We-Think
Mass Innovation, Not Mass Production by Charles Leadbeater
Profile Books © 2008 290 pages
• The Internet radically increases your level of connection with others.
• When you become more connected, you increase your chances for collaboration.
• But by becoming more connected you also increase your vulnerability.
• “We-Think” is a term for Internet-enabled collective thinking: “We think, therefore we are.”
• This collaboration will transform some industries completely, change some
industries somewhat and touch some industries almost not at all.
• We-Think offers powerful new potential for political action and social justice.
• It offers greater economic equality because it freely shares pivotal economic tools.
• We-Think combines innovative, collective aspects of the counterculture, academia and geek experimentation.
• It democratizes the world, widely spreading access to media and information.
• The broader collaboration enabled by the Internet increases freedom by multiplying individual choices.
Charles Leadbeater’s awareness of the limits of Internet-enabled
collaboration lends weight to his discussion of its possibilities and all aspects of the World Wide Web’s real future potential.
The Internet is transforming the world in good and bad ways. It opens access to
information and the media, and allows people to network, despite geographic distance.
Yet, the Web expands the chance that onlookers can monitor individual actions; it exposes
you to unprecedented, unexpected intrusions. The Web is above all open – a place where
barriers are missing or porous; that means both risk and opportunity. Now the Internet
is reaching a crucial point in its development. Use has spread so widely that the Web has
begun to influence everything people do. The core issue is not how many individuals
use the Web, but what happens when they “share and then combine” their thoughts. The
Internet matters most as a platform for sharing.
This sharing provokes a fundamental shift in self-definition. Philosopher René Descartes’
famous line about identity and self-knowledge, “I think, therefore I am,” is changing
amid this connection and collaboration. Today’s motto might be “We think, therefore
we are.” That’s the essence of “We-Think.” Projects like Wikipedia show its possibilities,
negative and positive. “Wikipedia is prone to more errors” than usual encyclopedias,
and took several iterations to come into being. But the voluntary contributors who write
it fix its errors faster than traditional reference works fix theirs, and it is growing at a
tremendous rate, including entries on odd or obscure topics.
We-Think Principles
We-Think’s changes are immense and widespread, but not absolute. The collaborative
principles that define We-Think will not apply in every circumstance. Rather, expect
to see a tremendous clash over the next few years, as collaboration and the traditional
hierarchy push and pull at one another. Expect the results to fall along a spectrum, with
We-Think endeavors at one end and traditionally hierarchical organizations at the other.
And that’s fine. We-Think is founded on voluntary collaboration and choices, not on
dictating any one mode of organization.
We-Think doesn’t require anyone to buy into a specific ideology. It is being adapted
where it works. Take the mapping of the “worm-genome” as an example of We-Think
in action. Nobel laureate Sydney Brenner started mapping the genome of C. elegans
in 1965, but the project was too big for his lab, and too complex for any lab at the time.
Therefore, Brenner shared what he and his team were learning, and other researchers
began to voluntarily take on different aspects of it. As this far-flung community grew,
the technology radically advanced. The Worm Breeder’s Gazette shared the results with the community, as face-to-face meetings provided direction and group identity.
This project took place as computers were really just emerging, and well before many
people were using the Internet. Yet computers, the Web and other modes of connectivity
that define the information age (cell phones, text messaging) have allowed similar
projects, like Linux and the open source code movement, to succeed even faster. These
projects start with “a good core” of dedicated people who provide expertise and initial
direction. Then they blossom as the core “creators give away the material on which others
can work.” This opens the community, providing ways for new members to take part and
supplying much-needed conceptual tools. As people connect, a self-regulating social
structure emerges. The core often remains influential, due to its greater knowledge, but
not due to a need to control the project.
We-Think projects function like working cities. A diverse population allows more
perspectives to emerge; trust and respect provide a frame for interaction. This
population then collaborates, not just in creating new things but also in organizing
them. The various elements of a We-Think community may work independently on
different portions of a shared project (mapping a genome, writing code). People work
on these projects for the joy of it and for recognition from the community. Often this
means hashing out ideas in discussion forums.
Market forces don’t drive pure We-Think projects. Instead, these projects, like
Wikipedia, offer alternatives to products created by the market. This happens, in part,
because market forces tend to focus investigation and creativity too narrowly, shutting
down real creativeness. That said, We-Think offers some alternative business models
with options that are not available in a traditional hierarchy. We-Think thrives on openended
conversations. It both offers and depends on a sense of community, which large
corporations often lack. Rather than using a model in which products flow from producers
to consumers, We-Think engages consumers in co-creation and welcomes product
modifications. For example, take the video game World of Warcraft, where players’ social
interaction fleshes out and partially creates the game’s structure. We-Think redistributes
ownership and leadership fluidly according to individual contributions, not hierarchy.
Where Does We-Think Come From?
You might see We-Think as a collaboration among “a computer nerd, an academic, a
hippie and a peasant.” Actually, its history blends many attitudes that these groups
articulate. The first public discussions of networked computers happened in the late
1960s, as the counterculture was flourishing and many Americans lived on communes.
The movements became directly connected when Fred Moore – part of the Whole
Earth Catalog, which provided a range of tools for counterculture activities – started
organizations to explore “the social impact of computers.”
Numerous 20th century thinkers called for the increased citizen involvement you now
see online. Marshall McLuhan advocated “a retribalization of society” to counter mass
culture. Ivan Illich and Guy Debord supported shifting away from consumption and
spectacle, and toward dialogue and action. Finally, E. F. Schumacher, who wrote Small
is Beautiful, called for “production by the masses, not for the masses.”
These qualities abound in online activity. Social networking sites (for example, MySpace)
create connections. Blogs and wikis let passive spectators become active producers.
South Korea’s OhmyNews uses “55,000 citizen journalists” to provide alternative news
coverage. Media-sharing sites (YouTube for videos; Flickr for photos), let individuals
share and enjoy media that once was available only through mass corporate or government
venues. The most successful sites operate with “a spirit of collaborative self-government,”
like the way traditional peasant groups governed the use of the commons. A Web of
expectations emerges through repeated community interactions that happen with little
top-down adjudication, though small-scale negotiations may continue. While community
governance of a commons can break down, especially if the community collapses, the
Web’s conceptual resources are less vulnerable. Shared use is often strengthening. Taking
too many fish from a lake can deplete it, but taking ideas from a shared pool multiplies
their power, rather than sapping it. The result is a bit like folk music, where people
borrow musical structures from a shared tradition without concern for ownership.
