Economics of innovation

Gary Vaynerchuk on Social Media

2012-02-26T04:51:00.004-08:00

Gary Vaynerchuk explodes off the screen on YouTube the Wine Guy.

I specialise in social media for brands and business, but Gary Vaynerchuk is the master of social media for individual entrepreneurs. He started as a baseball card collector and grew a multi million dollar wine business.

Gary's presentation in 2008 at Web Expo 2.0 was a turning point in the discussion of social media in business. There are lots of other people who can give you advice about 'how' to use social media, but no one but Gary can tell you so forcefully 'why' to use social media.

If you have a colleague, boss or client that is resisting social media then send them a link to this video. In his presentation, Gary is like a human social media grenade. I've always believed in the power of presentations and story telling. Gary reminds us that a presentation can be compelling just because of the sheer force of personality that comes through on stage.

His new stuff, since the presentation in 2008 is even more applicable to a business context. He's recently been working with big-boy brands like Pepsi and Blue Mountain Coffee. You can find some of his more up to date presentations on YouTube. But the 2008 Web 2.0 Expo is still the benchmark. I drew out a couple of key points from the presentation:

One to one marketing
Both Gary and I believe that your grandma knows more about how to succeed at social media than you do. This is because she grew up when business was done one-on-one. The corner store, the local shoemaker, the neighbourhood bakery. Your grandma knew them individually by name.

Word of mouth
She also knew about word-of-mouth. If she liked something she told people, and they listened. Gary shares my belief in the coming humanisation of business. As I wrote about in relation to Icebreaker, you can have word-of-mouth around a product. If you want to drive word of mouth around an entrepreneurial idea then you also need to be part of that word of mouth yourself.

Hustle
Most people treat social media like a singles pick-up bar. Trying to close on the first date. They forget that social media relationships are like real-world relationships. They take time and effort to nurture. Gary calls this effort 'hustle'. It's a slightly New Yorker phrase for the way that small actions and effort every day create momentum. Rappers, salespeople and bar tenders all have to hustle in New York to survive. Hustle is the millions of tiny pushes that you need to make to be successful. It's the blog posts you write, the conferences you attend, the industry events you speak at, and the YouTube videos you make.

The book
Gary put the best of his presentations and advice into a short book called Crush It! (2009, Harper Studio). There is also an excellent Audiobook version on iTunes. His experience in the wine trade, building relationships and creating content really shines through.

Crush It! by Gary Vaynerchuk is all about how to bring your personality and passion into social media.

The book 'Crush It!' should really have been called 'Kill It!' or 'Hustle!', because that's what Gary wants you to do. Gary's book isn't quite as good as he in person, but it's a practical set of steps that help you put his energy into action in your life. It's a nice talisman on the bookshelf to remind you to 'kick ass' every time you log on to Twitter, YouTube or your blog.

Gary also has a new book out called the Thank You Economy. It's a more grown up approach than Crush It'! But I'd start with Crush It! because it's a classic.

Find a niche you love, start a blog today. Keep your day job, but hustle, hustle hard.

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The business of merino

2012-02-14T17:07:00.001-08:00

What can you learn about word of mouth from a sheep?

In 1994 a high country farmer pushed a wooly shearing singlet across the table to a young Jeremy Moon. From a distance it looked like any other underlayer, but when you picked it up, it didn't itch. Jeremy suddenly saw potential. By getting the best out of the product, selling hard, hustling and getting the best out of various advisors, Jeremy has managed to grow a multi-million dollar lifestyle and sportswear brand.

13 years later I had just finished watching Jane Fulton Suri from Ideo at the Better by Design conference and a marketing manager from ANZ handed me a corporate sponsored Icebreaker top. It was a small piece of conference swag that changed my life. I had heard of Icebreaker before but had dismissed it as just another itchy woolen jumper. How wrong was I?

Now another 5 years later and I've worn that Superfine 190 top hundreds of times. It's still smart enough for a job interview and casual enough to wear to the pub. I'm a fan because merino has almost nothing in common with normal wool and instead has no itch, feels super soft, is tough in the washing machine and smells fresh even on epic plane flights, long runs or multi-day adventures. I own dozens of pieces of merino and have forced the fabric onto family, in-laws and even occasionally strangers.

Luckily, a new wave of merino manufacturers have joined the movement including Rapha, Outlier, Finsterre, Chocolate Fish, Nau and SmartWool. Each of these companies have tackled the challenge of building word of mouth in slightly different ways. There is a lot that you can learn about niche marketing and social media from these companies.

