Wednesday, December 31, 2008

Preying on impulses

Marketers spend quite a bit of time thinking about how to encourage impulse buying. In a sense, trying to encourage impulse buying is a form of gravity fighting. You're trying to get people to do something that they didn't really want to do.

[See my earlier posts on the folly of gravity fighting.

But although I do believe that trying to fight gravity is generally a foolish strategy, it does not fail entirely. There are ways to get people to do what they don't really want to do. There's quite a bit of art and science behind this. Good retailers study this carefully. They know which products to put near the cash registers. They know what kind of signage will "interrupt" people. And so on.

I'm seeing a lot more of this sort of behavior on the part of businesses. The poor state of our economy puts pressure on businesses to sell sell sell. So I'm getting lots more emails with all sorts of sales incentives.

But let's play around a bit with the notion of impulse buying. I think it's safe to say that, in general, the impulse purchase is one that the consumer didn't need. If it was a need, it would have been on the shopping list. One way or another, people manage to buy their needs (assuming they can afford to do so). You don't have to encourage the need based purchase. You may need to make sure that it's your brand or product that is selected to fill the need, but you do not have to convince people to buy what they need.

Impulse purchases, on the other hand, are not needs. They are wants. And they aren't even really significant wants or they would have ended up on the shopping list. Rather, they tickle some small non-rational fancy buried somewhere in our minds that we probably cannot explain or justify.

Since people don't need these, I would argue that they are harmful. Why? Because they consume resources for no good reason. People are spending money that they could have used for a need or a truly significant want, on something that will do almost no good for them. In more flush times, this may not be so bad. But now that consumers are genuinely strapped and many are out of work, can we morally defend business practices that encourage impulse buying?

I wonder whether devising marketing strategies to get people to impulsively buy more gum, DVDs, options for their new car, etc. is on firmer moral ground than prostitutes trying to drum up business by finding married men they know are sexually unsatisfied. (Assume for the moment that prostitution was legal.) Or the alcohol industry trying to sell to recovering alcoholics. Or the mortgage industry trying to sell homes to people who couldn't afford them. Oh wait, they actually did that. My point is that all of these situations involve impulses. The sexually unsatisfied man has impulses. The recovering alcoholic has impulses. And shoppers have impulses.

When you spend time developing strategies and tactics to get people to add a few more items - that they don't really need or want - to their shopping cart, how are you better than the prostitute, booze pusher or predatory lender? Because you just sold a pack of gum and it doesn't cost that much or really hurt anyone? OK, you have a point. But not a very strong point. I'll agree that there is a quantitative difference between "taking" someone for $1 and conning someone out of thousands or wrecking their marriage... But it's just a quantitative difference. The fundamental behavior is the same. You have used guile to get people to do something that is bad for them and good for you.

On one hand, I say "shame on you!" On the other hand, our economy is entirely dependent on this. Maybe it's shame on us all.

Seem my earlier post regarding excessive consumption and Tim Jackson's poignant comments on the issue.

Tuesday, December 30, 2008

Sales without selling at Nordstrom

Below is a card I received from a shoe salesman that sold me one or more pairs of shoes at Nordstrom several months ago.

For me, it is a perfect example of how I like to be sold to. Fred knows he's trying to sell. I know Fred's trying to sell. Fred knows that I know he's trying to sell. I know that Fred knows he's trying to sell. And now you know that Fred knows that I know that he knows he's trying to sell. What I'm trying to say is that we all know Fred is trying to sell.

But here's the magic. It doesn't
feel that way to me. And you know what? Feelings matter. [Can someone pass me a hankie please?] I feel that Fred is just treating me like a human being. He's thanking me for "letting" him help me in the past. He makes no mention whatsoever of his desire to help me in the future. He doesn't say anything about hoping to see me again soon. None of that. He just thanks me for being a customer in the past.

Super classy and it makes me feel great.

Just another reason why I buy all my shoes at Nordstrom.

A "consume to live" economy

Imagine a continuum. There. Isn't that fun? No, wait, there's more. Imagine a continuum that has on its left a "live to consume" economy and on its right a "consume to live" economy.