The Implications of We-Think
We-Think won’t move through all areas of the economy equally or at equal speed, but it
is already transforming professions that organize and distribute information. Librarians
face huge change as they try to decide what happens when they no longer shepherd
physical collections of books, but rather conduct access to a digital collection. Moving
academic journals online, and letting manuscripts circulate is speeding up the spread
of information. Journalism, music, publishing…any information-processing venue will
change quickly and immediately; that’s roughly 20% of the Western economy.
Another 50% of the economy is involved in “medium-impact” enterprises, where We-
Think will proceed unevenly. These are fields, like mining, that still employ some
major component directly from the industrial age, or industries that use little digitized
information, such as service companies. Even these areas will come to incorporate We-
Think in surprising ways.
More generally, proprietors are distributing “open-source designs” to do-it-yourself
enthusiasts who want to modify mass products. Various scientists are ambitiously
working on mobile fabrication units that could make anything that matched stored plans.
One version, the “Fab Lab” developed by MIT’s Neil Gershenfeld, is already in limited
use. A few medical communities are experimenting with involving patients more in their
own care by training people with chronic conditions to monitor themselves and share the
results with their medical teams, all electronically.
Online you have access to more open market choices. The combination of cyber-stores’
lower overhead costs and the consumer’s ability to search for any possible purchase
creates countless market niches. The Internet also provides tools that multiply creativity,
allowing you to make art more quickly and spread self-expression more widely.
In politics, increased connectivity and communication have mixed effects. Some critics
say that the Web makes a crowded, noisy world more so. While most political participants
in democratic countries can use the Web, “fundamentalist populist movements” get a
disproportionate amount of online attention. Even terrorists use the Internet to stay in
contact. In general, the Web has contributed to the disruption of hierarchical order. Even
when democratic movements use the Web ethically, for instance, to organize for the civic
good, it has not yet produced more reflective debate, as its champions hoped. Instead,
most people connect with like-minded cohorts.
On the positive side, the Internet brings youth into the political process. In the Philippines,
protestors have used multiple routes (the Internet, mobile phones) to share messages,
circulate petitions, organize demonstrations, spread information and expose corruption.
Many bloggers move faster than the mainstream media to catch cover-ups and distortions.
While China is trying to censor the Internet, even there, activists show online how the
government acts. The Web also enables “ultra-local politics,” letting neighbors connect
in new ways; in some cities, including Boston and Toronto, people in social networks are
getting deeper into politics. Overall, the Web benefits democracy.
The Internet may have some negative effect on equality, in that it connects the already
connected, thus increasing the influence of the few who are already socially and
economically ahead. More basically, many online perks don’t address the needs of the
poor: Shared music doesn’t feed the hungry. Yet, as Yochai Benkler argues in The Wealth
of Networks, “information, knowledge and culture” are essential factors for “human
welfare.” The Web makes it possible to share scientific breakthroughs and mass reference
works (i.e., Wikipedia) with the emerging world.
A tug-of-war between traditional models and We-Think is emerging in several areas. For
example, Cambia, an Australian nonprofit organization, discovered a bacteria that can
replace patented biotechnology, solving some agricultural challenges for poor countries
that can’t afford patent fees. When Alwyn Noronha tried to introduce computers to schools
in the Indian state of Goa, the educational system couldn’t afford Microsoft licensing and
maintenance, so the schools turned to “Linux and other open-source” software. We-Think
leads to the use of “mobile phones to connect borrowers and lenders” for “microfinance”
loans, giving small businesses access to previously unavailable investment dollars.
Skeptics have legitimate reasons to worry about the Internet’s impact on freedom. The
same electronic Web that lets you connect voluntarily can be turned against a free
society: Technology could enable someone to track your actions or expose your secrets.
Instead of fostering collaboration, participating in an online community could create
“group-think,” where everyone follows the herd and individual creativity gives way to
derivative thinking. While those concerns are genuine, electronic connectivity ultimately
enhances your freedom in some key areas. By offering alternatives to mass media, the
Web provides more chances to think freely, to speak back to the media or even to start
your own media outlet at little cost.
Individual identity is not swamped in continual online contact, but rather negotiated,
in a sort of dialogue. Young people who have grown up online are adept at shifting
personas and finding comfortable contacts. Yes, they need skills to do so, but that’s
true in the physical world, too.
Wednesday, 16 September 2009
Tuesday, 15 September 2009
Reis & Trout - The 22 Immutable Laws of Marketing
Law #1: The Law of Leadership
The Law of Leadership affirms the importance of being number one in a category. People usually know who the number one player is, but often cannot even name the number two. Ries and Trout also claim that the first player to appear in a category usually ends up being the number one player. There are plenty of good examples of this. Chrysler brought us the first minivan and still leads the category.
Law #2: The Law of the Category
The Law of the Category says that if you cannot be first in your category, setup a new category. This is really just another way of explaining a concept called "differentiation".
New entrepreneurs tend to think purely in terms of finding a product which is better than the competition. But so very often, it is more important to be different than to be better. Every difference defines a category. And for each category, somebody is the leader. In other words, a large market is really just a cluster of small markets. Tackle the large market and you will probably lose. Tackle a small market and you might just win.
Law #3: The Law of the Mind
The Law of the Mind says it is better to be first in the mind than first in the marketplace.
Law #4: The Law of Perception
The Law of Perception says that in the battle between products, perception is more important than reality.
People tend to think that the best product will win. However, as Ries and Trout say, "Marketing is not a battle of products, it's a battle of perceptions." Sometimes the best product does not win.
This concept seems unfair, but it's fundamental and we might as well get used to it. Ries and Trout go so far as to say that "Most marketing mistakes stem from the assumption that you're fighting a product battle rooted in reality. All the laws in this book are derived from the exact opposite point of view."
Subjectivity
The real issue here is that the words "better" and "best" are subjective terms. People have different requirements and preferences upon which they form very different opinions. There are very few absolutes.