Designing the Icebreaker brand
A lot has been written about Icebreaker's success including a precocious 17 year old, Better by Design case studies and a Harvard Business School case study. Their concept stores seem to generate good buzz whenever they arrive in town, their Facebook page is well loved and bloggers rave about their products. Icebreaker is one of New Zealand's global branding success stories.

As well as my near constant wearing of the product, I know the back story behind the brand fairly well because I've worked with lots of the people that were involved in creating it.

In the early days, the Icebreaker team called on a wide range of design talent including Brian R Richards, Designworks, Billy Sushi, Origin Design, DNA and even the elusive Chris Bleakley and John Plimmer. I believe that it's the mark of a strong team to keep their centre of gravity in-house while drawing on the best of the agencies that they worked with.

Through all of this, Icebreaker seem to have prided themselves on building a multi-million dollar brand with word-of mouth alone and no above-the-line advertising. Design has been a key part of achieving this and the catalogues have become something of a collectors item over the years.

Icebreaker catalogue covers from 1994 to 2011

Recently there has been some mixed work from a variety of agencies. Including some aggressive virals from Y&R, website work from SiteSmart, store design from Viz Works and PR by Mango Communications. Even so, there is still a lot to learn about social media and word of mouth from Icebreaker and its peers.

The product is the marketing
The best word of mouth is built on robust product stories. Outlier are targeting urban cyclists, they focus unwaveringly on the robustness of the product. For these niche companies 'the product is the marketing'. People smarter than me have examined why the product is so important to building a loyal following. To build buzz, your product has to 'just work'. Finisterre built from a core of cold weather surfers but now lets the product speak for itself across a range of sports. Like Outlier they have used credibility in one niche to quietly attract other niches.

Finisterre have gradually built outwards from their core surfing community

Get fans talking to each other
Once you have the fans then it's all about getting them to communicate with each other in an environment that you have created. This is the softest sell ever. All you do is play host. Let the guests at your party talk about how good the hors d'oeuvre are. Road cycling brand Rapha have created an iPhone app called Rendezvous that lets their customers find each other and meet up for group cycle rides. The app ties fans to the brand but is focused on tying them to each other. This encourages the fans to bring their other friends along to join the club.

Rapha are all about connecting their tribe together

Lighting a fire
Smartwool used product sampling to get over the initial adoption hurdle. They actually went out on the ski slopes and challenged people to wear their merino socks for the day. Icebreaker arranged for Sir Peter Blake to wear an early prototype while sailing around the world. Some good sampling and activation are nice ways to build word of mouth, but they are dynamite for PR. You can leverage small events by building a human story that the media will pick up on. This is where niche word-of-mouth morphs back into mass consumer marketing. If your story is good enough that my mum will talk about it at her book club, then it's good enough for a blogger, TV show or Time Magazine.

Getting some merino for yourself
Researching this blog post reminded me how much I needed to get another couple of merino tops so I went hunting in London. The key to loving merino wool is finding a weave that works for you. Think of the difference between your favourite cotton t-shirt and your favorite cotton bath-towel. They are both cotton, but the weave is pretty different. For me, the drape of a good quality superfine merino wool is perfect. The fabric sits like a cotton t-shirt and is super comfy. What can you find in-store:

The big sports brands like Helly Hansen, Kathmandu and Rohan do solid merino kit but it's almost always a clingy underlayer weave. It's ok for travelling or as an underlayer, but it's not going to win any style awards.
The big high street brands like Uniqlo, Muji and Carhartt do great merino. It's usually a wide weave cardigan type knit that works as a smart mid-layer. But there is no way that it's going to survive the bash-them-against-themselves maelstrom inside your washing machine.
What you'll struggle to find is the high quality, super fine merino weave that drapes like silk or cotton. For that you need to hunt out the new wave manufacturers like Rapha, Outlier, Chocolate Fish and Icebreaker.

If you're just getting started then try out an Icebreaker Tech T. They're a classic and will work for you in almost any setting. If you're already a merino fan then do check out Rapha's merino long sleeve polo. It's a go anywhere smart look.

The Icebreaker Tech-T is a design classic and a travel wardrobe staple

The marketing lesson from a weekend of wandering Covent Garden, Soho and Hackney is that, "You've got to be in it to win it". Meaning that even with the best product if you're not in-store, in-stock and in-the-full-range-of-sizes then all your hard marketing work can die on the vine.

