Marketing Version 2.0

I can remember the days when I would threaten to write a letter when an airline lost my bag. This is circa 2000. Writing a letter and perhaps waiting on hold for 20 minutes were the only available solutions. The letter hardly ever got written, and if it did, it inevitably got read by no more than one person at the company, someone with little power to fix anything and an infinite capacity to forget about the problem.

Oh how times have changed. Not that airlines have stopped loosing bags, but my reaction and power as a consumer. Now, if I’m upset by lost luggage, I’m on my cell phone before we have left the airport, updating my Twitter account, which triggers a Facebook status update. And the chain reaction doesn’t start there, you have gchat status would be updated, along some blogging to do, and, if maybe a scathing 1 star review of the airline on one or more consumer watch site.

This is where it gets interesting. Instead of my complaint getting lost in shuffle, it becomes information for my friends, contacts, and potentially other cyberbots to make their future consumer decisions. The nature and context of this media is infinitely more authentic and unbiased than anything companies can broadcast themselves, and thus very influential on perceptions of brands unlike any we’ve seen before.

This isn’t just a scenario specific to me, or airlines, but potentially with every consumer interaction. The very nature of consumer research and brand development/management is in the process of changing, which means that it is ESSENTIAL that companies are not only aware, but have the capability to manage this new frontier.

So what does managing mean? Quite simply, the tools to effectively manage social media from a market research and brand management don’t exist, yet. The optimal tool will have the ability to put in content in context (sentiment), weight user’s based on influence, track over time and across content sources. Can’t wait!

Starting Businesses Like Producing Movies, Wes Anderson Movies

Last night I found myself captivated by a New Yorker article about Wes Anderson.  Not surprising, given my predilection for both the New Yorker and Mr. Anderson.  What was somewhat surprising was the thought that emerged:

What if we started businesses like we run movies?

They already both have inflated salaries, and Wall Street is just as much a rumor mill as tabloids.  Why not make the development of a business like the development of a movie, specifically a Wes Anderson movie.

Elements of the rather extended metaphor (hear me out):

• Anderson has a cast of regular characters that he brings together to work on projects.  He knows their strengths as well as weaknesses and he has the capability to bring in new blood when the project requires something more.

• The cast of characters in an Anderson movie, generally have a familial relationship with him as well as the other actors.  This is largely due to the fact, they generally knew Anderson in a different context prior to working together and have worked together so often  There is a certain amount of trust and camaraderie that results from this.

• Anderson has figured out what he does best and who his audience is.  Each new movie is a derivative of this.

• He has funders that trust him, and consequently $20 million is his with little fan fair.

So, what would this look like in the realm of startups?

• I’d like a cast of regular characters that I trust, I know the quality of their work, and I know that they’ll be enthusiastic to work on a project together.  A technical guru, the sales god, a lawyer that is competent and unexcitable, and a strategic thinker.  In Industries where it is needed, outside tech talent could be brought in.

• Hopefully, by working together time and time again, a level of trust would be developed, which makes constructive criticism possible, and I would argue, the innovation and development of the business quicker.

• With a consistent group, and hopefully a proven track record, funding would be much easier.  You’d know what funders you’d like to target and they’d know you.  Or even better, your initial ventures are so successful you can self-fund the rest.  This eliminates a large portion of distractions.

• When the venture is up and running – the group disbands.  Maybe some stay with the company until the time when the next movie script is being written.

• A side note – for Anderson’s latest movie (The Fantastic Mr. Fox an adaptation of Roald Dahl’s book by the same name), the writers moved into Roald Dahl’s old house.  The intention was to remain focused and true intentions of the original author.  And while this seems largely symbolic, the need for perpetual focus in the midst of artistic license is essential to the success of a startup.