Law #5: The Law of Focus
This is one of my favorite chapters. The Law of Focus says that "the most powerful concept in marketing is owning a word in the prospect's mind." This law challenges us to boil our marketing message down to just one idea. If you can teach your market segment to associate your product with a single idea, perhaps even a single word, you can be a market leader.
Count Your Words
When entrepreneurs ask me for advice, I usually ask them to explain their product in 25 words or less.
Crafting Your Message
It's okay to have more information handy. Datasheets and whitepapers are great. Once people get interested, they will probably want all the detail you can provide. But for first impressions, you should tell the world only one thing about your product. You can use 2-3 words as long as you are not trying to sneak in extra ideas. Usually, you need only one word. But which word to pick?
• Pick a reasonably common word out of the dictionary. It should be a word that everybody understands. Don't invent a new word that nobody has ever heard.
• Don't try to associate your product with a word in the customer's mind if that word is already associated with your competitor.
• Don't pick the word "cheap" or any of its synonyms. Very few businesses can thrive while making low price their primary message. Wal-Mart is one of those businesses. Your small ISV is not.
• Don't pick the word "quality" unless you can prove that you care about quality a lot more than everybody else. As Ries and Trout say, "everybody stands for quality. As a result, nobody does."
Law #6: The Law of Exclusivity
The Law of Exclusivity says that "Two companies cannot own the same word in the prospect's mind."
It's time to face the facts. Some of these laws seem to have more punch than others. For example, I find the Law of Focus to be a concept with a lot of impact. It's very counter-intuitive, and yet very powerful.
Other laws here seem almost, well ... obvious. These other laws don't seem to deserve their pages quite as much as the great ones like the Law of Focus. I speculate that for some reason, Ries and Trout wanted exactly 22, so they kept adding laws until they got the right number. Too bad. If they had stopped at 21 they could have used some sort of a blackjack theme.
The Law of Exclusivity would have been a candidate for removal. It is fairly intuitive to me that two companies cannot have the same market position.
Still, let's not dismiss this law too quickly. After all, obviousness is not always a reason to ignore a topic. It is obvious that we should all eat better and exercise more, but we don't.
Similarly, marketers do routinely find a way to violate this law. They do a Smart Thing by following the Law of Focus and choosing one key benefit around which they build their product message. Then do a Dumb Thing by choosing the same benefit as somebody else. Almost invariably, they end up beating their head against the wall in futility. It is obvious that we should not try to beat somebody else at their own game. And yet, we often try.
Law #7: The Law of the Ladder
The Law of the Ladder acknowledges that in most market categories, there is actually more than one available slot in the mind of the customer.
The Hierarchy of Categories
In our discussion of the previous laws, we have emphasized the importance being different, the important of finding a subcategory in which you can be #1. However, when you pop the stack frame up one level to the enclosing category, we find that you are ranked on a ladder among the other players.
Three Tidbits about Ladders
1. The mind of the customer can only remember a few rungs. Research indicates a maximum of about seven, and a more practical limit of about two or three. How many brands of toothpaste can you name? How many brands of cola? How many brands of automobiles? Some categories have more rungs than others.
2. The best strategy for you depends entirely on your ranking on the ladder. The right strategy for the #1 player is probably wrong for the #2 player, and vice versa. The authors cite the Avis rent-a-car example, where they gained tremendous results from simply acknowledging their status as #2. This example has been very much-discussed in the ten years since the book was
written, but it still rings with a bell of wisdom. Avis showed a lot of self-awareness. Customers respected that.
3. There is a typical mapping of market share onto ladder position. The authors claim that each rung on the ladder has twice the market share of the rung below it. These guidelines are obviously very rough, and all kinds of exceptions do apply. Still, when we see a ladder where the market share ratios are not even close to this rule of thumb, we are motivated to ask why.
Law #8: The Law of Duality
The Law of Duality says that "in the long run, every market becomes a two-horse race."
Young markets have many rungs on the ladder. They are highly fragmented. Gradually, as the market matures, players disappear and the market settles on exactly two primary players. Examples of this phenomenon are everywhere:
• Coke and Pepsi
• Canon and Nikon
• Nike and Reebok
• GM and Ford
• McDonalds and Burger King
It often takes a long time for things to settle down, but in the end, markets usually give people what they want, which is two strong choices. Buyers don't like choosing between ten or twenty players. It's too stressful.
A big reason for this effect is that most people don't make their own buying decisions. People tend to buy what somebody else is buying. Pragmatists buy something only after they see the Early Adopters buying it. Conservatives buy it only after the Pragmatists are buying it. Laggards buy it only when the peer pressure and ridicule is so severe that they look like absurd for not buying it. Market share begets market share, and the rich get richer.
Even as the market gets very mature, it will continue to tolerate the presence of more than two players. However, the top two will have the lion's share of the market. All other players are essentially in niche segments.
Once a market reaches this state, it will generally not allow #1 and #2 to move around. For example, the market will never allow the top two players to change positions. Burger King will never be #1.
Furthermore, the market will not allow #1 to get too far ahead. Just as markets hate having a ten-horse race, they also hate having a one-horse race. When #1 gets too far ahead of #2, the market will usually correct the problem.
Law #9: The Law of the Opposite
The Law of the Opposite says that the #2 player should generally do the opposite of what the #1 player is doing.
If you are #2 in your category, you want to be #1, right?
Wrong. You can't choose to be #1, but you can certainly choose to be #3 or #4. The worst thing you can do is to try and beat the #1 player at his own game. Instead, realize that not everyone in the market wants to play that game. Offer those people an alternative.
Law #10: The Law of Division
The Law of Division observes that over time, a category tends to divide and become two or more categories.
A new market category starts out very broad. For example, in the beginning of the automobile industry, the only category was "cars". Over time, categories break up into smaller and more specialized subcategories. Today, there are quite a few brands of car, each catering to a specialized niche.
This effect is an obvious and natural consequence of other laws. Each company will try to setup a new category in which it can be #1. Not all of these categories will end up becoming real, but some will.