Next steps
There are three main things that you can learn from these merino companies:
1. Niche marketing is about outstanding products
2. Loyal fans are more powerful at spreading ideas than you'd expect
3. You can build a big brand, even if you start with a small tribe

Social media for lawyers

2012-02-07T14:25:00.000-08:00

Lawyers don't use social media well enough.

Have you ever wondered why it's so hard for lawyers to build an online reputation?

Everything is so public. There is a common fear about client confidentiality and not wanting to appear to be touting for business.

Even worse, lawyers don't want to mis-step and find their reputation in tatters. We all remember the "4 pound dry cleaning" associate from Baker and McKensie or Claire Swire from Norton Rose.

If you don't take charge and actively manage your identity online then you are just leaving your reputation to chance. I've seen too many friends who's online reputations don't live up to how good a lawyer they are. This makes me sad.

When you write an article for a trade publication, give a presentation or write a case summary for a yearly review then make the most of it. Post it on LinkedIn, Tweet it out and ask for a link to it from your firm's blog.

Social media is simply another channel for you to build your reputation as a lawyer. But technology moves so fast that if you don't participate then you may find that the account names you want are taken or like some of my closest friends, you find that:

The highest ranking item for your name is a student debating competition from ten years ago.
The front page of google is full of your (somewhat unimpressive) marathon times (these are often published publicly online without your permission).
Another person with your name ranks higher than you, and that they are a bit of an unsavory character.

Problems such as these mean that when a client wants to find you on Google, they can't.

As a lawyer your reputation is everything. Twenty years ago it was all about the old boys club. And maybe it still is, but the next generation of clients are going to want to be able to find you on LinkedIn, Twitter and most importantly on Google. The best advice I've ever read on social media for lawyers was written before social media even really existed. Trusted Advisor by Charles Green sets out a plan for building your reputation gradually by doing what you do best. Everything I've learnt about selling professional services builds on his work.

Social media strategy for lawyers
The core of your personal social media strategy within the umbrella of your law firm will be based on:

Who is the audience you want to reach?
What topics do you want to be known for?

There is some good practical advice from the General Counsels of Telsa Motors and Fuji in this video called How to earn my GC business.

LinkedIn profile
LinkedIn is the cornerstone of your professional social media presence. Many law firms are requiring their partners to sign up for LinkedIn, but that doesn't mean that people are doing it well. To succeed on LinkedIn, you should treat it the way you treat real life networking. You aren't there to tout for business, you're there to maintain relationships so that when someone does need advice they instantly think to turn to you. This means taking a softer approach to LinkedIn than most social media experts would advise. As a lawyer, you'll want to focus on:

Having a fully complete profile including major clients, practice areas and recent wins.
Include a link directly back to your official profile on your law firm's website.
Posting occasional updates about developments in new legislation, recent cases and industry news.
Keeping an eye on groups, discussions and news from your peers.

LinkedIn is the perfect place to gradually build a public reputation in your practise area without making a big deal of it.

Facebook
You'll find that Facebook is a powerful tool, but for most lawyers, it's best to keep your professional and personal lives a little separate. Some criminal barristers find that Facebook is great for building a following online. But unless you are a public defender, then Facebook isn't really a tool for business development for lawyers. You can still keep a part of your profile public so that the basic information does pop up in Google. Check your privacy settings to enable this.

Twitter
Twitter is like a very public and simplified version of Facebook. It's great for getting to the front of Google for your own name. If you do dive into Twitter then focus on short, simple updates and managing who you follow, rather than who follows you. You'll want to very gradually build a small following of loyal and connected solicitors in your niche. Simply chasing a large following is not really a good look.

Blog
Running your own blog can be overkill for the average attorney. You only need to post once a month to keep it alive, but even that is probably too much for most senior associates. Instead, make sure that you are writing an article or two for your firm's blog occasionally.

YouTube
Google loves video content. A new video on YouTube will often rank on the first page of Google search results almost immediately. Your firm probably has a couple of recruiting videos from 1997 that you used to use at campus careers fares. As naff as the videos probably are, they are alot better than being entirely absent from YouTube. Talk to your marketing department about uploading as much video content as possible onto YouTube. If you do present at a conference then try and get a copy of the video and upload it onto YouTube.

