The consultant is a broker who attempts to amass so much knowledge that each company has to hire him, no matter how uncomfortable that feels.

The value in hiring management consultants lies in broadly three (overlapping) areas:

1. Superior analytics skills – Firms like McKinsey do hire some of the best business brains.
2. Expertise – industry or functional expertise.
3. Best practices

The third – best practices – does overlap with expertise, but differs in a crucial way. Expertise could be acquired either because you were a part of industry or because you have been a consultant to that industry (or function like Marketing or HR) for many years. But best practice is just about knowing what the best companies are doing.

Hiring consultants to get industry best practices analytical skills is quite common. There was a time when smart MBAs were concentrated in management consultancies and were hired by companies just looking for smart analytical types to fix problems that their own managers were not able to.

But hiring MBAs became commoner in the industry as business schools kept churning them out. This redressed the IQ balance somewhat. Which forced management consulting firms to shift more towards hiring people from the industry (acquiring expertise) and to offering best practices.

In many cases, hiring a management consultant for best practices is perfectly alright. In functional areas like HR for instance. Although, hiring somebody with the expertise as an employee might be better.

But if you hire a McKinsey for core business strategy you have to be pretty convinced that your executive row has the wrong people. Even then, if you were the CEO, wouldn’t you make changes to your exec team rather than seek outside help?

Outside of management consulting I see no dilemma. In IT consulting for instance, there is a certain complementarity in the expertise that the IT consultant brings. Assuming that IT is not core to the company (i.e. you are not amazon.com) there is every reason for the company to tap the technology expertise with a consultant.

Management consulting is the only kind of consulting where most of what they do is not complementary to what the client’s leadership is doing. It makes up for their deficiencies.

The companies who therefore use them for core stuff have admitted to themselves that a) their exec team cannot rise to challenge and b) in the inflow-outflow that Chris McKenna speaks of above, they will definitely gain from the inflow more than they can lose from the outflow of information.

You know who’s never used consultants? Warren Buffett.

I bank with a well-known national bank. We’ll call it CurrentBank. I’ve banked with CurrentBank, for more than a decade. I like to keep things simple, so I don’t have any other accounts. But as soon as BankSimple is up and running, I will open an account with them. Read on to find out why.

I recently booked airline tickets on Cathay Pacific for my in-laws who live in India, to come spend a few weeks in the holidays here with us in the Bay Area. I made the booking on Cathay’s website using my CurrentBank debit card. A few days later I was shocked to learn that CurrentBank had hit me with a fee of $234.92 for “international transaction fees”. I scrambled and called CurrentBank, who basically said, sorry, but read your contract.

I of course knew about those international transaction fees. I see them all the time when I use my card outside the US. But how am I supposed to know that sitting in the Bay Area I can be hit by these fees while buying tickets on an international airline. I had never paid any transaction fees on Cathay before this and this was not the first time I was buying tickets online on Cathay, though the trip always originated in the US.

Wouldn’t it be really simple for Visa and/or CurrentBank to pop a message while the transaction is being processed that said “Please note that CurrentBank will charge you an additional fee of $234.92”. Something that is always done at ATMs around the country. But why would they. You see, the card holder might have second thoughts.

The objective, you see, is not to serve your customer’s interests. It is to lure him in by “free checking” and other tall claims and then trap him with well-laid traps.

You might say, “Hey, you should have read the contract.” I offer an analogy to whoever might pose that question. Suppose you went to an e-commerce website. You clicked on the “I agree” button. The agreement that you just agreed to included a line that said “A service charge of 3% will be charged to your credit card for every purchase.” You then did your holiday shopping and then discovered in January that the e-commerce company hit you with an additional charge. You’d be pissed, wouldn’t you? So am I.

Earlier this week I got hit by a fee of $15. My account is not supposed to have any fees, but there must be a good reason why they hit me with a fee. I’ll never know. Their online statement gives no explanation. And it is not worth my time to call and find out what the fee is about. They probably concluded long ago that saying too much in transaction statements just raised unpleasant questions. And who wants to deal with those pesky customers.

I know CurrentBank needs to make a profit. I know that they’ve been hit big time by the cap on debit card fees (which the retailer pays). But I’d be much happier if they charged me whatever they needed in an upfront and transparent way. Don’t lay traps.

That’s why I am rooting for BankSimple. I have no problem paying a fee for checking. I know it costs money to provide a good service. But I want the services and fees to be simple, upfront and transparent.

You might say, why BankSimple, maybe this is just a CurrentBank problem. Try another bank. I don’t have to. I know all of them suffer from the same problem. They are all busy “leveraging their customer base.” After gazillion acquisitions, the way they compete has come down to reducing costs and getting more out of the existing customers. Unfortunately, the latter often means ambushing them in dark alleys with hidden fees.