What do I mean by those phrases? Well, a "live to consume" economy is one where people's thoughts and activities are organized around consumption. They are all about getting more stuff. They even get stuff for their stuff (e.g., useless ornaments for their cellphones). Companies are founded and people are hired to produce all this stuff. They grow by finding new types of stuff that people can be convinced they need. Other companies produce the equipment that stuff manufacturers need to produce stuff. Other companies produce the packaging that the stuff manufacturers put their stuff in. Other companies make accessories for the stuff. And yet other companies advise stuff manufacturers on what new types of stuff they can make. Then there are the companies that "help" people who don't have enough cash on hand convince stuff-sellers to let them take some stuff now under the promise (structured in some way) that they will pay later. And so on. The desire for stuff is never satisfied and in fact, it is engineered to never be satisfied. The desire or obsession with stuff creates a constant pressure for ever more and better stuff, without which the entire edifice collapses (sound familiar?).

A "consume to live" economy is not organized this way. It may be organized around many different things but imagine just one. Imagine an economy organized around people living valuable, grounded, wholesome lives in the pursuit of nobility, excellence and wisdom. In this economy, people would consume that which they needed to live their lives in the pursuit of the above goals. They would have basic shelter and adequate nourishment. They would have whatever psychic pleasure and diversionary activities such as would be needed to maintain a state of wellness.

So if we put the "live to consume" economy on the left of our continuum and the "consume to live" economy on the right, where do you think we are today? (Let's focus on the U.S.) It seems to me that we are very far to the left. Nearly all the way. We have our needs well taken care of and have been in this position for quite a long time. So we have the luxury to focus our resources elsewhere. [Note: I am well aware that we have many homeless and poverty stricken people in the U.S. My comments relate to the society in general.]

Now you might be thinking about Maslow's hierarchy now. But we are not behaving as Maslow predicted. We are not spending our resources (time, money, attention, etc.) on self-actualization. We are spending our resources on ever more elaborate means of masturbating. Yeah, I said masturbating. We spend an ungodly amount of effort thinking about stuff, planning to produce stuff, planning to buy stuff, saving up for stuff, talking about stuff... that we have no time to think about what might be important in life. We have no time to pursue wisdom. We have no time to ennoble ourselves and those around us. And we do this because, well, it feels good. OK, maybe masturbating wasn't fair. After all, we do buy stuff for others.

Is this the right way to live? The wizards that run our economy have been intent - for a goodly number of years now - on making sure we have access to capital to buy more stuff. Problem with the economy? Make sure consumers can get credit so they can buy stuff because when they buy more stuff, companies have to produce the stuff and they need workers for that production and the workers will then have jobs which means they'll get paid so they'll have money to buy stuff...

I don't think you need a doctorate in Logic to see the problem with a "live to consume" economy.

I don't know folks. It all seems like such a waste to me.

Saturday, December 27, 2008

Calcified relationships are useless

I recently wrote about leaving T-Mobile for AT&T. I did it largely because I want to get an iPhone, although my employer's significant discount with AT&T definitely helped.

But I've been thinking about why I left T-Mobile and what they could have done to keep me. As I wrote in my last post on this issue, the customer service rep was really nice when I called to tell them I was switching. The language he used made me feel special. He talked about what a great customer I had been for 7 years and how if I chose to come back, they would really take care of me.

It got me thinking: where were they for all of those years when I wasn't calling to tell them I was leaving? I will admit that I have noticed - over the past year or so - that when I call them, the experience is quite pleasing. But that isn't really enough. The problem is that my relationship with them never changed. I put in more years. I remained loyal, but they never acknowledged that in any way. Only when I called to dump them, did they express their love and show appreciation for my loyalty. Too late.

Think about it. Relationships either change or they end. The change doesn't have to be dramatic. But long lasting relationships often get the feel of a very comfortable old piece of clothing that gets softer with age. Where you know its every wrinkle and it seems to know just how to fit itself onto your body. Or an old bottle of wine or an aged whiskey that doesn't radically change flavor but seems to settle into its existing flavor with more grace and dignity over time.

The value of a long-lasting relationship is huge (when the relationship doesn't suck). But only if it acquires some greater breadth or depth. Otherwise it is calcified and its uselessness screams out until you fix or end it.

My relationship with T-Mobile never changed. They never acknowledged my loyalty in any way. They never behaved differently towards or with me when I was a 7 year customer than when I was a new customer. What that says is that they don't care. It's not a real relationship.

