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economics

Meritocracy is Almost as Real as this Unicorn

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Meritocracy is Almost as Real as this Unicorn

While living and working in San Francisco many years back, I learned a new term: Meritocracy.

It sounded like such a lovely thing - the idea that people are celebrated, rewarded and advanced by the merits of their talent and hard work. If I worked hard and produced great stuff, I would benefit the same as anyone else who did the same. And those who weren't getting ahead? They just weren't working hard or smart enough. And the poor saps that lack the talent and skills they need to rise to the top? They would still be recognized for their input.

But as time went on, I noticed that reality didn't quite match this romantic idea of meritocracy. Only a certain type of person seemed to get ahead again and again. And there were plenty of talented, hard-working people who were left behind.

But I still wanted to believe that the system worked. It just sounded so amazing! So I had some theories about the discrepancy between idea and reality:

  1. Those same types of people who kept getting ahead in a meritocracy had more time and resources to hone their skills and contribute. For example, a young single guy from a wealthy family could afford to work more on an open source project than a middle-aged woman with kids.
  2. There was some unchecked bias that was leaking over into this merit-based system. All we needed to do was check our bias at the door.

I was so naive. When I brought up the first theory, I would get the, "So, what are you proposing as the solution? That we reward people differently? That goes against the idea of a meritocratic system!" When I protested that we ARE treating people different by expecting 80 hour work weeks, thereby eliminating anyone with any sort of responsibilities, they accused me of being one of those socialist types that discouraged hard work.

The second theory was harder to prove - the very idea that meritocratic types had bias was offensive and any example I brought up was defensible - but lucky for me, a study came out a few years back (Dec. 2010) that looked into bias and meritocracy and guess what it found?

Not only is bias a factor that renders meritocratic rewards decidedly UN-meritocratic, it actually exacerbates bias!

Let me repeat: BIAS IS EXACERBATED IN A MERITOCRACY!

In three separate and controlled studies with 445 participants (pre-screened to have deep managerial experience), they found that time and time again, the participants rewarded male employees significantly higher than their female colleagues (in the same job, with the same supervisor, with the same performance evaluations). And even more interesting was that, when they controlled for a non-meritocratic condition, the female employees were rewarded slightly higher.

Wow, right? So those that strive for this utopic, egalitarian ideal of meritocracy are actually MORE biased. And why was this?

"Uhlmann and Cohen’s (2007) argument that  a sense of personal objectivity moderates the extent to which individuals act on their beliefs, including stereotypical beliefs, would also predict the paradox of meritocracy in employment settings. They showed that when people feel objective, they become more confident that their beliefs are valid, and thus more likely to act on them." p.27 (emphasis mine)

In other words, the more you believe in the soundness of the system, the more likely you are to leave your bias unchecked. It reminds me of when people say, "no offense but," then follow it with something incredibly offensive, believing their initial statement removes the speaker from responsibility for the statement.

The only way that meritocracy could actually work is in a world where:

  1. we are all starting from the same position of advantage. Time, money, ability, education, etc. [bonus: read The Invisible Knapsack of White Privilege]
  2. we had checks and balances on our biases.

In other words, a world in which unicorns and leprechauns exist. In other words, not in this world in 2013.

So let's please stop fooling ourselves that those that get celebrated, rewarded and advanced are the most deserving. We should know better by now.

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The Disintermediation Era

It must suck to be the middle-man today. Everywhere they turn, it's bad news. Democratization this. Circumventing that. There was a point not that long ago that the middle-man provided great value. The record companies brought music to the masses. The media created channels for the news to get through. The Blockbusters of the world housed thousands of movies for people to rent. Telephone companies laid the lines for us to connect with one another around the world.

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With Great Power Comes Great Responsibility

greatpower So as any of you who visited HPC yesterday know, it was attacked by a malware hosting site. I'm not sure how they do it, but somehow they get in and implant iframe code to serve up malicious software for unsuspecting visitors. I think it may have been a security hole in WordPress combined with my own laziness around passwords (now fixed). Either way, it wasn't a good day and I spent many hours cleaning out this bad code and trying to figure out what the heck was going on. Many hours were also spent by Ivan Storck (of Sustainable Websites - my host), William Dodson (from OBX Designworks) and my friend Mathieu (developer in Montreal) in helping me through this. By the time we got all of the malware attack cleaned out, Google had blacklisted my site (which led to a series of blacklisting by all the sites using Google's indexing API). Yuck.

I wasn't attacked personally. This happens randomly all of the time. Somehow there is money to be made in ruining the internet. However, I find it very odd to think that one would wreck the very thing that provides them with a steady stream of income. I compared the action to the self-replicating Smith on the Matrix. (spoiler alert) Imagine if Smith would have won - he would have taken the machine down and everyone would have died. There would be no point in him existing anymore.

Which brings me to my point: where did we go wrong in the world to encourage the Smiths? The malware hosts? The scammers, spammers, frauds, grifters, etc? Those that would pollute the very environment they need to exist in? These people are obviously gifted with the ability to problem solve, code, think up elaborate schemes and strategize. If they used this talent for good and not for evil, imagine how AWESOME the world would be!

It's a tragedy of the commons, where selfish thinkers abuse the common space for their own gain. Of course, this thinking - if truly strategic - assumes that not all will follow the selfish path. The tragedy occurs when everyone thinks selfishly and the commons is ruined and unusable, leaving nothing for anyone to exploit any longer.

If instead human beings thought truly strategically - and this is the basis to my favourite book in the universe The Origins of Virtue: Human Instincts and the Evolution of Cooperation by Matt Ridley - and contributed to the commons, we would all thrive! But this selfish, short-term thinking hacking away of small pieces of the pie happens and we all suffer...including the hackers themselves eventually.

