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CEO Daily: Wednesday, August 26

Has the Internet of Things been hyped? That’s what my colleague Adam Lashinsky suggested recently while subbing for me writing this newsletter. Last week, research firm Gartner concurred, locating the Internet of Things at the “peak of inflated expectations” in its report on “Hype Cycles of Emerging Technologies.


I was in North Carolina the day the Gartner report was released, and put the question to SAS CEO Jim Goodnight – a man who was crunching Big Data before it was a thing. Dr. Goodnight conceded: “It’s probably a little hyped.” While business is kicking out vast amounts of data as a consequence of everything being digitally connected, most of it isn’t being analyzed. “Until we see the data,” said Goodnight – who employs a battalion of data scientists at his Cary, N.C. headquarters (No. 4 on Fortune’s 100 Best Companies to Work For) – “we don’t know what we can do with it.”


Still, Goodnight argues the current hype is no reason to ignore the technology. Business leaders, he says, have to ask themselves: “Do they want to transform their businesses, or be transformed? If they don’t figure it out, they aren’t going to be around.”


Later that same day, I witnessed a modest example at Old Dominion Freight Line, where CEO David Congdon showed me his master control room. A giant digital wall map displayed the location of each of the firm’s more than five thousand trucks, and also indicated how fast each truck was moving. Needless to say, with the boss watching, no one was speeding.


Gartner’s hype cycle predicts a “trough of disillusionment” will follow the “peak of inflated expectation.” But then a rising “slope of enlightenment” sets in, leading to a “plateau of productivity.” In this case, that plateau is likely to be a high one. Ignore it at your peril.


Enjoy the day.







Alan Murray

Top News

• Stocks end Tuesday with deep losses

A rally on Wall Street fell apart on Tuesday, with stocks ending the day with steep losses, as worries about China’s economy remained a top focal point for investors. Major indices turned negative in the final minutes of trading after previously climbing almost 3%. Tuesday’s drop followed even steeper losses on Monday and notably in the past week the S&P has lost 11%. Reuters

• Boeing fights 401(k) class action

Today a federal judge will begin to weigh whether aerospace giant Boeing mishandled retirement plans by offering imprudent investment options and allowing big fees to get passed on to employees. The company has vowed to fight the suit, which has been in court for almost a decade. Meanwhile, the legal firm that is backing the case has notched more than $214 million in payouts from settlements in similar cases with Kraft Foods, Caterpillar and six other companies.  WSJ (subscription required)

 Oshkosh wins major government contract

Oshkosh has won a massive contract that could be worth $30 billion or more to build nearly 50,000 vehicles for the U.S. Army and another 5,500 for the Marine Corps, with the contract from the Army one of the largest awarded in years. It beat out Lockheed Martin and AM General, the manufacturer of Humvee, for the highly competitive contest. Meanwhile, the Humvee is expected to be phased out.  Washington Post

 What’s next for the Fed?

Amid all the madness on the stock market, many observers are trying to figure out how the Federal Reserve will respond. In particular: will it still raise interest rates this year? With three more meetings scheduled for this year, some notable voices are still saying yes, an increase will occur. “I expect the normalization of monetary policy — that is, interest rates — to begin sometime this year,” said the president of the Federal Reserve Bank of Atlanta on Monday.   New York Times (subscription required)




Around the Water Cooler

• FDA cracks down on Just Mayo

Vegan mayo maker Hampton Creek cannot catch a break. Months after the maker of Just Mayo faced a lawsuit from Unilever (Hellmann’s parent) that accused the startup of “unfair competition,” the small company has received a warning letter from the Food and Drug Administration claiming the company’s products are being “misbranded.” The issue? Just Mayo doesn’t meet the definition and standard to identify as mayonnaise.   Fortune

• Is a Twitter acquisition inevitable?

The Twitter story is not that of a tech darling: the social media’s share price continues to drift lower and the company still doesn’t have a permanent CEO to fix the company’s slowing growth in its user base. One mergers and acquisitions specialist is arguing a deal will likely occur, pointing to Google and Facebook as likely buyers. Fortune

Users ignoring social media ads more than ever

Social media has positioned itself as a savior of sorts to the advertising industry, and that strategy makes sense as worries of cord cutting has affected media stocks and ad money isn’t following readers to mobile devices. But a new study shows that has the noise for branded ads on Facebook, Twitter and other sites has increased, engagement has decreased. The risk? Ad firms may catch on and realize that their money just isn’t well spent on social if the eyeballs aren’t there.   Fortune