How could they have created a real changing relationship? Here are just some ideas:
* An "anniversary" present on the anniversary of my joining T-Mobile with a gift that increased in value every year
* Every now and then just sending an email, a text or calling me and letting me know - for no apparent reason - that they really appreciated my x years of business
* Giving me a special customer service line, good for long-standing customers only
* Having special in-store events for long-standing customers

And so on. See, this is not hard. And some of these ideas are really cheap. But they would have made me feel really good. I don't know if they would have been effective at stopping me from getting an iPhone. But if they had really cared about me and really showed it, I probably would have gotten an iPhone and unlocked it for use with T-Mobile.

Relationships where one or more of the parties is human, change. Period. If you are a business and you want to have a relationship with a human customer, you should have a plan for this. How will you evolve the relationship over time? I think, perhaps, that many businesses either don't think about this issue at all, or, worse, think of customers as equipment that depreciates over time. But the opposite is true. Customers get more valuable over time. So make sure to have a customer lifecycle plan for managing this incredibly valuable asset.

Wednesday, December 24, 2008

Restaurant 2.0?

I've been getting a good education over the past year from people, like the indomitable Jer979, who are considerably more internet savvy than I. I understand that the pace of life on the internet is fast. Very fast.

I don't want to be the one to sit astride the internet shouting stop. [And not just because of the serious proctological damage that would ensue.]

However, I wonder if attempts by the internet savvy to bring the speed of life online to their offline jaunts and pastimes is somehow damaging. To wit:

Soup of the day is pretty current. Do we really need soup of the moment?

Tuesday, December 23, 2008

Innovation and mediocre sex

I'm seeing a lot of misguided application of innovation techniques. The biggest problem I'm seeing is that people are following process and using techniques but without the right attitude and behaviors. Without the soul. And the soul, I'm afraid, is the secret sauce. That's what really gets you to new and different ideas.

One way this plays out, is for would-be innovators to find a few hours where people are available in between budget reviews and other budget reviews, in some boring corporate meeting room and to try and jam in a whole lotta innovation by walking through lots of innovation steps.

You're wondering how I'm going to work the sex metaphor into this aren't you? Wait for it, wait for it, now take it:

I think the scenario I laid out above is the "quickie" of innovation. In the quickie, one or both people want or need sex but they don't have the time for it and sometimes don't even have the right space for it. There are no sweet words. No candles. No KY Yours and Mine. And very little soul. The quickie has its place. It does serve a purpose. But it isn't going to get you that soulful emotional passion and love. The soulful experience requires the right mood, the right amount of time and the right space. You cannot shortcut it.

Innovation is quite similar. You cannot shortcut it. If you need a few quick ideas, some low-hanging fruit, go for it. In that scenario, you don't really need innovation, you just need some ideation. [See my last post for an explanation of this.] But when you are looking for something really novel or unique, that big-idea, you need the right mood, the right amount of time and the right space.

When you set it up that way, the magic can happen.

Innovation or ideation?

One of the problems with encouraging innovation is that people learn to love the hammer so much that in addition to using it on nails, they start using it on screws, kitchen appliances, the air... Heck, sometimes they use it on each other. It's crazy!

Now I love me a bit of wild fun as much as the next guy. And in this day and age, who is hurt by a little reckless hammer swinging amongst friends?

Well I am my friends. I am. You see, innovation is serious business. It's not for the faint of heart, the long of tooth or... that other guy.

Innovation is appropriate for every area within business or life, and every person can and should innovate, but not all at the same time. Not every problem needs innovation. So I'd like to propose an easy way of thinking about when you really need innovation and when you need... that other thing.

Ask yourself: is the answer to your problem or challenge already to be found somewhere in the minds of your team members? Is your problem one that can be handled through the application of domain expertise? In other words, do your people already have the answer but simply lack an opportunity to come together, talk about the issue, get their thoughts out and discuss them? If so, you need ideation, not innovation. You need to bring your team together for some sort of ideation session so they can unload what they've got and you can sort it out and plan your path forward.

But, if the nature of your problem or challenge is such that it requires a genuinely novel answer and cannot be solved by getting experts to do their expert thing, then you need innovation. This requires more artfully crafted exercises to stimulate your team members to think differently. It requires time. And it requires the right space.