Next steps
There are some things that you can do immediately to improve your reputation online:

Update your LinkedIn profile with more information on awards, major transactions and press coverage. These are all already public so you have nothing to fear.
Google yourself and make a note of what you see on the first page of results. If you're happy then, diarise to re-check again in 6 months.
If you're not happy with what you see on Google then start creating content that will displace your current competition with things that you do want to see.
Set up an editorial calender with a plan for articles you will write, conferences you'll attend and events that you want to go to.
Keep your profiles and accounts up to date because Google (and your clients) love fresh content.

Zen at work

2012-01-31T08:38:00.000-08:00

Your approach to life impacts your approach to business.

Reading the Steve Jobs Biography has made me realise how important his spiritual and philosophical inquires were to his business.

I’ve made a point of keeping my beliefs to myself in my work, and on this blog. But Steve’s example is forcing me to confront the fact that the attitude you bring to life really does inform the attitude that you bring to business.

Recently, several bloggers that I respect such as Olivier Blanchard and Seth Godin have been sharing more about how their beliefs inform their work. Thus, I’d like to share my own brief explorations with Zen and some practical things that I’ve learnt.

Bring yourself to your work
There is a very real challenge of how to bring more of your personality to work. Especially when it comes to beliefs, ideas and philosophy. HR and sales training have traditionally been safe places to start a conversation about 'Why are we in business?' and 'What do we want to achieve?' but they are not enough. To bring more of your own beliefs about people, life and the universe into your work try the following:

Breathe more (like right now), breathing is a classic zen technique for centring. The resulting inner calm will infuse those around you.
Start your next meeting with a "What do we want to get out of this meeting?" conversation. It's easier to focus when you know why you are playing the game.
Sit on the rock. You need to figure out what kind of dent in the universe you want to make. Don't spend too much time on this. Just pick something that you want to see more of or less of in the world and commit to that. Then adjust as you go along.

Steve Jobs bought Zen practice into his business life.

The Zen of Steve Jobs
Steve Jobs was influenced by Zen teachers Shunryu Suzuki and Kobun Chino Otogawa. There are some really interesting critiques of Steve’s evolving interest in Zen during his career. There is even a comic book about Steve’s relationship with Kobun Chino Otogawa called The Zen of Steve Jobs. Steve bought Zen practise into his business and the confident minimalism of zen is obvious in the best of Apple’s products. Shunryu Suzuki was one of the first Zen masters to eschew the sudden flash of enlightenment in favour of pursuing every-day little improvements. Steve adopted one of Suzuki's phrases for the early Macintosh team; "The journey is the reward." This seems kind of obvious, but it's hard to keep it in mind when you are washing dishes or stuck in traffic.

My story
As a teenager, I came across The Monk who Sold his Ferrari and Zen and the Art of Motorcycle Maintenance but couldn’t really get Zen to work for me on a day-to-day basis. I largely forgot about it until a friend suggested that I do the Landmark Forum in 2011. I did the weekend course and it prompted me to take action on a range of things that I’d been putting off, from my photography, to the move to London and even my relationship with my family.

The Landmark Forum is a weekend training course run in large cities in the UK, USA, New Zealand and Australia (amongst others). Graduates include the author of Fight Club, the directors of The Matrix and creator of Chicken Soup for the Soul, Jack Canfield. Around one and a half million people have done the course.

Landmark changes the the format of Zen training by having a large group, for a long period of time, in a big room, with a presenter at the front. The result is that you get a more intense exposure to the content. It’s not everyone’s cup of tea, but I'm really pleased that I did it.

Landmark was influenced by the EST training created by Werner Erhard. Like Steve Jobs, Erhard was heavily influenced by Zen teacher Shunryu Suzuki. Erhard was also influenced by Dale Carnegie and Napoleon Hill. EST was created in the 1970s and about 500,000 people took the training including Cher, John Denver, Dr Phil, Douglas Engelbart (who invented the computer mouse) and Arianna Huffington (founder of the Huffington Post). It took Zen and added a bit of ruthless compassion. Meaning that, the trainer was pretty tough on people when needed. Like a football coach with the occasional bout of shouting at the players.

Finding your own guru
Recently I’ve been experimenting with how to keep all of this alive in day-to-day practice. I’ve come across a much older Zen thinker that provides really good food for thought. Jiddu Krishnamuti is the real thing. An Indian guru who quit and gave up being a guru saying; “Be your own guru.” Recordings of all of his talks are available online for free. His main point was not to over-think things.

Next steps
So, how to apply all this in your life? And in business?