This happens because - as Ridley says in The Origins of Virtue - the system is set up to encourage such selfish, short term thinking. Narrow view competition, multiple times removed culpability and a focus on short-term rewards have encouraged this. For instance, there are corporate structures, with their quarterly reporting (short-term view) and lack of social responsibility (the responsibility is with the shareholders who are far removed from the decision making as well as the consequences of that decision making). Copyright and patents also contribute to the attitude. I would argue that almost everything about surviving in modern society has to do with removing ourselves from responsibility and giving us the individual task to survive one day at a time (but that is a different post).

Thus, we encourage a great deal of tragedy in the commons themselves, costing billions of dollars in security, fraud protection, insurance and damages every year to those who try to live their lives on the up and up.

So, how do we stop this insanity? Like Peter Parker in the picture - whose tragedy was focusing on his own selfish needs resulting in the loss of his uncle - we aren't recognizing the long term consequences of our actions. I really think this needs to be forefront in our discussions around this stuff. We also need a good dialogue and understanding of the butterfly effect - how one action leads to effecting so many others. It may seem small and insignificant to cheat here and there, but it adds up and changes the system we are part of. And finally, and I know this type of thinking isn't popular amongst Americans, we have to imagine how we can contribute to the commons to mutually benefit (instead of one or two people benefiting, leading to the suffering of others). It's not socialism, it's smarter thinking. Just think of the costs we will save on our taxes alone when we don't have to pay for the inefficiencies of a system full of people trying to cheat it.

We do have great power here. These tools can be used for great things. Solving hunger, poverty, creating peace, boosting economies (in countries where most of the spammer/scammer stuff comes out of), finding cures for bad diseases and all of the other social pitfalls we've created by thinking too short term for our world. So...where do we start?

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Why Whuffie is Difficult to Grok for Large Companies

The advantage I've had while working for and with startups for most of my career is that the 'underdog' or 'the new kid on the block' gets a great deal of support and love from people all around. Somewhere deeply ingrained in the folklore of capitalism is the rags to riches story that almost everyone can celebrate. But when the riches come about...the story ends. And the loving nature of those around the company can suddenly turn to suspicion. We love to hate the successful. We help lift them to their success, then resent them for it. I might have found that odd at some point, but have grown to understand it mostly through reading social anthropologists such as Matt Ridley, Tor Norretranders and Lewis Hyde, all of whom talk about the gift economy and its historical role in keeping those in power...in power. All the way back to Aristotle, the parable has been that those who grow all too powerful in any given economy need to be taken down a notch so that the rest of the community can thrive. In the analogy of the Tall Poppy, those that overgrow and overshadow cut off the sun from the rest. In order for the community to thrive, they must be cut down.

Thus, in the way that the tall poppies are to be cut down to size, we have a tendency to do the same for corporations or individuals that have gotten too large in our culture. Which brings me to why it is difficult to grok whuffie if you are a large company.

So why? With good cause, big companies are a little more paranoid than their scrappy, startup counterparts. Their poppies have grown above the others and there seem to be natural and politcal mechanisms put into place to cut them down to size. I was disgusted, but not surprised to hear of the number of people lurking around the corner, waiting for a successful firm to make the smallest mistake so that they can raise class action suits for ridiculous things like sending out an email without unsubscribe information or raising forward-looking information that doesn't happen. These opportunists aren't called out because what they do is shrouded in the purview of watching out for the public good.

Okay, so I get it. As I tweeted earlier tonight, I'm saddened that we create our own rat traps in success. Once we're 'there' we can no longer do the stuff that made us successful in the 1st place. All of this was brought up by Josh Kopelman's great post on the success of Paypal. And that success came from the fact that they had nothing to lose as compared to their rival eBay. As he wrote, "I believe that eBay understood everything that was needed to build a great payments product. They were just unable to do so given the risks involved." Paypal could break the rules all they wanted because, well, they could get away with it as a small, scrappy startup. eBay, having established itself as a big success, could not. You just can't behave that way when you get to be a certain size.

Or can you?

As I watched Tony Hsieh of Zappos.com on the SXSW stage last week, it gave me a great deal of hope. Zappos.com isn't small potatoes. They just broke over $1billion in revenue, have thousands of employees (I can't find the exact number, but I think there are 1400 in corporate and another 1400 in their Kentucky warehouse). Yet with these big numbers, Tony is committed to not being the type of company that is risk-averse. He encourages employees to tweet, listing their tweets out front and center. He's committed to service and bringing happiness and he isn't afraid to let any of his employees speak to any reporter, customer or blogger at any time. He trusts that he's instilled a positive enough culture at Zappos that he needn't censor or concern himself with the unique spin each employee has on the company. He encourages it.

Tony's former company became the kind of company he didn't want to work for. The one that couldn't grok whuffie. The one that wasn't fun or a little weird and wasn't focused on delivering WOW through customer service. So, from the beginning, he made sure he built Zappos to be the company that was. And guess what? There don't seem to be as many people lurking in the shadows wanting to take Zappos down a notch...even though it's poppy is soaring above the rest. I think it's because the tall poppy that is Zappos is deeply committed in giving back to the community that got it there. It's part of the gift economy. Zappos has the freedom to embrace the chaos because it didn't take out any other poppies on the way up.

So, although as companies get bigger, they tend to lose the zeal and scrappiness that got them there in the first place, it doesn't have to be the case. Can big companies who haven't taken the care that Zappos has build that culture retrospectively? I'd love to see - or be part of - that case study. Big companies CAN grok whuffie. It'll just take a little TLC.