Monday, December 22, 2008

Kudos to T-Mobile

I've been a T-Mobile customer for 7 years. I had 3 phone lines so I was a pretty good customer. But I've decided to switch to AT&T. I'd really like to get an iPhone. Plus, I get a hefty discount because my employer has a nice arrangement with AT&T.

I ported two of my phone lines to AT&T. I only left my own number with T-Mobile because I'm waiting to see if Apple releases a 32gb iPhone in January. Anyway, I called T-Mobile to switch my rate plan to the cheapest one they have in anticipation of leaving them entirely. I told the rep that this is what I was doing.

And he was really gracious. He behaved exactly as I would have wanted. He said he was sorry to see me go, that he understood I had my reasons and that if I chose to come back to T-Mobile I would be well taken care of.


Sunday, December 21, 2008

Innovation and the human soul

Below is a section of a letter I recently sent to friends. I think too much time is spent on trying to "manage" innovation and not enough on trying to get out of the way so that the human soul can do what it does best.

"Emerson wrote that "Society never advances. It recedes as fast on one side as it gains on the other." What he meant, in part, is that although society does benefit from the accretion of knowledge, experience and technology, the true measure of society lies in the greatness and nobility of each individual human soul.

I have long believed that the primary impediment to innovation is the insistence of organizations and institutions on attenuating the connection between individual people and their souls. Institutions feel much more comfortable when we access only those parts of our souls that are deemed to support their mission. This process of occlusion begins when we are children, and, over time, we forget who we are and what we can achieve. When the need for innovation arises, we find that the only levers we know how to push are the ones we have been allowed to push in the past. Predictably, these yield only the solutions we have already produced. We can innovate only when we find a way to remove the occlusions of our soul, be they fears of failure, rules we have been taught, social mores or the like."

Friday, December 19, 2008

Where do you find god?

I found him on my windshield! Some pastor left me a flier telling me all sorts of things including the fact that Jesus loves me.

Needless to say, this was welcome news. I do not find myself in the unfortunate position of having too many people love me.

I'm just wondering though: if Jesus loves me, and if he took the time to stop by my car, why couldn't he have fixed the leak in my trunk?!

Thursday, December 18, 2008

Innovation rule #7: Never say “always” or “never”

Yeah, I just broke my own rule. But the rule only took effect after I wrote this.

I have had many discussions about the future state of the world with various people who often say “but people will always…” or “people will never…” Whenever I hear that, I know that person is in for a very rude surprise.

There are very few immutable laws in this world. We’re still learning the laws of physics and we barely understand human psychology. What appears to us as a constant, is more than likely just an artifact of our own family, society, culture or organization. Whatever you think will always be, probably won’t. And whatever you think never will be is just around the corner.

So don’t let yourself get too comfortable imagining that your future will look like today except with flying cars. The future is going to be very different. Open yourself up completely to this likelihood and you may play a role in shaping that future.

Alright, this is the end of my seven rules series. I hope these thoughts will inspire you. If they do help you invent the teleporter, please let me have the second ride.

And now, if you don't mind, I'd like to toot my own horn ever so briefly. This is my 100th blog post! I have no idea why that is significant in any way. You might think that my blog sucks. Heck, sometimes I think my blog sucks. And even if you like it, 100 is just like any other number except that it is 100 and the rest aren't. Still, I feel like marking this occasion and now I have.

Wednesday, December 17, 2008

Innovation rule #6: Don't confuse measurement with wisdom

Many times have I heard the wise saying that “what gets measured gets done.” It is a wise saying. There is definitely truth in it. But it can also be a lazy and unintelligent way to avoid trying anything new.

Look, you already know how to measure what you’re doing today. Those testing methodologies have evolved over many years to the point where you feel comfortable relying on them. They didn’t just emerge out of thin air. In fact, wouldn’t you expect testing methodologies to follow the invention of the objects they are designed to test?

Novel initiatives are novel. There may not be a good way to test them yet because nobody has had a reason to develop the tests. What would you like to do? Continue doing the same things over and over again until you pass into oblivion, or occasionally wade into uncharted territory and evolve into a set of testing methodologies over time?

Some activities or phenomena are just easier to measure than others. If you aspire to be the expert at delivering the stuff that is easily measured, good luck. If you want to survive and thrive in a changing world, you’d better find a way to get comfortable doing something new.