This law is a good place to remind ourselves that Ries and Trout primarily consult for companies like Pepsi, McDonalds and General Motors, not for small ISVs. There is a bit of an impedance mismatch between their world and ours. Those companies do business in mature industries selling mass market consumer products. Those products are easily interchangeable. I can switch from Pepsi to Coke with no major costs associated with the transition and deployment. Categories split into subcategories over very slight differences in consumer preference. Brand building is absolutely critical. General Motors understands that some car buyers want to feel like they are buying something sporty, whereas others want to feel like they are buying something conservative. So, they sell basically the same car under the Pontiac and the Buick name, managing each of these brands very carefully. The underlying engineering is identical, but the message of these two brands is very different.
Law #11: The Law of Perspective
The Law of Perspective says that "marketing effects take place over an extended period of time", but the basic point of this chapter is that some marketing actions are negative in the long-term even though they seem positive in the short-term.
Short-Term Highs
The authors include an interesting discussion of sales and coupons in the retailing industry. They argue that these devices are like drugs – they produce a short-term high, but the only way to maintain the high is to keep going. Eventually, you have to "keep those coupons rolling out not to increase sales but to keep sales from falling off if you stop." I assume this is the reason that our local furniture store is always running a sale – they are afraid of going through withdrawal.
Law #12: The Law of Line Extension
The Law of Line Extension says that it is a mistake to take the name of one product and apply it to another. Companies do this often, but it basically never works. We think that the power of the brand will help sell the new product. Instead, the brand itself is tarnished. People start to get confused about what the brand means. Quite often it is necessary to kill the second product before it causes too much damage to the first one.
Law #13: The Law of Sacrifice
The Law of Sacrifice says that "you have to give up something in order to get something".
The cool thing about this law is that it's not automatically attractive. It makes you think.
The Law of Focus isn't like that. When people hear about the Law of Focus, the first reaction is to say, "Yes, yes, focus is good." People seem to forget that the word "focus" implies a decision about what you are not going to do. With the word "sacrifice", that particular implication is much clearer.
But in some sense, these two laws are the same idea with different expressions. There is power in focus, but to get there, we have to make tough decisions about what things we will not do.
Saying "No"
The Law of Sacrifice is all about saying "no" to opportunities. This skill is incredibly difficult to learn. I suspect that the only way to learn to say "no" is to experience the pain of saying "yes" too often.
Law #14: The Law of Attributes
The Law of Attributes says that "for every attribute, there is an opposite, effective attribute."
Fussy
There was quite an uproar from fans after the recent season finale for Star Trek Enterprise18. You see, the episode contained a serious error. One of the characters states that the year is 2152 when in fact, as every Trek fan knows, the current episodes take place in the year 2154.
I've heard several people say that this mistake ruined the whole episode.
I concede the mistake is silly, but come’ on -- the whole episode? Perhaps we need a bit of perspective. That date wasn't a central point of the show. It's a detail, and aside from the fact that it was incorrect, it doesn't matter.
Incidentally, guys, this is the reason why your girlfriend or wife doesn't like going to see movies with you. Nobody wants to watch a film with some anal-retentive dork who is ready and waiting to discard the entire film because the producers made a minor mistake in science or technology. Try to just enjoy the movie, or at the very least, shut your pie hole so that she can. (This tidbit of relationship advice is provided at no extra charge. ☺)
Marketing Books
Geeks like us are lousy at marketing for the same reason that nobody wants to see movies with us. Marketing books are written for big-picture thinkers. They contain broad sweeping generalizations which are only true most of the time. Guys like Ries and Trout don't feel the need for a lot of precision.
So a geek sits down to read this book. Somehow he manages to cope with the word "immutable" in the title, which is obviously a gross exaggeration. Somehow he manages to smile at the examples, which are now ten years out of date, especially the one about Lotus Notes. Somehow he manages to overlook most of the little imprecisions in the first 13 chapters.
Law #15: The Law of Candor
The Law of Candor says that "when you admit a negative, the prospect will give you a positive". As usual, the examples from the book are mainstream consumer products:
• Listerine did it when they acknowledged that their mouthwash tastes terrible.
• Avis did it when they acknowledged that they are #2.
• Volkswagen did it when they acknowledged that the "bug" is ugly.
Each of these companies gained a lot when they applied the Law of Candor. People respect the courage and honesty it takes to admit that not everything is perfect.
Being Genuine
The Law of Candor is another one which is simply not intuitive. Most marcomm people are terrified of it. Conventional wisdom says that absolutely everything in your marketing message must be positive. In fact, a primary function of the marcomm team is to sanitize all public statements ensuring that the company never says anything it does not want to say.
Credibility
Ignoring the Law of Candor can kill your credibility. Whatever your negative issue is, everybody already knows about it anyway. If you don't talk about it, then it will become "the elephant in the room". When you issue yet another sanitized press release, your customers eagerly read it, hoping to see some evidence that you have any self-awareness at all. They ask themselves, "Don't these people realize how awful their mouthwash tastes?"
As Ries and Trout say in the chapter, "Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best."
Law #16: The Law of Singularity
The Law of Singularity says that "in each situation only one move will produce substantial results".
We literalists will once again have to endure the authors' word choice. The above statement is almost certainly not true. ☺
And yet, Ries and Trout make two important points in this chapter, which I will paraphrase as follows:
• One bold stroke is much better than a bunch of small marketing efforts.
• Marketing is too important to be left to the marketing people.
Law #17: The Law of Unpredictability
The Law of Unpredictability says, "Unless you write your competitors' plans, you can't predict the future."
But that doesn't seem to be the main point of this chapter. What the authors are really saying is that long-range planning doesn't work. We can try to observe and follow trends. We can make big-picture predictions. But if we try to make detailed plans over the long term, our competitors will surprise us and those plans will end up getting scrapped.
Law #18: The Law of Success
The Law of Success says that "success often leads to arrogance, and arrogance to failure".
The basic point of this chapter is a warning to not let yourself get too far from your customers. Truly small ISVs may not need to worry too much about this, but the admonition is valuable nonetheless.
As companies grow, the CEO tends to get busy with other stuff. She doesn't spend much time "in the trenches" anymore. He goes to a lot of meetings and spends a lot of time working on the big picture. In the process, she loses touch with the customer.