Graduation Speach

Recently I was filling out some tax forms at a bike shop I’m going to work out. Retail isn’t exactly the job I hoped to land immediately following my graduation from business school, but it pays the bills and allows me to pursue two of my real passions, buying bicycle related gear and working on some business projects of my own that aren’t producing revenue yet. I had to put my parents address on the tax forms because I am not sure where ill be living 2 months from now. The store manager said something I really liked. He said, “I just laugh when young people give me their current address, ‘yeah right’ I tell them.” I have had my MBA for almost a month now and not much has come of it, this is the same for many in my class. It’s terrifying really. It’s also agonizing to think about all the unused talent floating around in the double-digit unemployment numbers.

My unemployment does give me a lot of free time though. Time I have spent reading a lot of start up buzz, blog posts and web comics. Being such a wide-spread problem, the low employment numbers for recent grads has prompted a lot of press and a lot of thoughtful writing by some people who have the benefit of both experience and comfortable employment. I have neither of these, yet I would like to compile my learning from the reading I’ve done to comfort other recent grads as I have been comforted myself.

Every one feels a great deal of anxiety about becoming something worthwhile at this age. Whatever your definition of worthwhile, the question, “So what are you doing next?” while harmless in its intent, has likely flooded your sub-conscious with a dragging guilt at not having a decisive career plan set and started at age 22. Maybe you have one, maybe your executing it, but if you think either of those are true you are kidding yourself. Think about it this way, how old are you parents? Probably 40’s to 50’s, how many places have they lived/worked/gone back to school since they were 22? If the answer is below 3, are they happy? If they are, how many of their friends could say the same thing. If they aren’t happy, do they have plans to change? The retirement age for us is likely to be in the mid to late 70’s. that leaves about two times the time you’ve been on this earth so far. And you spend the first 13 years of it nearly completely disabled by an under developed brain and crippling hormones. You have two of your current life-times to figure out what you want to do and to amount to something. So don’t settle down just yet. Leave time to explore, travel, learn and work at something you love. The opportunity cost of having it all figured out at age 20 something is pretty high.

human or computer

I have friend who hates her summer job, and rightly so, it sucks. She’s an intern in the alumni relations office at the university we just graduated from. The task she has been given for the last few weeks has been to search facebook and linkedin manually for names from a list, record job information if its there and mark whether a facebook account exists so that the alumni can be friended or invited to a group later. This is not only tedious and repetitive, it takes no real judgment calls. There is no need to think critically or make tough decisions, just type, click add to the spreadsheet. If something is this boring, can probably be done by a computer.

If the University had hired a computer science grad to write such a program, it would take a fraction of the time and would continue to work after the internship was over. It would also provide the CS major a chance to practice his skills while freeing my friend up to something that actually engaged her mind and her skills. The costs for everyone involved are pretty high. The university pays a graduated student to type and click 8 hours a day, five days a week for an entire summer. My friend spends that time hating her job and distracting herself with Gchat when possible and somewhere a recent CS grad is out of work.

So why does her job exist? Because that’s how they’ve done it before, because no one has thought critically about the problem and because if my friend suggested it, she would think herself right out of a job. Its easy to hire someone for a job a computer could do. They are cheap in this market; you can interview and manage a person, which gives HR something to do, and since you are a person, you know generally how people work. But people like to think, they don’t like to act like computers, and when they do, they are slower at it. They are also more expensive in even the medium term, and they make more mistakes. If something is repetitive or involves data input or collection of any sort, think long and hard if it can be done by a computer instead of a person, you will save everyone involved a lot of stress and money.

Does this beard fit into that niche?

I recently decided to grow a beard. It started because my electric razor’s charger blew up when I plugged it into a 220 volt European outlet, and became a bit of a joke between me, and the guy in the mirror. While the general consensus was that facial hair of such a beardy nature would be a hindrance with the opposite sex, a friend of mine had a different logic. The clean-shaven heard was competing for the clean-shaven-appreciating heard. According to his logic I was competing in a niche market. While perhaps a decidedly smaller number of girls appreciated my rugged appearance, the supply of bearded men is much smaller than that of the clean-shaven. In his words, you could go to a party in a chicken suit, and while most girls may think you’re obnoxious, 5 will think your funny and that’s 4 more than you need.