So don’t take the easy way out. Sometimes you have to leap before you look.

Tuesday, December 16, 2008

Innovation rule #5: Don't fight gravity

I can’t tell you how many times, as a marketer, I’ve heard discussions that start with “how can we get consumers to…” Usually those sentences end with a desire on the part of the company to have consumers change in some way that is clearly beneficial to the company but of dubious benefit to the consumer.

This is nothing but an attempt to fight gravity. If consumers wanted more of your stuff, they would already have it. Instead of wondering how you can get them to change to make your life better, try and think about how you can change to make their lives better.

The music industry is a good example of this phenomenon. People started illegally copying and sharing music so the music industry decided that the best path forward was to sue their customers. Do they really think they are going to succeed in the effort to turn off the internet?! Again, this is an attempt to fight gravity. I don’t have the answer for them, but it sure as hell does not lie with fighting gravity. Instead, they should accept that there are changing norms, behaviors and expectations for value amongst today’s music consumers and figure out a way to deliver that value.

So don’t fight gravity. You will get very tired and then you will lose.

Monday, December 15, 2008

Innovation rule #4: Don't forget humanity

Amidst all of the interesting and good work on innovation processes, techniques and tools, I fear that we have lost sight of the fact that innovation comes from people. People are naturally wired to try and understand and gain mastery over their environment. They are curious. They are playful. They seek excellence. If this doesn’t sound like your workforce, then stop reading this right now. You don’t have an innovation problem, you have an HR problem.

In all likelihood, your people have these qualities. If you don’t see them, it may be that you forced them underground. When you did so, you probably sent your innovation down there as well.

So don’t overmanage your people. Find people that can be inspired by what your organization is generally trying to achieve and, as much as you possibly can, let them take all of their passion, energy and inspiration and figure out how they can best put it to use for you. You will never know this as well as they do. So get out of the way.

Sunday, December 14, 2008

Innovation rule #3: Do ignore cannibalization

New initiatives are often evaluated looking only at the incremental sales they will generate. The cannibalized sales are subtracted off of the total sales to yield the incremental size of the new business opportunity.

This does not make sense. It relies on an untenable assumption and will force you to undervalue innovation opportunities.

The assumption is that the pie you are holding on to right now will remain intact and in your possession forever so long as you do not discard it of your own volition. The world doesn’t work this way. Your competitors are out there looking to grab a slice of that pie. If you have an innovation idea, chances are that someone out there has the same idea and they will not care about cannibalizing your business. In fact, that’s exactly what they intend to do. So your cannibalized sales are as good as gone.

When you discount your new initiatives by the value of the cannibalized sales, you are pretending that those sales would have been yours forever. Putting your hand over your eyes blinds only you. Your competitors can still see and they will exploit your blindness and leave you wondering why the heck you couldn’t see it coming.

So forget cannibalization. The world is constantly changing and what you have in your hand today will not remain in your hand forever. Just do the best job you can for your customers and the rewards will follow.

Saturday, December 13, 2008

Innovation rule #2: Do see the system

Organizations are machines. The various parts work together to generate the desired output. Sometimes the parts work well together and sometimes the machine is poorly designed and there is misalignment. In either case, it makes no sense to modify one part of the machine and pretend that change will have no impact on the rest of the machine.

If you want your organization to innovate, you must design a machine for that purpose. All parts of that machine must work together to drive innovation. Who you hire, how you train them, how you measure and reward performance, how you pay people, how you communicate internally, what your physical space looks like… Every aspect of your organization is a part of your machine. It will either contribute to or detract from your success.

So build the right machine.

Friday, December 12, 2008

Innovation rule #1: Do respect the uniqueness of ideas

It seems to be the nature of large institutions to kill interesting ideas. Whether those institutions are governments or large corporations, there is an inexorable march towards blandness.

Think of an idea or vision as a crystal. It has a distinctive shape marked by jagged edges and depressions. Whether you think it good or bad, beautiful or ugly, it is distinctive and it makes an impact. When large organizations take an idea through the vetting process, each constituency sees a jagged edge they feel must be filed down or a depression that must be filled in. Before you know it, that distinctive crystal has morphed into a perfectly smooth sphere which represents the average of all points of view. Average ideas are almost guaranteed to generate average results.