Find a copy of Shunryu Suzuki’s Zen Mind, Beginner's Mind on iTunes. It’s a soft introduction to Zen but you’ll soon be finding the divinity in the mundane and being more mindful of the present moment.
Listen to as much J Krishnamurti as you can find on YouTube, Audiobooks or iTunes. If it’s too hard core for you then Deepak Chopra is a passable substitute.
Ask around your friends and find someone who has done the Landmark Forum. Talk to them about the weekend course and then sign up for it. It’s full on, but it will be one of the most powerful things you do in your life.

Confessions of an Angry Ad Man Part 2: Strategists

2012-01-17T13:18:00.000-08:00

This month we have another guest post from an advertising creative. He's a Cannes Lion winning copywriter who has worked for Saatchi & Saatchi, Y&R, TBWA, Leo Burnett and Ogilvy. As you'll surmise from the guest post, he's a very angry ad man. I don't agree with everything in the post but I've decided to publish it as a coherent whole.

Bloody Poodles: The angry ad man on planners and strategists

My first comment on planners is that I'm not qualified to comment on them, because I've never really seen the output of their work. But I'm also pretty sure that no one else has either, so I'm as well placed as anyone. The so-called outputs of planners are usually documents with important sounding titles like Manifesto, Brand Architecture or Tone of Voice Guidelines. I haven't seen nearly as many of these documents as you'd think given the recent cambrian explosion of strategists, planners, researchers and other non-creative and non-suit employees in most agencies.

When creatives do get to see the output of planners, it's usually at a client meeting. The nice venn diagrams are usually there to soften up the client so they'll accept my creative ideas more readily. It feels a bit like the ariel bombardment the night before I go 'over the top' and into battle. It's nice to have, but I'm not sure that once the sh*t hits the fan, that it made any difference. Although, I once presented my ideas after a Strategy Director had woven the client such a vivid story about their target customer I'm pretty sure that I could have presented an actual piece of crap and it would have been approved. So maybe strategy can be useful if done well.

Even at its best, planning feels like Suiting 2.0 to me. It's all the customer insights, creative brief writing and copy suggestions that I've always gotten from account managers. Only now I can get from them someone wearing a velvet jacket who secretly wishes that they worked for McKinsey. This new and improved Suit isn't always a bad thing, as the quality of client servicing in most agencies does leave room for a more intellectually robust approach. I've been pissed off at planners but I've never felt that they were fundamentally too dumb to understand the big idea. I can't say the same for account men.

The future of agency life is probably to learn better from each other. For example, I always look at a new brief by asking: Who are we targeting? What do we want to say to them and what do we want them to do as a result? Apparently, this is pretty much what a planner does, so maybe we could swap notes more often. Although, strategists seem to treat these type of questions as an end unto themselves, rather than a means to an end. As depressing as it sounds, the goal of advertising isn't always to sell more products. Sometimes it's just to get the work out the door. I'm thinking in particular of a set of banner ads that took up 3 months of my life and involved 40 sets of changes.

I do have to say that an arrogant planner is a truly dangerous thing. To me, the purpose of planning is to align the thinking of the client and the agency. If the planner is arrogant they might not be able to shift the thinking of the client and they certainly won't be able to shift thinking inside the agency. Arrogance almost defies the purpose of planning and strategy. If a strategist isn't a team player then I can spend half the project reverse engineering a target market so that I've got something to base my campaign on. I then get to the meeting and find that the planner has been off in their own world duplicating the effort to create exactly the same thing. This wastes my time and theirs.

Maybe planners really are the brains of the operation, but only at the start of a project. Like someone who farts in an elevator... By the time you see the impact of a planner's work, they're long gone. Peter Thomson, the usual author of this blog, once told me that being a strategist feels like using words to reach out inside a client's brain and do a particular type of micro-neurosurgery that then makes the client say in six month's time, when the work is presented, "Yes, that feels like us."

- This guest post is part two of a series by the Angry Ad Man. You can read part one at Confessions of an Angry Ad Man Part 1

Social media in the real world

2012-01-13T04:11:00.002-08:00

Touchscreens can bring social media out into the real world.

The cutting edge of social media is offline. Businesses have become increasingly lost and I see people forgetting two of the most important things about social media: 1. Digital experiences can still be part of the real world. 2. Social media doesn't have to be digital.