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Why the Economy Needs Some CBT

Cognitive Behavioral Therapy Model
CBT Model Explained by My Counselling Site

I used to have this affliction where I would make mountains out of molehills - whether the news was good or bad, I would hyperbolize and dream it into Never Never Land. For instance, someone could approach me after I gave a talk and say, "That was interesting," in that "I question the usefulness of your information" kind of way and I would go from the receipt of potentially banal or at the very most slightly negative feedback to "OMG, I should never speak in public again. I have no idea what I'm talking about" in zero to 30 seconds. Then I'd stay in that awful spiral for hours...sometimes even days.

Similarly, I could take good news and start to spiral upwards. Even the smallest possibility meant that it was a done deal and I could start celebrating. Of course the crash of things falling through threw me in an extreme downward spiral. It was either WAY up or WAY down for me.

Until I found Cognitive Behavioral Therapy. Unlike many other forms of therapy, CBT is incredibly goal-oriented and focused. And there are simple exercises that the recipient performs over and over again to re-wire the way she reacts to events. Over a series of lessons and subsequent practice, I learnt to stop the spiral before it happened. Now I can get truly negative feedback and stop to assess whether I can learn from it and how to respond in a way that isn't defensive or futile. A person approaching me after a talk can even say, "You sucked. I learnt nothing," and I will either engage them in conversation (ie. "You learnt nothing because you already know the material or you learnt nothing because you disagree?") or take the comment in stride with overall feedback (ie. Overall feedback was positive, but this one person didn't like it - can't please everyone). It's been an amazing transformation for me and given me the ability to stop and think realistically and strategically about news, feedback and events.

As I'm hearing the news about thousands and thousands of layoffs in multiple industries everyday due to the economic crisis/downturn/recession/depression/etc we are in, I think: "Wow, this economy sure could use a little CBT. We appear to be in a spiral." And we are. And the spiral that happens on one level affects the next and, like a really powerful hurricane, seems to pick up speed as it moves down the line. What is happening appears to be the best example of what Reagan called 'Trickle Down Economics' I've ever seen...or a really far-reaching version of Systems Theory. Nothing operates in a silo.

I put a call out on Twitter that stated:

"If I were the President of the US, I would put a stop 2 layoffs and tell these companies 2 get more creative w/ their cost cutting."

Many people replied that this was a socialist attitude, but I really don't think so. We got into this mess because of poor short-term thinking and the lack of early government intervention. Nobody wanted to intervene because things were booming - what a buzzkill - unfortunately, they were all warned that this would happen. The truth is...because of corporate structures (nobody is truly accountable when the bill is passed to the shareholders), short-term thinking (really pushed by the corporate structures that hold CEO's accountable on a short-term quarterly basis, so quick win solutions win over long term thinking) and a lack of understanding of systems theory (which is really the basis of community - what we do affects others and vice versa), we are destined to dig ourselves into a deeper hole. The level we are at now and the speed at which we are still spiraling suggests that the Great Depression levels of unemployment and economic crisis aren't ridiculous predictions. I tell you. I'm scared. And something needs to be done to stop the spiral.

There are all sorts of ways to cut costs in organizations. Certainly, employees are expensive. But there are serious downsides to mass layoffs:

  • Reduces 'surviving' employee morale and productivity
  • Customer retention falls off more when their contacts leave, especially after a layoff (and the general feeling of the trustworthiness of a brand drops, so Word of Mouth is bad), losing more sales
  • There are significant indirect costs to laying off people (especially large numbers), which end up wiping out the short term savings.

There is a great article on BNet that links to several studies to back this up.

So, yes, layoffs are a great way to cut costs in the short term, but the long term costs of layoffs are not worth it...not to mention the toll that mass layoffs take on the overall economy when they are all too common. The community around a major company that lays off, say, 5,000 employees suffers too. The local restaurants see a drop in patrons. Theatres, ballet companies, art galleries and other entertainment starts to struggle to make ends meet. Local business, car sales, real estate and just about everyone else who makes a living in the local economy suffers. I was talking to the bar manager from Nova the other day and she told me, "People are still drinking, but tips are way down." Still, she told me, "I'd rather my customers can pay their rent and tip me 5% rather than 15% and get thrown out on the street." I wish everyone had her "we're in it together" attitude.

So, then, what is the alternative? What would the economy learn from CBT? How do we stop the spiral and get more realistic and strategic about our reactions?

Here are some suggestions:

  • Ask your workforce to take a small paycut instead of having to layoff a percentage. FedEx did it. They had the CEO take a 20% paycut, senior staff take a 7.5-10% paycut and the rest of the staff take a 5% paycut. This probably saved them more in the long run and they get to continue to provide good customer service so that sales don't suffer more.
  • Give each department a challenge to cut costs drastically without cutting talent, quality or customer service. Make it a contest where the department who cuts the most creatively (without compromising the quality or service) gets an extra holiday week once things get sunnier. Alternatively, you could say, "C'mon...you decide how to cut costs so we can all get through this." and you'd have employees getting creative.
  • Work with your customers to increase sales while helping them balance their budgets. They are feeling the economic squeeze, too. Maybe you drop some prices to return customers as a thanks for their loyalty. Create a referral program and give discount codes for people to offer to their friends and neighbors. This may work better with the ballet company, but you could offer 'Economic Downturn Wednesdays" where you'd sell really inexpensive tickets so ppl could still afford to go out. You'd probably introduce many new people to your business.

There are probably dozens of great management articles out there on multiple ways to cut costs during tough times. What I do know is that we can't keep dumping unemployed people into the abyss like this. Not without some serious ripple effects. We have to stop spiraling and start thinking longterm. And we are all in it together. All of us. If there ever was time for community, it's now. It's time for each of us to stop thinking about ourselves and start thinking about how we can work together to get through this time. It's time to stop the spiral.