Despite what the chapter says, I think this effect may or may not be rooted in arrogance. The root problem might be simpler and more innocent. Maybe the CEO simply let himself get too busy. It seems quite possible to become detached from the basic activities of the company without growing a big ego.
But either way, forgetting the customer is a fatal disease. Fortunately, this disease is also preventable and treatable. Don't let it happen to you. Even as your company grows, stay involved in the basic stuff, at least a little bit.
Law #19: The Law of Failure
The Law of Failure says that "failure is to be expected and accepted".
Nothing interesting ever happens unless we take risks. The authors encourage an atmosphere of risk-taking with a good discussion of why individuals tend to be afraid of taking risks.
The chapter also includes another important point: When you realize you've made a mistake, cut your losses.
It's just so hard to admit a mistake. Denial is a wonderful thing.
Law #20: The Law of Hype
The Law of Hype talks about the fact that "history is filled with marketing failures that were successful in the press".
This chapter talks primarily about new things which claim to make existing things obsolete. Such products tend to become darlings in the press, because the notion of breakthrough innovation is very attractive to readers. People love to read stories about things like the personal helicopter which was supposed to make cars obsolete several decades ago. So the press jumps on the bandwagon, stories get written, newspapers get sold, and people get excited. And they still drive their cars to work everyday.
What I love about this chapter is that it was written in the early nineties, before the Web, and it still rings amazingly true. The Web was supposed to obsolete almost everything. Today we can see that the Web has changed life in many ways, but most of the previous structures and systems are still with us.
Law #21: The Law of Acceleration
The Law of Acceleration says that "successful programs are not built on fads, they're built on trends".
Drawing their examples from mainstream consumer products, the authors observe the tendency for companies to overestimate short-term fads. When something new becomes big and hot, companies jump on the bandwagon, spending a lot of money doing so. They restructure. They invest in new equipment. They work hard to make themselves prepared to deliver products for the fad.
And then the fad stops, and the company is left with problems:
• "What am I going to do with all the olive green refrigerators and orange carpeting I bought just before the fashion changed?"
• "Oh, great -- I can produce fifty gazillion Cabbage Patch dolls per day. That'll come in handy now that nobody wants them anymore."
• "Darn it! I just bought a warehouse of fruit-colored translucent plastic, and now I find that the next iMac looks like a white desk lamp."
Fads accelerate very quickly, but often don't last long. Trends have a much slower acceleration but eventually run fast and steady. Chasing fads is expensive, so it becomes very
Law #22: The Law of Resources
The Law of Resources says that "without adequate funding, an idea won't get off the ground". The gist of the chapter is that marketing is very expensive and you have to be prepared to spend big bucks on advertising if you want to be successful, so you're going to need a lot of funding from your VC.
Preaching these ideas to small ISVs is like showing up at your local Alcoholics Anonymous meeting and telling everyone that a little red wine every day helps the heart.
The Law of Leadership affirms the importance of being number one in a category. People usually know who the number one player is, but often cannot even name the number two. Ries and Trout also claim that the first player to appear in a category usually ends up being the number one player. There are plenty of good examples of this. Chrysler brought us the first minivan and still leads the category.
Law #2: The Law of the Category
The Law of the Category says that if you cannot be first in your category, setup a new category. This is really just another way of explaining a concept called "differentiation".
New entrepreneurs tend to think purely in terms of finding a product which is better than the competition. But so very often, it is more important to be different than to be better. Every difference defines a category. And for each category, somebody is the leader. In other words, a large market is really just a cluster of small markets. Tackle the large market and you will probably lose. Tackle a small market and you might just win.
Law #3: The Law of the Mind
The Law of the Mind says it is better to be first in the mind than first in the marketplace.
Law #4: The Law of Perception
The Law of Perception says that in the battle between products, perception is more important than reality.
People tend to think that the best product will win. However, as Ries and Trout say, "Marketing is not a battle of products, it's a battle of perceptions." Sometimes the best product does not win.
This concept seems unfair, but it's fundamental and we might as well get used to it. Ries and Trout go so far as to say that "Most marketing mistakes stem from the assumption that you're fighting a product battle rooted in reality. All the laws in this book are derived from the exact opposite point of view."
Subjectivity
The real issue here is that the words "better" and "best" are subjective terms. People have different requirements and preferences upon which they form very different opinions. There are very few absolutes.
Law #5: The Law of Focus
This is one of my favorite chapters. The Law of Focus says that "the most powerful concept in marketing is owning a word in the prospect's mind." This law challenges us to boil our marketing message down to just one idea. If you can teach your market segment to associate your product with a single idea, perhaps even a single word, you can be a market leader.
Count Your Words
When entrepreneurs ask me for advice, I usually ask them to explain their product in 25 words or less.
Crafting Your Message
It's okay to have more information handy. Datasheets and whitepapers are great. Once people get interested, they will probably want all the detail you can provide. But for first impressions, you should tell the world only one thing about your product. You can use 2-3 words as long as you are not trying to sneak in extra ideas. Usually, you need only one word. But which word to pick?
• Pick a reasonably common word out of the dictionary. It should be a word that everybody understands. Don't invent a new word that nobody has ever heard.
• Don't try to associate your product with a word in the customer's mind if that word is already associated with your competitor.
• Don't pick the word "cheap" or any of its synonyms. Very few businesses can thrive while making low price their primary message. Wal-Mart is one of those businesses. Your small ISV is not.
• Don't pick the word "quality" unless you can prove that you care about quality a lot more than everybody else. As Ries and Trout say, "everybody stands for quality. As a result, nobody does."
Law #6: The Law of Exclusivity
The Law of Exclusivity says that "Two companies cannot own the same word in the prospect's mind."
It's time to face the facts. Some of these laws seem to have more punch than others. For example, I find the Law of Focus to be a concept with a lot of impact. It's very counter-intuitive, and yet very powerful.
Other laws here seem almost, well ... obvious. These other laws don't seem to deserve their pages quite as much as the great ones like the Law of Focus. I speculate that for some reason, Ries and Trout wanted exactly 22, so they kept adding laws until they got the right number. Too bad. If they had stopped at 21 they could have used some sort of a blackjack theme.
The Law of Exclusivity would have been a candidate for removal. It is fairly intuitive to me that two companies cannot have the same market position.