Digital outside
Social media is becoming more of a part of everyday experiences in the real world. My favourite examples range from RFID wristbands that let you "like" a ride on Facebook at an amusement park in Israel to touch screen tables that let you order Asian food a restaurant in London. My good friend Giapo Gelato has an HP touchscreen with a webcam that allows you to record a short video instore and upload it to YouTube. For a period in 2010 the Giapo Instore Channel had the most uploaded videos to YouTube of any user account in the world. This was because Giapo had made it so easy to walk up to the screen, press record and instantly be sending a message to the world about your favourite flavour of the day.

Experience design
The fact is that social media and digital communication were only ever channels for delivering an experience to another human being. It just so happened that the experience was travelling through a screen on your laptop or a phone. In the next 5 to 10 years time, that screen could be anywhere. Improvements in touch interaction, projection screens, and hardened glass mean that you are going to find digital interactions popping up in increasingly unexpected places. While these checkout kiosks, public street maps and projected artworks are an annoyance to an older generation, to Generation Z they will be normal and expected. There is a great YouTube video with the punch line “To a one year old, a magazine is an iPad that is broken.” If you don’t have an experiential and interactive element to your brand, now is the time to start.

Taking the media out of social media
So real life will become more and more digital. But I’m just as frustrated by the online social media gurus who forget that social media isn’t always digital. It's too easy to forget that your business has always had a community of people around it and that those people have always used content and media to lubricate their interactions.

Every media used to tell a human story can be social media

Five things that you might not think are social media
Cave paintings were used as backdrops and prompts for a village story-teller to recount tales of hunting and village life. Human beings have always used media to promote interactions. At our very core, we crave either individual recognition, or affinity with the group, or both. This deep seated polarity drives our behaviour on Facebook just as much as it drove beat poets in the 1950s in a smoky jazz club or Roman story-tellers in a village square. All creating, sharing and consuming media to bind people together and to mark out the tribe as separate from other groups.

1. TV show
Television has always been a social media, because of the conversations that it prompts. The water-cooler buzz in the office on the day after a big show is just as social as the live tweets about the latest X Factor. The water-cooler conversation is simply a little less efficient and asynchronous because the show is finished before the conversation starts. BBC comedian Stewart Lee has a piece (spotted by Nick Emmel) in which he comments [paraphrasing]: “Television used to be about participating in a massive shared experience, being a part of something. Now you can watch a show alone, downloaded in your own time, and be part of nothing.” Lee is noticing that TV was always a social media, just the channel for the conversation has changed.

2. Magazine
The most important business-to-business social media is a Post-it note stuck in a magazine. I’ve lost count of the newspaper clippings left on my desk and the Airline Inflight magazines with a page folded down and a note from my boss saying “New business potential...” Printed material is more social than we realise because it persists, it can be shared and it has a talismanic value when passed from one person to another.

4. Comic strip
The printed out Dilbert cartoon on the wall of your IT department is a form of social media. Once it's on the wall, the cartoon becomes a media that reinforces a particular message to the sender and communicates it to an audience. Those naff signs in the accounts department are also social media, you know, the ones that say “I can please one person a day and today is not your day.” They spread via photocopying, they carry an idea and they create a badge of identity. If you are not just as fascinated by those signs and cartoons, as by the latest social media websites, then you are missing out on the human, anthropological and psychological view of social media. My friend Hugh McLeod has built an entire career on turning printed cartoons in the workplace into "Cube Grenades".

5. Book
I’ve scribbled all over my copy of Mitch Joel’s Six Pixels of Separation. Whenever I lend my copy out to someone I encourage them to write on it as well. It’s now a bit dog eared, but that book has a life of it’s own as a shared record. It’s a shared social experience on an admittedly very small scale but it's also a very personal one. Lend one your own favourite books to a friend, discuss it with them over a beer and then come back and tell me that social media is an “online only” trend.

5. Conference or a party
Events are a full of media including the speeches, recordings and slides. Scales range from huge TED conferences to board game nights at your local pub. The more isolated that people become in their day jobs, the more they crave real human interaction after hours. There are great websites that contribute to this trend like meetup.com but there is no media more social than simply being in the room with other people. The media part is the icebreaker provided by the speaker or event theme. If you’ve ever used the line “What did you think of that last speaker?” at a conference then you’ve used a form of media to smooth a social interaction. That’s social media.

Design for the real world
For consumer brands, some of these offline social media need to be more scalable experiences like coupons, touchscreens, friend-get-friend promotions and sponsored events. Whoever your audience is, you can use social behaviour as part of almost any promotion if you think laterally. Next time you're looking for a big idea in social media... get away from your screen and look outside.