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ZOMG...I'm an Employee!

Intuit Values Install (Intuit Values Etchings)

I've been hinting for the last couple of weeks that I have a couple of big announcements to make. This is the first of them.

Starting next week, I begin my job with Intuit as the marketing lead on their Partner Platform. I'm pretty freakin excited about this move for multiple reasons. Here they are:

  1. I'm a data geek and when I first sat down with Alex Chriss, the Business Leader of the Intuit Partner Platform, about this opportunity, he gave me a scrumptious look into just how much amazing data Intuit has that can really help small and mid-size businesses rawk it.
  2. Intuit, itself, needs people from 'my world' (i.e. grassroots, startups, etc.) to help lead it into the next phase. I like feeling needed, but I also saw that I can make a difference in this big, successful, solid company. As soon as the opportunity was presented to me, I started thinking about all of the awesome things I could do by connecting Intuit, the web community, small businesses and even other big, successful, solid companies together to really empower those small to mid-size businesses. My first order of business is to resist using acronyms as much as possible. ;)
  3. I, personally, could use a little schoolin' on corporate America. Though I've worked for larger organizations before, I haven't worked for a company quite the size of Intuit. I'm used to the fly by the seat of my pants, embrace the chaos kind of process that makes things happen quickly and is subject to much risk. This, of course, needs to be balanced with more structure when you scale up to a larger organization and one is accountable to a large workforce and client base. I'm about to find out how to balance that. I'm pretty excited to see where I can push boundaries and where boundaries can push me.
  4. I need to sink my teeth into a really kickass project. And THIS is a kickass project. Intuit has long been the trusted name in business accounting software and has made some tentative moves to the online space. However, the Partner Platform is a huge leap in the direction that the business world is going. When you add up the trusted name of Intuit with the excitement and innovative possibilities of the Partner Platform, you get a big, fat WOWSA of an opportunity to make a real difference.
  5. 2009 is going to be the year when small businesses will bloom. These layoffs really stink, but the more people I talk to who are getting laid off, the more people I'm hearing are making a go of starting their own ventures. They'll need some good support. Enter the Intuit Partner Platform. I want to provide the tools everyone needs to succeed with their new ventures.
  6. The team on this project is killer! I get to work with one of my favorite people in the world, Alex Barnett, who is - I think - one of the sharpest nails in the toolbox when it comes to developer network stuff. I'm really excited about working with him. We riff really well off one another and he's a very down-to-earth person himself...which I heart. I've also grown quite fond of Alex Chriss despite the fact he talks in acronyms. Alex C and I have much in common: Canadian, startup background, brilliant, amazing ideas and willing to fight for what we believe in. A good guy to have in my corner. I also got to briefly meet the delightful Bill Lucchini, who is the Vice President & General Manager, Platform-as-a-Service Group, who knows his sushi, is also super smart and is the right kind of person to lead this effort. I have yet to meet the rest of the team, but if they are anything akin to those I've already met, I'm pumped!

So, there you go. The stubborn indie who revels in her odd work hours (12pm-12am), movement making abilities (it's a full time job in itself!) and addiction to Twitter (another full time job) is going corporate. And, dammit, I'm excited about it. :)

Here is the announcement from Intuit.

(stay tuned for announcement #2!)

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Tragedy of the Commons: Lane Hartwell vs. Richter Scales

In Ridley's book, The Origins of Virtue: Human Instincts and the Evolution of Cooperation, he explains that Garrett Hardin's famous Tragedy of the Commons example which reads:

"Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all." p. 232

is a mis-reading of history. In actuality:

"...an English medieval common was a complex spider's web of jealously guarded property rights...these were rights to graze, cut wood, dig turf, turn out pigs to eat acorns, catch fish, or take gravel, sand or stone. And these rights were privately owned by individuals...commons came in effect to be owned jointly by those who possessed these rights in common, rights that were extinguished, converted or trampled in the process known as enclosure. But commons were never free-for-alls." p. 232

As you see, the tragedy was availed in a democratic manner. People obeyed their limits on the common property because, well, they didn't want it to be taken away. If a farmer abused his/her privileges, by grazing more sheep or taking more gravel than alloted, s/he would lose them altogether. In this way, the commons persisted and all 'won'. If left to a free-for-all, the commons would befall the tragedy Garrett Hardin surmises and become unusable. Nobody, not even the abuser, would 'win'.

The photography, artwork, literature and other works under the Creative Commons license today requires a similar balance. Artists put their work into the commons and other artists use and credit that work to the benefit of all parties. The original artist benefits by getting his/her work spread further (only realized through accreditation), the Creative Commons benefits because this positive flow encourages more artists to submit their work, and the mashup artist benefits because s/he has a good breadth of works to pull for inspiration and materials.

Now, if the accreditation is broken, it ceases to benefit the original artists, who have a bad experience with Creative Commons and won't put future works into the commons for usage, so, ultimately the mashup artists suffer as well because they have less material to pull from for their own creative works.

Lane Hartwell has been suffering a tragedy of the commons for quite sometime now. Although her photographs aren't under the Creative Commons license (they are marked All Rights Reserved, which means someone actually needs to contact her if they want to use one of her shots, which is simple to do on Flickr or on her blog) she has offered a great deal of amazing photography, documenting a very exciting time in history. In my opinion, her photographs are essential, just as Scott Beale's are (he has also been repeatedly frustrated by non-credited use of his work), and the great tragedy that has come of the unfortunate tipping point incident of the unauthorized/uncredited use of Lane's work in a video by the group Richter Scales.