This does not mean that you must cherish every jagged edge or depression. Some ideas are just plain stupid. But it does mean that you should respect the unique integrity of an idea. Inclusiveness is a respectable value, but not at the expense of the quality of your ideas.

So find the champions for your valuable crystals and let them move ahead. If there are people in your organization that cannot support a particular crystal, better to encourage them to find one they can support than to allow them to turn one into a sphere.

Seven rules for innovation

Unless you’ve been living in a wifi-proof bubble over the last few years, you’ve been inundated with articles, podcasts, blogs, emails, conferences and tweets about innovation. If you work for a large company like I do, you’ve also been subjected to a swarm of consultants, all of whom are eager to share their unique point of view or proprietary methodology to drive your business.

If you are perfectly happy with your innovation output, please stop reading this right now. In fact, stop reading everything. Your time is way too important to waste on reading. Go and invent the teleporting machine or the sock that cannot be lost.

But if you’re feeling as I am that in spite of the plethora of truly thoughtful academics, consultants and practitioners, we have not yet achieved a satisfactory level of proficiency in innovation, please read on.

After about an eight-year career in consulting and line-marketing, I moved into a dedicated staff innovation role. I have spent the past year trying to develop cross-business innovation opportunities and create a more innovative culture. It is a role that is exciting and frustrating – for the same reasons. To do it well, one must be able to simultaneously respect the realities of the current business environment and see through those realities and assumptions to the world that could exist if someone had the courage and wisdom to lead the way forward.

I am not yet doing it well. If I were, I would be too busy spending my obscene bonus or giving keynote addresses at posh boondoggle conferences. Like many, if not most, innovation practitioners, I am still struggling to better understand the concept of innovation, the barriers, and the means of avoiding or circumventing them. Through the course of my struggles, I have had a few ideas that I think can help us cut through some of the confusion or move past some of the old ways of thinking that encumber our innovation efforts. I have organized these thoughts into seven rules – three dos and four don’ts. Most of these thoughts come from earlier blog posts. I hope that gathering them together in this way will add value for my fellow innovators.

Starting today, I will publish one rule a day. I hope you find them interesting and inspiring. And if you have your own rules to add, I would love to hear them.

Is a brand a cause or an effect?

It would seem they are both.

Brands are sets of associations and impressions in the minds of consumers. Brands are the cumulative effect of the actions that marketers engage in with respect to their products and the experiences that consumers have as a consequence (direct or indirect) of those actions. Brands are, in a sense, epiphenomenal.

Brands are also causes. The associations and impressions that people have, cause them to behave in various ways towards branded products that they would not towards equivalent unbranded products. The brand acts as a heuristic and the value of that heuristic in effecting sound judgment is a function of the accuracy of the associations that consumers have with respect to the branded product(s).

So brands are both cause and effect right?

Well not so fast.

Perhaps they were in the past. In years past, a big company could launch a product, advertise it on TV, promote it at retail and stand to benefit for years to come from the associations that were created by the quality of the product and the message communicated through the advertising. Consumers would simply assume that if Brand X launched another product, it would be as trusted, as fun, as innovative as their mental representation of that brand. They relied on the heuristic because starting every decision process from scratch is time consuming.

I'm not so sure it works that way anymore. Consumers are savvier, likely because finding information is much much easier. It's all on Google for free. And, of course, there is a general societal trend towards mistrust of social institutions.

It seems to me that brands are no longer causes. They no longer cause people to behave in ways that they do not behave towards equivalent unbranded products. I think that in a world of instant free information, brands can never rest on their laurels. They must constantly keep doing whatever earned them those associations and impressions in the first place. A brand that is known for quality cannot take a vacation from quality and still expect to maintain the same associations and impressions in the minds of its consumers.

So if brands must continuously earn their associations, then it seems reasonable to argue that it is not the brand (i.e, the associations) that causes people to act but, rather, the actions of the marketer with respect to its products that causes people to act.

I know that I'm oversimplifying. And I know that I have overstated the case. Still, I think brand loyalty is declining and cycle times have shrunk. "What have you done for me lately" is the new mantra.

So I think marketers must think of their brands as effects. Effects of the actions they take. Once they have a brand that stands for something positive, they should vigorously and unflaggingly pursue actions that reinforce those associations in the minds of their consumers.