Social Media for E-commerce Start-Ups

2012-01-04T08:10:00.000-08:00

Social media lets you get face-to-face with your customers.

Social Media is a naked communication medium. There is no ad agency making your adverts, no journalist writing an article about you. It’s just you and your customer, staring straight into each other’s eyes. If you are growing your own e-commerce website then everything you do will be focused on increasing conversion rates, basket sizes and margins. There are lots of practical things that you can do to improve these metrics. Many of which are ordinarily covered on this blog. But what I want to discuss today is how people are attracted to your site in the first place.

Commercial social media
My background is in business strategy and finance so I take a very commercial approach to social media. Over the years, I’ve found that social media provides a solid return on investment because it allows you to communicate more directly with your target audience. This builds the volume in your sales pipeline, increases repeat purchases and allows you to build margins by commanding a price premium.

There are two things that you can do to increase traffic to your e-commerce site from social media sources. The first is building compelling content that positions you as a respected expert and the second is to engage with the community in a way that builds trust.

Content creation for e-commerce start-ups Content is a cornerstone of a good social media programme for a start-up. The goal of your content is to add real value for your audience. You can create content across four areas:

Text (Blog post, articles, press releases and whitepapers)
Images (Photography, info-graphics and diagrams)
Video (Creative content like ‘how to’ guides or editorial content such as interviews and web-shows)
Audio (Podcasts, instructional CDs and audiobooks)

You need to choose the type of content that suits your creative process and your audience. In the end you’ll want to mix the mediums but it’s best to start with a strong focus on one that you know you can do well.

Community building for e-commerce start-ups
Direct participation in social networks like Twitter and Facebook can bring significant traffic to your e-commerce site. But if you don’t have robust and helpful content to act as the subject of conversation then you’ll be left just talking about yourself. To build community for your site, imagine that you are going to a party:

First you decide which party you want to attend and how to get there.
Then you arrive at the party and listen to what’s going on, you get a feel for the crowd.
You gradually start to join a couple of conversations by building on what others are already saying.
Once you are part of the discussion you might add a story of your own.
Eventually, if you like the crowd and they like you, then you might invite them to come to another party at your house on another day.

These steps collate directly to building your community in social media. You need to choose an audience, listen to the buzz, comment on existing blogs, create your own content and eventually bring visitors into your new site.

Authentic voice for a start-up
To bring content creation and community building together you need to have an authentic voice. This requires a single editorial voice, whether it is your CEO, a spokesperson, or you. Practical ways that I use to tell when an e-commerce site has a real and authentic voice:

Your generic corporate twitter account is paired with a public profile of an actual person.
You have a mix of your own content and links to other people’s content. This shows that you are not operating in your own little vacuum.
You host or attend real-life events, then post about them.

Summary
Social media is a naked and direct way of bringing traffic to your e-commerce site. You need to add real value to your community with ‘how to’ guides, tips, tricks and articles that they can learn from. You also need to let them get to know the real you. In the end, we all want to buy from people who we respect and trust. Social media allows you to build that respect and trust directly with your customer.

- This post originally appeared as a guest post at the 39 Shops blog. 39 Shops are an ecommerce platform for start-ups. You can view the original post and read more articles at: http://blog.39shops.com/social-media-for-e-commerce-start-ups

The relationship age

2011-12-21T11:39:00.000-08:00

Technology changes are raising customer expectations.

Why humanising business is the next revolution.
We are in the middle of one the biggest economic shifts since the Industrial Revolution. The Information Age is rapidly being replaced with a new era grounded in technology but focused on people. And it's happening too fast for anyone to see. I call this new era, the Relationship Age because we will see businesses that nurture their relationships thrive and those that don’t die off. What look like changes in technology today are actually changes in human behaviour.

Once you have everything, you want to stand for something
We have been building our businesses to supply better products more cheaply. This has been largely achieved with cheap consumer products now widely available. But we’ve forgotten what consumers wanted all along. To matter. As Guy Kawasaki and Hugh Mcleod have each said in their own ways: There is an almost infinite demand for meaning. At the end of this recession, the new growth will come from hand-crafted, relationship-based, businesses that can think like a small company and still move resources like a large company.