Still, let's not dismiss this law too quickly. After all, obviousness is not always a reason to ignore a topic. It is obvious that we should all eat better and exercise more, but we don't.
Similarly, marketers do routinely find a way to violate this law. They do a Smart Thing by following the Law of Focus and choosing one key benefit around which they build their product message. Then do a Dumb Thing by choosing the same benefit as somebody else. Almost invariably, they end up beating their head against the wall in futility. It is obvious that we should not try to beat somebody else at their own game. And yet, we often try.
Law #7: The Law of the Ladder
The Law of the Ladder acknowledges that in most market categories, there is actually more than one available slot in the mind of the customer.
The Hierarchy of Categories
In our discussion of the previous laws, we have emphasized the importance being different, the important of finding a subcategory in which you can be #1. However, when you pop the stack frame up one level to the enclosing category, we find that you are ranked on a ladder among the other players.
Three Tidbits about Ladders
1. The mind of the customer can only remember a few rungs. Research indicates a maximum of about seven, and a more practical limit of about two or three. How many brands of toothpaste can you name? How many brands of cola? How many brands of automobiles? Some categories have more rungs than others.
2. The best strategy for you depends entirely on your ranking on the ladder. The right strategy for the #1 player is probably wrong for the #2 player, and vice versa. The authors cite the Avis rent-a-car example, where they gained tremendous results from simply acknowledging their status as #2. This example has been very much-discussed in the ten years since the book was
written, but it still rings with a bell of wisdom. Avis showed a lot of self-awareness. Customers respected that.
3. There is a typical mapping of market share onto ladder position. The authors claim that each rung on the ladder has twice the market share of the rung below it. These guidelines are obviously very rough, and all kinds of exceptions do apply. Still, when we see a ladder where the market share ratios are not even close to this rule of thumb, we are motivated to ask why.
Law #8: The Law of Duality
The Law of Duality says that "in the long run, every market becomes a two-horse race."
Young markets have many rungs on the ladder. They are highly fragmented. Gradually, as the market matures, players disappear and the market settles on exactly two primary players. Examples of this phenomenon are everywhere:
• Coke and Pepsi
• Canon and Nikon
• Nike and Reebok
• GM and Ford
• McDonalds and Burger King
It often takes a long time for things to settle down, but in the end, markets usually give people what they want, which is two strong choices. Buyers don't like choosing between ten or twenty players. It's too stressful.
A big reason for this effect is that most people don't make their own buying decisions. People tend to buy what somebody else is buying. Pragmatists buy something only after they see the Early Adopters buying it. Conservatives buy it only after the Pragmatists are buying it. Laggards buy it only when the peer pressure and ridicule is so severe that they look like absurd for not buying it. Market share begets market share, and the rich get richer.
Even as the market gets very mature, it will continue to tolerate the presence of more than two players. However, the top two will have the lion's share of the market. All other players are essentially in niche segments.
Once a market reaches this state, it will generally not allow #1 and #2 to move around. For example, the market will never allow the top two players to change positions. Burger King will never be #1.
Furthermore, the market will not allow #1 to get too far ahead. Just as markets hate having a ten-horse race, they also hate having a one-horse race. When #1 gets too far ahead of #2, the market will usually correct the problem.
Law #9: The Law of the Opposite
The Law of the Opposite says that the #2 player should generally do the opposite of what the #1 player is doing.
If you are #2 in your category, you want to be #1, right?
Wrong. You can't choose to be #1, but you can certainly choose to be #3 or #4. The worst thing you can do is to try and beat the #1 player at his own game. Instead, realize that not everyone in the market wants to play that game. Offer those people an alternative.
Law #10: The Law of Division
The Law of Division observes that over time, a category tends to divide and become two or more categories.
A new market category starts out very broad. For example, in the beginning of the automobile industry, the only category was "cars". Over time, categories break up into smaller and more specialized subcategories. Today, there are quite a few brands of car, each catering to a specialized niche.
This effect is an obvious and natural consequence of other laws. Each company will try to setup a new category in which it can be #1. Not all of these categories will end up becoming real, but some will.
This law is a good place to remind ourselves that Ries and Trout primarily consult for companies like Pepsi, McDonalds and General Motors, not for small ISVs. There is a bit of an impedance mismatch between their world and ours. Those companies do business in mature industries selling mass market consumer products. Those products are easily interchangeable. I can switch from Pepsi to Coke with no major costs associated with the transition and deployment. Categories split into subcategories over very slight differences in consumer preference. Brand building is absolutely critical. General Motors understands that some car buyers want to feel like they are buying something sporty, whereas others want to feel like they are buying something conservative. So, they sell basically the same car under the Pontiac and the Buick name, managing each of these brands very carefully. The underlying engineering is identical, but the message of these two brands is very different.
Law #11: The Law of Perspective
The Law of Perspective says that "marketing effects take place over an extended period of time", but the basic point of this chapter is that some marketing actions are negative in the long-term even though they seem positive in the short-term.
Short-Term Highs
The authors include an interesting discussion of sales and coupons in the retailing industry. They argue that these devices are like drugs – they produce a short-term high, but the only way to maintain the high is to keep going. Eventually, you have to "keep those coupons rolling out not to increase sales but to keep sales from falling off if you stop." I assume this is the reason that our local furniture store is always running a sale – they are afraid of going through withdrawal.
Law #12: The Law of Line Extension
The Law of Line Extension says that it is a mistake to take the name of one product and apply it to another. Companies do this often, but it basically never works. We think that the power of the brand will help sell the new product. Instead, the brand itself is tarnished. People start to get confused about what the brand means. Quite often it is necessary to kill the second product before it causes too much damage to the first one.
Law #13: The Law of Sacrifice
The Law of Sacrifice says that "you have to give up something in order to get something".
The cool thing about this law is that it's not automatically attractive. It makes you think.
The Law of Focus isn't like that. When people hear about the Law of Focus, the first reaction is to say, "Yes, yes, focus is good." People seem to forget that the word "focus" implies a decision about what you are not going to do. With the word "sacrifice", that particular implication is much clearer.
But in some sense, these two laws are the same idea with different expressions. There is power in focus, but to get there, we have to make tough decisions about what things we will not do.