Now, of course, the Richter Scale's use of the photo wasn't extraneous, but since the video was viewed hundreds of thousands of times (prior to takedown), there was a missed opportunity there for the many photographers whose photos were used to make this group famous. In their post entitled, Credit and "Here Comes Another Bubble, the author explains:

We did make an effort to credit those people we actively worked with on the video, as well as Billy Joel, which we listed in the comments on YouTube and on our blog. But, given the large number of sources we used, the task of assigning credit for each source seemed impractical.

He goes on to mention Lane Hartwell...without linking to her photos or her website. As one commenter said, "Basically if I am reading your post correct, what I hear you saying is "Mea Culpa, but we're lazy."" In actuality, the time one can take to list the photo credits is a fraction of the time it would take to go out and duplicate the work of those artists to make the same presentation.

But that is where we will head if we continue having a cavalier attitude (I like how Lane put it) towards the use of the work of others. The more we abuse, the more we will lose.

I learnt this the hard way a couple of years back. Flickr was my wonderland, filled with gorgeous photos. I would search groups and tags until I found the cornucopia of fabulous shots to make my presentations pop and people go ooooh and aaaaah. Now, to be clear, I understood the importance of attribution even back then and gave full credit, but I did not respect the wishes of the photographers. I used photos not marked with CC licensing (many were marked as Lane's are, with All Rights Reserved) and didn't clear my usage with the photographers.

I, of course, was busted and learnt a very valuable lesson in respect for artist's work. One photographer emailed me and told me about a site that I have grown to absolutely love and adore, iStockPhoto, which has made a world of difference in my presentations as I know I have explicit rights (paid for affordably - so I am supporting the artist directly) to use the photographs in my presentations. My presentations look hot, the photographers get paid and iStockPhoto grows so more people can benefit. I still use some Flickr photos (CC Non-Commercial/Commercial Attribution Share-Alike licenses only), but I always ALWAYS ALWAYS credit the photographers, providing a link to the original photo (also a requirement from Flickr, btw). If someone was to ask me to remove a photo, I would without question. It is not my work to argue.

Whether or not Lane invoking the DMCA is legal or not isn't really what matters here and making it about 'hurt feelings' belittles what is really at stake here. What is at stake here is that the continuance of individual abuse of the privileges of the works put into the commons will lead to fewer of those works being put into the commons.

If we want the 'free the content' world to work - and that would be ideal for all - we have to learn to respect the work and the producers of that work. Putting our productions online shouldn't mean that we give up all claims and possibility of profiting from it and we should discourage those who abuse this. Just like in the English medieval commons, we need to understand that:

Common property and open-access free-for-alls are very different things. (p.233)

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How to Make a Gabillion Dollars with Community Marketing...or something to that effect

http://s3.amazonaws.com/slideshare/ssplayer.swf?id=109311&doc=making-a-gabillion-dollars-with-community-marketingor-something-like-that1172 From my presentation at e.day 2007...presentation and transcript below. The Video.