 

Another friend of mine is a clean-shaven, 6’5”, model. He has had decidedly more luck in his flooded market than I have in my niche one.

 

This analogy sheds a bit of light on the traditional view of the niche market. First the preferences of the niche may include that which is actually disliked by the majority, not merely un-preferred. By competing in a niche, are you alienating the majority and limiting future growth? Second, the market for 6’5” models is nearly everyone, how can you differentiate in a way that applies to the entire market, not just the niche?

Viral Marketing – cough cough

Viral marketing is sick, and not in the awesome sort of way, but rather the has-a-runny-nose-and-coughs-on-the-subway sort of way.

 

There are a few metrics that can be used to judge when a business concept has nearly peaked in trendiness and as a result lost all its meaning. Perhaps the most useful of these metrics is an abundant use of the tag words by MBA students. Viral marketing is pitched as a viable strategy in nearly every marketing and strategy class I attend. When asked for specifics on the strategies used to create said viral marketing, the suggestions are much fewer in number. Many seem to feel completely justified in saying that all you have to do is get your product in front of the right network, or the right individual and voila! Instant virality. This is crazy. This is like the marketing of the 1940′s or what I like to call SALES. It is backwards and does not work

 

A better idea would be to focus on building a product that people want to talk about. Rapid growth of an idea or product happens because the product is something that people want to talk and hear about, and consequently there is a nonmonetary value associated with sharing.

 

People like to be the one to tell someone about the great new restaurant, the hip new iPhone ap, or the hilarious YouTube video. Not only that, but they like to be the FIRST. On the flip side, people like to hear about these things. The result: an information arms race.

 

Let’s make this clear: people don’t like to tell people about the crapy stuff, thus, no arms race. Do you think people were clamoring to tell each other about Coke Zero? It’s a new Coke, it has zero calories, end of discussion. But do you think that viral marketing was discussed in the Coke strategy meetings? I guarantee it was. Do you think Christian Lander thought about how he could create a viral marketing campaign around his book, Stuff White People Like? No, he started a website because he is creative and funny. The website was creative and funny and people wanted more, he wrote a book and people paid for it, lots of people.

 

The more effective use of resources (your time, your money, other people’s time, other people’s money, natural resources, shelf space, bandwidth) is to design a product that people WANT to talk about.

 

It’s about making things that excite people, not exciting people about things.

Kumquat Theory

The kumquat theory is when a concept reaches the forefront of your consciousness and your subsequent increased awareness of the concept leads you to believe in coincidence.

 

Take for instance the day you first learn what a kumquat is.  In the coming week you will undoubtedly see kumquat soda at your local coffee house and kumquats on sale at the grocery story.  Now, it is not that kumquats are new to any of these locations, just that you now recognize them.  But you are likely to view these events as coincidences, “funny, I’d never heard of a kumquat till last week, and now I see them everywhere.”

 

Coincidence can be a very compelling selling point.  If you can induce “kumquat experiences,” you can likely induce further exploration and even better, execution.  I’ve seen this happen time and time again with business pitches, new products, restaurant suggestions, or job candidates. (When pitching this to your boss it may be best to not say you want your new product to elicit “kumquat experiences”)

 

The disclaimer of course: once you garner the attention you desire from the contrived/serendipitous coincidence, you have to have something to back it up. If the first kumquat soda you try, after learning what they are, sucks, it doesn’t help other kumquat products.

Elementary Algebra

On one of my first days in class as a first year MBA student, my professor walked in and wrote this on the board:

 

P*V-C=$

 

He then proceeded to say, “This is what business is all about, sorry you paid so much to learn it.”**

 

This beautifully simple equation continues to be a great framework to evaluate businesses and thing about strategic decisions. Anything you do within your business should pull one of these levers:

 

Increase price

 

Increase volume

 

Decrease costs

 

When you pull these levers, you make a bigger money machine.

 

If I was going to organize a business, I would have one member of the C-suit in charge of one letter. There would be a CEP, CEV, CEVC, CEFC. CEP is in charge of what amounts to marketing – figuring out how to make a product that people will pay for and how much they will pay. CEV is a combination of logistics, marketing, and advertising. CEVC and CEFC are in charge of operations and finance.