Saying "No"
The Law of Sacrifice is all about saying "no" to opportunities. This skill is incredibly difficult to learn. I suspect that the only way to learn to say "no" is to experience the pain of saying "yes" too often.
Law #14: The Law of Attributes
The Law of Attributes says that "for every attribute, there is an opposite, effective attribute."
Fussy
There was quite an uproar from fans after the recent season finale for Star Trek Enterprise18. You see, the episode contained a serious error. One of the characters states that the year is 2152 when in fact, as every Trek fan knows, the current episodes take place in the year 2154.
I've heard several people say that this mistake ruined the whole episode.
I concede the mistake is silly, but come’ on -- the whole episode? Perhaps we need a bit of perspective. That date wasn't a central point of the show. It's a detail, and aside from the fact that it was incorrect, it doesn't matter.
Incidentally, guys, this is the reason why your girlfriend or wife doesn't like going to see movies with you. Nobody wants to watch a film with some anal-retentive dork who is ready and waiting to discard the entire film because the producers made a minor mistake in science or technology. Try to just enjoy the movie, or at the very least, shut your pie hole so that she can. (This tidbit of relationship advice is provided at no extra charge. ☺)
Marketing Books
Geeks like us are lousy at marketing for the same reason that nobody wants to see movies with us. Marketing books are written for big-picture thinkers. They contain broad sweeping generalizations which are only true most of the time. Guys like Ries and Trout don't feel the need for a lot of precision.
So a geek sits down to read this book. Somehow he manages to cope with the word "immutable" in the title, which is obviously a gross exaggeration. Somehow he manages to smile at the examples, which are now ten years out of date, especially the one about Lotus Notes. Somehow he manages to overlook most of the little imprecisions in the first 13 chapters.
Law #15: The Law of Candor
The Law of Candor says that "when you admit a negative, the prospect will give you a positive". As usual, the examples from the book are mainstream consumer products:
• Listerine did it when they acknowledged that their mouthwash tastes terrible.
• Avis did it when they acknowledged that they are #2.
• Volkswagen did it when they acknowledged that the "bug" is ugly.
Each of these companies gained a lot when they applied the Law of Candor. People respect the courage and honesty it takes to admit that not everything is perfect.
Being Genuine
The Law of Candor is another one which is simply not intuitive. Most marcomm people are terrified of it. Conventional wisdom says that absolutely everything in your marketing message must be positive. In fact, a primary function of the marcomm team is to sanitize all public statements ensuring that the company never says anything it does not want to say.
Credibility
Ignoring the Law of Candor can kill your credibility. Whatever your negative issue is, everybody already knows about it anyway. If you don't talk about it, then it will become "the elephant in the room". When you issue yet another sanitized press release, your customers eagerly read it, hoping to see some evidence that you have any self-awareness at all. They ask themselves, "Don't these people realize how awful their mouthwash tastes?"
As Ries and Trout say in the chapter, "Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best."
Law #16: The Law of Singularity
The Law of Singularity says that "in each situation only one move will produce substantial results".
We literalists will once again have to endure the authors' word choice. The above statement is almost certainly not true. ☺
And yet, Ries and Trout make two important points in this chapter, which I will paraphrase as follows:
• One bold stroke is much better than a bunch of small marketing efforts.
• Marketing is too important to be left to the marketing people.
Law #17: The Law of Unpredictability
The Law of Unpredictability says, "Unless you write your competitors' plans, you can't predict the future."
But that doesn't seem to be the main point of this chapter. What the authors are really saying is that long-range planning doesn't work. We can try to observe and follow trends. We can make big-picture predictions. But if we try to make detailed plans over the long term, our competitors will surprise us and those plans will end up getting scrapped.
Law #18: The Law of Success
The Law of Success says that "success often leads to arrogance, and arrogance to failure".
The basic point of this chapter is a warning to not let yourself get too far from your customers. Truly small ISVs may not need to worry too much about this, but the admonition is valuable nonetheless.
As companies grow, the CEO tends to get busy with other stuff. She doesn't spend much time "in the trenches" anymore. He goes to a lot of meetings and spends a lot of time working on the big picture. In the process, she loses touch with the customer.
Despite what the chapter says, I think this effect may or may not be rooted in arrogance. The root problem might be simpler and more innocent. Maybe the CEO simply let himself get too busy. It seems quite possible to become detached from the basic activities of the company without growing a big ego.
But either way, forgetting the customer is a fatal disease. Fortunately, this disease is also preventable and treatable. Don't let it happen to you. Even as your company grows, stay involved in the basic stuff, at least a little bit.
Law #19: The Law of Failure
The Law of Failure says that "failure is to be expected and accepted".
Nothing interesting ever happens unless we take risks. The authors encourage an atmosphere of risk-taking with a good discussion of why individuals tend to be afraid of taking risks.
The chapter also includes another important point: When you realize you've made a mistake, cut your losses.
It's just so hard to admit a mistake. Denial is a wonderful thing.
Law #20: The Law of Hype
The Law of Hype talks about the fact that "history is filled with marketing failures that were successful in the press".
This chapter talks primarily about new things which claim to make existing things obsolete. Such products tend to become darlings in the press, because the notion of breakthrough innovation is very attractive to readers. People love to read stories about things like the personal helicopter which was supposed to make cars obsolete several decades ago. So the press jumps on the bandwagon, stories get written, newspapers get sold, and people get excited. And they still drive their cars to work everyday.
What I love about this chapter is that it was written in the early nineties, before the Web, and it still rings amazingly true. The Web was supposed to obsolete almost everything. Today we can see that the Web has changed life in many ways, but most of the previous structures and systems are still with us.
Law #21: The Law of Acceleration
The Law of Acceleration says that "successful programs are not built on fads, they're built on trends".
Drawing their examples from mainstream consumer products, the authors observe the tendency for companies to overestimate short-term fads. When something new becomes big and hot, companies jump on the bandwagon, spending a lot of money doing so. They restructure. They invest in new equipment. They work hard to make themselves prepared to deliver products for the fad.
And then the fad stops, and the company is left with problems:
• "What am I going to do with all the olive green refrigerators and orange carpeting I bought just before the fashion changed?"