Slide 1. So, I’m here today to talk to you about a subject that is near and dear to my heart: “How to Make a Gabillion Dollars with Community Marketing...or something to that effect” And, truly, it’s pretty simple...there really are... Slide 2. ...only 3 ways to make a gabillion dollars online. The first? Slide 3. ...duh...we all know it is... Slide 4. ...the obvious...PORN! Sex! Hubba hubba! ...which is accompanied by its first cousin... Slide 5. ...spam...because you know you will need... Slide 6. ...a few of these in order to... Slide 7. ...get alot like this and the next thing you know you can... Slide 8. ...roll your own... Slide 9. The second way to make that gabillion dollars, of course, is to... Slide 10. ...get extremely bloody lucky. I’ve known more than a few instances where people were in the... Slide 11. right place at the Slide 12. right time and ended up... Slide 13. ...striking it rich. These are those situations where we love to go back in time and examine exactly what it was that...munity have to do with making a gabillion dollars? Slide 25. a whole lot. Because ... Slide 26. ...customers have a whole lot of choice, and if you haven’t noticed, it’s getting easier and easier for them to... Slide 27. ...tune you out. In fact, doesn’t it seem that the harder you try to get a message across Slide 28. the more likely it is that you are ignored? You may be producing the world’s coolest widget (and widget means something entirely different in this crowd), which, much like this sign is good for your customers, yet...they completely ignore it! Slide 29. Do you wanna know why? Do you? Even if you don’t I’m going to tell you (I have the stage)...It’s because... Slide 30. they don’t care what you have to say, sell or even give away. No they don’t. People don’t listen to ads, salespeople or important messages anymore. People don’t listen to YOU because they are too busy... Slide 31. listening to their friends! The people they TRUST! The people they care about! Slide 32. this is not news. The majority of our buying decisions have always been through word of mouth. This hasn’t changed. What HAS changed is that, thanks to the proliferation of online communities... Slide 33. ...our networks have gotten bigger. Which means that we have more options for getting recommendations. This is a screenshot of my ‘Friend Wheel’ from Facebook. As of this day, I have over 900 friends on Facebook. A portion of them I only actually know online and some of them, of course, have more influence over decisions I make than others. But what is important to note here is that even the most distant “friend” on one of these networks has more influence over my buying decisions than any ad or salesperson I encounter. Slide 34. It isn’t just me or the digerati or the “next generation”, there is significant online growth in all segments of the market. Slide 35. Just to put this all into perspective for you, this year Forrester Research found that only 13% of consumers say they buy products because of their ads. Contrast that to 60% of small business owners in North America that say they use peer recommendations to make their buying decisions and over 70% of 18-35 year olds who report the same for their media purchases. With every new social network, the penetration deepens. People are getting savvier and savvier. Their bullshit compass is well-tuned. They don’t want a pretty picture, they want to have the FULL picture. Slide 36. Now, as a word of caution...some companies have gotten smart to this phenomenon and started to join these social networks themselves...not as people, but as companies and characters and as sales. Which leads to a reaction something like this... Slide 37. Companies like Pay-Per-Post, who cater to clients who want to tap into Social Networks and the power of blogging, think they will influence others through word of mouth, but they have it dead wrong. Slide 38. They think that social capital Slide 39. can easily be converted into currency, but it doesn’t work this way. The reason people are on these networks is to... Slide 40. ...connect first. Slide 41. Connections over time equal trust. And trust is the basis of Social Capital - otherwise known as Credibility. Slide 42. When a blogger is known to taken money to review a product, the trust between him and his readers is eroded and he loses credibility. By trying to pay for social capital, the company extinguished it. Slide 43. Without social capital... Slide 44. You lose this. And when you don’t have this, any recommendation you make is seen as... Slide 45. ...spam and met with... Slide 46. ...this. So, if we were to take this equation and reverse engineer it, your first order of business in standing any chance of becoming an... Slide 47. Influencer - that is... Slide 48. ...someone with a whole lot of social capital - is to Slide 49. ...make connections and establish credibility. Slide 50. It’s kind of dead simple, if you ask me. It’s all about... Slide 51. building relationships. Of course, if this is not your cup of tea, you always have... Slide 52. ER....um...and... Slide 53. ...lady luck! Now, I think we’ve established the power of this community/relationship thingy and why it is important. But if you have any doubts: Slide 54. You may think you’re all that, but in actuality Slide 55. Your customers are tuning you out, because they would... Slide 56. ...much rather listen to recommendations from their friends, who they can trust have their best interests at heart than they would you any day. Now, if you think you are clever and try to pose as a friend, you will be greeted... Slide 57. ...with this. Really, the only way to avoid this type of reaction is to... Slide 58. ...make those connections and establish... Slide 59. ...trust... which leads me straight into the HOW of one goes about making those... Slide 60. ...connections...because Slide 61. ...this didn’t happen overnight. Getting there is simple, really. There are really only... Slide 62. 5 sure-fire steps to transform yourself from a ... Slide 63. spammer Slide 64. into a Slide 65. connector. And if you really rock... Slide 66. you could even become an influencer yourself...which will lead to... Slide 67. customer loyalty...and... Slide 68. increased word of mouth, and, of course ultimately... Slide 69. could even make you a gabillion dollars. So, here they are... Slide 70. the 5 sure-fire steps to transform yourself from a ... Slide 71. spammer Slide 72. into a Slide 73. connector. Number one... Slide 74. turn that bullhorn inwards. Slide 75. This is how marketing has looked in the past. Which, of course, led to alot of... Slide 76. ...this and/or alot of... Slide 77. ...this. So, what is the main characteristic of... Slide 78. ...this that turn people off? Well, most of all, the reason people are turned off is because this kind of communication is... Slide 79. ...impersonal. What worked for the more disconnected world we lived in, pre-internet is no longer so effective. Why? Because people don’t want to be... Slide 80. ...treated like a number, they want to be treated... Slide 81. ...like special snowflakes. As INDIVIDUALS. As human beings. This is precisely why they are getting their information from... Slide 82. ...their friends, who know and care about who they are. People they are CONNECTED TO. Slide 83. Truly, beyond anything else, people desire these connections. New studies on Social Intelligence shows scientific evidence that we are fundamentally wired to connect. People WANT to connect, even through their purchasing decisions, so if you are still... Slide 84. ...doing this...you are missing out on... Slide 85. ...this...so in order to... Slide 86. ...connect, you need to... Slide 87. ...take this and turn it... Slide 88. ...into this...a beacon for constant feedback. This, of course, sounds easier than it actually is. You need to focus on individuals while at the same time understanding the needs of the wider community. I call this process of focusing on relationships, feedback and listening to customers... Slide 89. ...INreach. For me, the OUTreach part of marketing always takes a back seat to INreach because it has much more impact. You’ve heard the saying, “It’s