 

With the understanding that this is a dynamic formula (it is nearly impossible to increase price without decreasing volume and there is often a trade of between fixed and variable costs), the CEO’s job is to coordinate efforts. Coordinate and optimize.

 

**there is of course one more wrinkle, the difference between fixed and variable costs. The formula is P*V-VC*V-FC=$

Did they think we were stupid?

One of these stories is the biggest stories to break this year and the other only appeared to be.  But they both leave the outside viewer asking themselves, “did they think we were stupid?”

 The stories? Spitzer and the Pentagon’s puppet analysts.

Of course, we, the general public, aren’t stupid, well not that thatstupid. But that didn’t stop them. Maybe they thought we (read the general public again) just didn’t have the knowledge or resources to break the story, but investigative journalists did, and we were indeed smart enough to immediate assess how we felt about both stories. And my guess is that most of us concluded that neither demonstrated the kind of behavior that public leaders should have. This guess is not a hard one to make, it’s pretty obvious that the public is not going to shake the hand of either the Pentagon or Spitzer for these moves (not that you would want to – chances are you will encounter a disease at worst, and a slimy residue at best).

That being said – why did they do what they did? The way I see it, there are three scenarios that lead up to both parties making the choices they did.

1. it did not occur to them to consider the outcome 
2. they not think they would be caught 
3. they thought people wouldn’t care 

The point is, both Spitzer and Pentagon officials (powerful (or once powerful) institutions in charge of massive decisions on a day to day basis) did not properly assess all scenarios, even the likely ones. If they had, they would have realized the consequences (loss of credibility) was far more detrimental then the benefit (short term affection).

Altruism, for not?

Wikipedia (the source of all sources) suggests that altruism is the selfless concern for the welfare of others. Altruism focuses on a motivation to help others or a want to do good without reward.  I disagree, and not just because I’m trying to rationalize my greed capitalist pig behavior, but because the whole idea is incomplete, and subsequently delusory.

 When was the last time you helped an old lady carry her cans of cat food to her car for no reason at all? Maybe there was a cute member of the opposite sex watching, maybe the old lady was the heir to some great fortune and now her insolent grandchildren have just pissed her of the point of writing them out of her will. Now she needs someone nice to give her expansive mansion. The chances are small, but so is the cost of helping her. At any rate you can feel good about it when she smiles gratefully. Hey that’s a reward (even if she doesn’t give you a big shiny nickel for it). I like thinking of myself as a good person – it’s useful – it helps out with the old karma accounting. And, last week, when you bought your friend that double espresso, mocha, with sprinkles, and whip cream and suffered both the financial and emasculating setbacks, why did you do that? Could it be that a) it made you feel good b) your friend would probably buy you a beer later that night c) hey, you might need a good job reference sometime in the future. Regardless, it wasn’t for not.

 Even Mother Thereasa wasn’t altruistic in the Wikipedia sense of the word. She was doing it because of the sweet kickbacks she was getting from God. But, hey – that’s what relationships are all about, give a little, take a little so that you help each other progress. In my mind, altruism is along the lines of comparative advantage – we all benefit by partaking.

 By establishing that there is some value to our “good” deeds, we can begin to account for it when we evaluate our decisions. It is not hard to conclude that there are also negative consequences to “bad” deeds. So, I submit, that it is with this matrix that we can begin to delve into the ethical complex of businesses or further into the individuals that make the day-to-day decisions. The opportunity cost of doing someone a fovor is that, given the chance, they may not return the favor. Favors tend to accumulate and escalate, so you often ultimately get back more than you put in.

 This may seem overtly cold and calculating to some who believe that you shouldn’t need a reason to do good (besides that disembodied all knowing consciousness in the sky), and it may seem overly idealistic and Disney-bookesque to others. Yet, its really neither, it’s a reason to do good, and this reason is worth recognizing because recognizing it ultimately leads to doing more good and that’s, err… good.