• "Oh, great -- I can produce fifty gazillion Cabbage Patch dolls per day. That'll come in handy now that nobody wants them anymore."
• "Darn it! I just bought a warehouse of fruit-colored translucent plastic, and now I find that the next iMac looks like a white desk lamp."
Fads accelerate very quickly, but often don't last long. Trends have a much slower acceleration but eventually run fast and steady. Chasing fads is expensive, so it becomes very
Law #22: The Law of Resources
The Law of Resources says that "without adequate funding, an idea won't get off the ground". The gist of the chapter is that marketing is very expensive and you have to be prepared to spend big bucks on advertising if you want to be successful, so you're going to need a lot of funding from your VC.
Preaching these ideas to small ISVs is like showing up at your local Alcoholics Anonymous meeting and telling everyone that a little red wine every day helps the heart.
Wednesday, 9 September 2009
Uncertainty Avoidance
Uncertainty avoidance deals with a society’s tolerance for uncertainty and ambiguity; it ultimately refers to man’s search for Truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising, and different from usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; ‘there can only be one Truth and we have it’.
For example, in Germany there is a reasonable high uncertainty avoidance (65) compared to countries as Singapore (8) and neighbouring country Denmark (23). Germans are not to keen on uncertainty, by planning everything carefully they try to avoid the uncertainty. In Germany there is a society that relies on rules, laws and regulations. Germany wants to reduce its risks to the minimum and proceed with changes step by step.
The United States scores a 46 compared to the 65 of the German culture. Uncertainty avoidance in the US is relatively low, which can clearly be viewed through the national cultures.
http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/uncertainty-avoidance-index/
see also:
managerial grid model
The managerial grid model (1964) is a behavioralleadership model developed by Robert Blake andJane Mouton. This model originally identified five different leadership styles based on the concern for people and the concern for production. The optimal leadership style in this model is based on Theory Y.
The grid theory has continued to evolve and develop. Robert Blake updated it with (?) in (?) (Daft, 2008). The theory was updated with two additional leadership styles and with a new element, resilience. In 1999, the grid managerial seminar began using a new text, The Power to Change.
Monday, 23 March 2009
Why Men Don’t Listen and Women Can’t Read Maps
Why Men Don’t Listen and Women Can’t Read Maps
Barbara Pease, Allan Pease | ISBN: 1566491568 | Publisher: Welcome Rain | 2000-06- 254 | English | PDF | 2.7 MB
The premises behind Why Men Don’t Listen and Women Can’t Read Maps is that all too often, these differences get in the way of fulfilling relationships and that understanding our basic urges can lead to greater self-awareness and improved relations between the sexes. The Peases spent three years researching their book–traveling the globe, talking to experts, and studying the cutting-edge research of ethnologists, psychologists, biologists, and neuroscientists–yet their work does not read a bit like “hard science.” In fact, the authors go to considerable lengths to point out that their book is intended to be funny, interesting, and easy to read; in short, this is a book whose primary purpose is to talk about “average men and women, that is, how most men and women behave most of the time, in most situations, and for most of the past.”
Malcolm Gladwell - Blink (2005)
Blink: The Power of Thinking Without Thinking is a 2005 book by Malcolm Gladwell, in which he explores the power of the trained mind to make split second decisions.
The author describes the main subject of his book as "thin-slicing": our ability to gauge what is really important from a very narrow period of experience. In other words, spontaneous decisions are often as good as—or even better than—carefully planned and considered ones. Gladwell draws on examples from science, advertising, sales, medicine, and popular music to reinforce his ideas. Gladwell also uses many examples of regular people's experiences with "thin-slicing."
Gladwell explains how an expert's ability to "thin slice" can be corrupted by their likes and dislikes, prejudices and stereotypes (even unconscious ones), and how they can be overloaded by too much information. Gladwell also tells us about our instinctive ability to mind read, which is how we can get to know what emotions a person is feeling just by looking at his or her face. He informs us that with experience, we can become masters at the game of "thin slicing".
Gladwell maintains that we "blink" when we think without thinking. We do that by "thin-slicing," using limited information to come to our conclusion. In what Gladwell contends is an age of information overload, he finds that experts often make better decisions with snap judgments than they do with volumes of analysis.
Gladwell addresses the questions about thin-slicing and gives a wide range of examples of blinking from the worlds of experts in gambling, speed dating, tennis, military war games, the movies, malpractice suits, popular music, and predicting divorce. Interspersed are accounts of scientific studies that partially, but never completely, explain the largely unconscious phenomenon that we have all experienced at one time or another in our lives.
Gladwell also mentions that sometimes having too much information can interfere with the accuracy of a judgment, or a doctor's diagnosis. The challenge is to identify and focus on only the most significant information. The other information could be just noise and can confuse the decision maker. Collecting more and more information, in most cases, just reinforces our judgment but does not help to make it more accurate. He explains that better judgments can be executed from simplicity and frugality of information, rather than the more common belief that greater information about a patient is proportional to an improved diagnosis.
http://depositfiles.com/files/5sggu8rsdOver Justification Effect (Greene)
The overjustification effect occurs when an external incentive such as money or prizes decreases a person's intrinsic motivation to perform a task. According to self-perception theory, people pay more attention to the incentive, and less attention to the enjoyment and satisfaction that they receive from performing the activity. The overall effect is a shift in motivation to extrinsic factors and the undermining of pre-existing intrinsic motivation.
In one of the earliest demonstrations of this effect, researchers promised a group of 3-5 year old children that they would receive a "good player" ribbon for drawing with felt-tipped pens. A second group of children played with the pens and received an unexpected reward (the same ribbon), and a third group was not given a reward. All of the children played with the pens, a typically enjoyable activity for preschoolers. Later, when observed in a free-play setting, the children who received a reward that had been promised to them played significantly less with the felt-tipped pens. The researchers concluded that expected rewards undermine intrinsic motivation in previously enjoyable activitiesLepper, M. R., Greene, D., & Nisbett, R. E. (1973). Undermining children's intrinsic interest with extrinsic reward: A test of the "overjustification" hypothesis. Journal of Personality and Social Psychology, 28, 129-137.
http://depositfiles.com/files/jw6ranvt4
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