easier to upsell an existing customer than to win a new one” - well there IS A REASON FOR THAT. Instead of always looking for new customers, we need to concentrate on involving our current customers in the growth and innovation of our products... Slide 90. But it isn’t just listening to direct feedback that you need to do, you also need to do the deeper legwork like reading blogposts, watching user behaviour, and the best way to start to really understand the needs of your customer is to... Slide 91. ...become part of the community you serve, which is the #2 sure-fire process. Becoming part of the community you serve means you have to... Slide 92. Get out of the boardroom and... Slide 93. into the community. Of course! Slide 94. ...but what does that MEAN? So, you are out of the boardroom... Slide 95. ...so now what? What do you do now? Where is this elusive community? Well, the first thing you need to figure out is... Slide 96. ...who IS that community you serve... Slide 97. Think of the diversity of the people in this world. Everyone has different needs, passions, interests, desires. Trying to serve each and every one of their interests would take a great deal of time and money you probably don’t have. You need to narrow it down. The simplest way to figure who your core customer is...is to figure out... Slide 98. ...what problem are you solving? And... Slide 99. ...who it is that you are solving it for? Then it gets easier to figure out where Slide 100. ...those customers are gathering, what interests them and what other networks they are using... Slide 101. ...and join them! Not as a poser. Not as a salesperson. Not as a trial. Not as a skeptic. But figure out what is useful and great. Fall in love with these tools and learn from them. I’ve seen WAY too many people wanting to build online communities that have never even been part of them. That’s going to work out as smoothly as... Slide 102. ...this dude trying to fit in at your teenager’s skateboard club. If you really want to learn the secret sauce behind the success of Facebook or Twitter or YouTube, you have to use it until you love it...period. Of course, once you start to really understand the needs of your customers, you’ll ask yourself... Slide 103. ...why would they give a damn? Why would they want to use your product? With seemingly infinite choice in the marketplace, globalism, commoditization, and constant overstimulation and inundation with branding messages, if you aren’t offering anything remarkable, you are going to... Slide 104. ...get alot of this. Boring! Lame! So, what you need to do is... Slide 105. ...differentiate. And that differentiation could look something like... Slide 106. ...Seth Godin’s <a href="Purple Cow">Purple Cow. We’ve seen cows. Lots of them. Cows aren’t that remarkable. Now, if we were to see a PURPLE cow, THAT would be different. We would stop the car, get out, look closer, take photos, call the news stations, etc. That purple cow would be REMARKABLE. In business, it’s not enough to be interesting...YOU NEED TO BE REMARKABLE? Because if you are remarkable... Slide 107. ...some people may just give a damn. However, remarkable is not the only way to differentiate yourself. In fact, the simplest and the best way to differentiate your business is Slide 108. ...to care about your customers. That’s right. Since the bar is set really low... Slide 109. ...your best marketing tool is awesome customer service. It really is the killer app. Which leads us into the third sure-fire step to success... Slide 110. ...delight and create amazing experiences. When I say ‘amazing’, I mean that it isn’t enough to make stuff that works well, if you want to incite passion and connectedness from people, you need to create sites that bring up feelings like... Slide 111. ...gratitude and thankfulness.... Slide 112. ...utter and total joy... Slide 113. ...loads of love...and of course... Slide 114. ...tons and tons of laughter. Because in order to make connections, it is very important that you... Slide 115. ...design your customer experiences for maximum happiness. If you do this, you WILL... Slide 116. ...connect. If you work to touch people in some way, shape or form, those connections will happen. And it doesn’t have to be complicated. In fact, the least complicated designs for happiness are often the most profound. An example of this is... Slide 117. ...ma.gnolia’s “give thanks” feature. This is a very simple, subtle feature. When you find someone has bookmarked something you find rather useful or you are rather delighted with, you just click on ‘give thanks’ link and you can send a ‘thank you’ to the person to show your appreciation. Several people have commented on how much more warm and friendly this has made the community and when it was implemented, it created a kind of buzz that we didn’t expect, attracting all sorts of influencers to the service. Which leads me to the next sure-fire step to take towards success... Slide 118. embrace the chaos. So... Slide 119. ...what about Planning? Business plans? Models? Strategy? Brand management? Messaging? Well, if there is anything I’ve learnt from working in social media is that when you try to control the future... Slide 120. ...it fights back...and in entirely surprising ways. There are so many hours wasted on coming up with all of the reasons something won’t work or on predicting customer needs that we forget to concentrate on the here and now of customer satisfaction. People and projects are messy. The future is uncertain. It’s far better to... Slide 121. ...lay the foundation for the type of community you want and then prepare to discover... Slide 122. ...the Everyday Magic along the way. Everyday Magic is what happens when you open your eyes to the unpredictable way that the world works around you. Unplanned events can lead to powerful endings. It’s one thing to say embrace the chaos, but here are a few tips on HOW to embrace it... Slide 123. 1. Stop moving and look around you until you see everything clearly. Ever heard, “Stop and smell the roses?” Whatever you are stopping and smelling or observing, do it. And do it often. 2. Transfer the knowledge. Be transparent and open...ask for help. Secrecy and brand management may have worked pre-internet, but your customers are happy to know you are human. The more you reach out, the more great ideas they will give you. 3. Every time you feel anxiety, acknowledge it. Embracing the chaos is a scary thing. Acknowledging you are scared will bring forward all sorts of help you didn’t know you had. 4. Define your own measure of success. Forget what the books tell you. Forget what even I tell you. Success is whatever makes you happy. Think long and hard about what your passion is and then go for it. 5. Get outside of your personal circle. Some of the biggest innovations have come from taking what is happening in other industries and adapting them to your own. Take a look at the iPhone's interface...I'm guessing that someone borrowed alot of wisdom from the gaming interfaces in Las Vegas. 6. Realize that everything is out of your control anyway. It’s a totally freeing feeling. 7. Have patience. These things may take alot of time. Embracing the chaos is a simple concept that will leave you feeling... Slide 124. ...like this about your future and will let you spend more time concentrating on your customer’s satisfaction than on working out hypothetical business issues. Slide 125. Well, we are finally here at the final sure-fire step to getting closer to Slide 126. ...this. To having the kind of network of people around you and your business that the feedback flows and the word of mouth travels fast. But first, has anyone ever heard of a concept called... Slide 127. Whuffie? Whuffie is a concept invented by Cory Doctorow of BoingBoing fame. In his futuristic Science Fiction novel, Down and Out in the Magic Kingdom, Cory uses whuffie to describe the capital of the future...which looks just like we talked about earlier... Slide 128. ...Social Capital. But in the future, it is the only capital and has replaced currency altogether. A person's Whuffie is a general measurement of his or her overall reputation, and Whuffie is lost and gained according to a person's favorable or unfavorable actions. Now, sure this is science fiction, but... Slide 129. ...I don’t think that “fictional” future is too far off. I’ve been witnessing it all around me. In every online community I’ve been part of, Social Capital is a core component of... Slide 130. ...connections and, in many cases is more valuable than money. Now, as the basis of these social networks is... Slide 131. ...trust, something must determine how I value the differing opinions of my... Slide 132. ...900+ “friends”. A friend can’t pay me to make a certain choice. Financial transactions don’t mean much of anything in the world of Social Capital. They work antithetically to it. These transactional ties are part of the market economy whereas Social Capital is part of... Slide 133. ...the gift economy. In the gift economy... Slide 134. the more you give away, the more Social Capital you gain. Saving Social Capital for a rainy day doesn’t work. Slide 135. It’s only valuable as it circulates throughout the community. And as it circulates throughout the community, it inherently... Slide 136. ...connects us. So, as I recognize that we still very much reside in a market economy and you still have to make a living, the question is.. Slide 137. ...what can you give away that won’t leave you broke? Which leads me to the most important sure-fire lesson of all... Slide 138. ...find your higher purpose. Finding your higher purpose as a company helps you figure out on what level you can start connecting to your customers and to potential customers. Slide 139. This group of friends have a shared bond: it may be their passions, history or even a common enemy. How do you relate to your customers in these ways? Is what your company does born out of a passion? Serving a need? Fighting a good fight? A company born out of a way to make you money doesn’t give you much of a goal to relate to your customer’s with. Slide 140. But maybe your company just exists to make money...then what? Is there no Social Capital for you? Nah...it’s actually pretty simple... Slide 141. ...you just have to find a way to give back to the community. And, as is built into the nature of the gift economy... Slide 142. ...the more you give back, the more that comes around to reward you and your company...beyond it just being a nice thing to do, it is part of the growing popularity of something called... Slide 143. ...“Nerd Values” that reads... Slide 144. ...”doing well by doing good”. Which doesn’t mean you have to be a non-profit... Slide 145. ...it just means that you end up doing the right thing by your customers (and the wider community) along the way, even as you grow your business. Craig Newmark is the founder of Craigslist, a really basic site that has crippled the classified industry in most major cities in North America by offering free listings. Craig has done well by doing good. You are seeing this everywhere now. ... Slide 146. All of these companies and organizations either build tools to help individuals go further or they spend loads of time giving back to the community they serve or BOTH. The more that give, the better everyone does in this ecosystem. And you know what else? Slide 147. Some of them make a gabillion dollars, too! I don’t think it is any fluke that those that listen to their customers, are part of the community they serve, design for happiness, embrace the chaos and have a higher purpose are those that are really excelling right now. So, that brings us back to... Slide 148. ...what can you give away that won’t leave you broke? How exactly do you give back to the community? What are considered... Slide 149. ...gifts in this gift economy?Well, here are just a few to get you started... Slide 150. #1...Democratize something! What is currently inaccessible? Elitist? What are ways in which you can give everyday people the power to speak up? The ability to create? Slide 151. Blogger did this for journalism. Slide 152. YouTube opened up a whole new marketplace for entertainment. Slide 153. Flickr made it easier for everyone to be a published photographer. What can you make accessible? Give people the tools to go further...Number two is... Slide 154. #2...Open it up! Open source it, foster a developer community! If you have created something good, people will make things you wouldn’t even dream of! Slide 155. Wordpress could compete with a crowded market of blogging tools to become one of the most successful because it started Open Source. By having the code open, legions of volunteers helped make Wordpress an awesome product. A word of caution, though. If you are going to open it, you need to support it. It needs to be a core product and not an afterthought. For those of you squeamish or unable to open your code, why not get some deep APIs in there? Become a platform for others to grow their own sites... Then of course is... Slide 156. #3...Building Bridges! What we don’t need are anymore closed networks. Your customers are feeling a pain point here in a big way. They don’t want to fill out another profile, they want their current networks to work together. So, how can you build bridges? Slide 157. For one, you can work on great standards projects like OpenID Slide 158. and Microformats. For another, you can look at how you can work.. Slide 159. ...WITH your competitors instead of against them for the betterment of customer experience. Bridge building is not only good whuffie, but it is good for the customer who WILL reward you for putting their interests first...Number four is my favourite... Slide 160. ...Spread love! I talked earlier about designing for happiness, but what about turning this up a notch? What about designing for generosity? For helping people connect at a deep level? Reaching out to people who don’t get the love all of the time? Designing a site that encourages people to do nice stuff for one another? Slide 161. Jane McGonigal’s alternate reality games, such as Cruel to Be Kind, are a great example of this. She’s created a mixture of online/offline action where, you are sent directives: give a stranger flowers, kill another player with compliments, etc. People react extremely positively and have reported personal transformations. She has a rabidly loving community. And the fifth example of how you can give back to the community you serve is to... Slide 162. #5...Value something bigger than you. Take something that has lost value in the shuffle: like the environment, leisure time, health, families, or slow food and dedicate your time to it. You’ll not only build that valuable Social Capital, but you will meet loads of people who share your passions and will probably be willing to help spread the word about your business. So, to sum up just a few of the ways to give back to the community... Slide 163. You can democratize, Open up, Bridge, Give Love and/or Value something bigger than you. Heck, do as many of these things as possible and your... Slide 164. ...social capital will grow immensely over time...Alright...we’re almost out of time. I know I’ve covered ALOT of ground here...and I don’t know if there will be any time for questions, but to recap...here are... Slide 165. The 5 sure-fire steps to transform yourself from a ... Slide 166. spammer Slide 167. into a Slide 168. connector... Slide 169. 1. Turn that bullhorn inwards. Stop talking and start listening! 2. Become part of the community you serve. Figure out who it is you are serving. It isn’t everyone. Then get out of your office and into the community. 3. Create amazing experiences for your customers. Design for maximum connectedness, happiness and joy. Empower and elate. 4. Embrace the chaos. Don’t overplan. Learn to be more agile and recognize everyday magic. 5. Find your higher purpose. Social Capital only gains in value as you give it away. Figure out how you are going to give back to the community and do it...often. Because the surest way to get... Slide 170. ...to this is... Slide 171. ...is through this...and if you still don't believe me... Slide 172. ...I wish you the best of luck... Slide 173. ...making this. Slide 174. thank you

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