Efficiency is no longer enough
The next big driver of progress won’t be scale-based efficiency. It will be a return to human values and relationships. In a business sense, this will mean customer service (in all its forms) will become the biggest differentiator. This new school of service will look more like after-sales support, installation, training and online peer communities. People won’t just buy a product , they’ll buy into a series of interactions with you.If you’ve ever bought something from a small local store instead of a chain store then you know what this trend looks like.

Standardised customisation
Automated manufacturing, 3D printing and rapid customisation are going to create manufacturing businesses re-born as service businesses. Computer controlled manufacturing has streamlined mass production to a point where were the output no longer needs to look like it was mass produced. Toyota now makes dozens of colours, models and variations on the same production line so that, as a customer, you can customise your car uniquely for about the same cost price as if it was built standard. I worked with a clothing manufacturer in New Zealand that can make a custom measured suit for the same price as an off-the-rack one because every part is laser cut one at a time using a computer.

More efficient manufacturing allows for easier customisation.

Efficiency will set us free, but to what end?
Ever wondered what all those people made redundant by robots and computerisation are going to do? The answer is service. And not the crappy, indifferent service that you're currently used to from an airline, hospital or bank. Competition will weed that crap out faster and faster. Every one of these industries have had such indifferent service because they had to standardise you as a customer and standardise their employees to chase efficiencies. CRM databases are reaching a level where they can allow for service to be personalised without loosing efficiencies. These new technologies are now liberating and empowering employees to act like humans again, and to treat you as a customer like a human being again. The commoditisation of customers is coming to an end, fast.

Hunger for the human touch
Whatever product you think you sell, it was never really a product, it was always an experience, and a service. But now people will start to realise that it's a service. How many times have you visited the ‘About us’ page of a company's website before the product page? The fact is that you are looking for people, for other warm-bodied human beings. We do this because people don't care how much you know, until they know how much you care.

Personalised service at scale
The more electronic people’s lives become, the more they crave real human contact. It's the "Checked by Quality Control ID12345" stamp that retailer Lush Cosmetics have now reinvented as a sticker with a cute cartoon face of a particular employee saying: "This product was hand-crafted by Janet." You need to use video customer support and every tool that you can get your hands on to put genuine human emotion back into your customer service.

People want to know the story behind the products they buy.

Invisible service
When a system become truly efficient, it becomes invisible. The pay-to-jump the queue security systems in America and the biometric chips in New Zealand passports are clues to the ways that technology can streamline a system until it’s almost invisible. The automated checkout robot at your grocery store is pretty crappy today. But give it enough time (and maybe RFID barcodes mashed up with near field payments) and you’ll forget that it’s even there. I've also noticed that in stores with lots of self-service kiosks the staff are friendlier because they have time to spend actually helping a customer find something. These systems will increase people’s expectations of smooth, fast and easy service from every organisation.

Accelerating competition
If you provide a bad product or service, there is almost nowhere left for you to hide. If you don't surprise and delight your customers with every interaction, then two guys in a garage are coming for you. Technology changes are lowering the barriers to entry in almost every industry.

Next steps
Four things that you can do to embrace the Relationship Age:

Streamline everything. Make your web checkout process seamless. Make finding things in your store effortless. Make your social media presences instantly responsive.
Use standardisation to create customisation. Once you have a template for your business, allow your customer to choose the parts that matter to them. Use a clean and fast CRM to remember everything about them and use that information to the benefit of the client (not just you).
Give your front line employees back the control, freedom and respect that they need to be able to deliver great customer service.
Make every customer feel like they matter. Remember, you don’t sell a widget, you sell the benefits of owning your widget, and you sell the experience of purchasing, using and maintaining it. You sell meaning.

Bad service
I want you to get angry when you experience bad service and when your company gives it. I want you to start thinking about every choice you make in terms of the meaning you want to create in the world. Every job you take, every website you make, ask yourself: Is this making things better, one person at a time. Ask yourself: Who am I really serving? Am I building a relationship?

What is a Strategist?

2011-11-22T06:33:00.001-08:00

Over the years I've periodically ended up with a job title that included the word 'Strategist'. It's almost always applied as an adjective as in Brand Strategist, Design Strategist, Social Media Strategist or Plumbing Strategist.

Great strategic thinking is a team sport. You need a mix of disciplines and backgrounds, but eventually someone has to go away after the brainstorm and turn the ideas into something that can be communicated and executed. That person is a strategist.

Recently I've been thinking about what makes a Strategist different to an Account Manager, a Copywriter or a Planner. I wanted to focus in on the role of a person who is referred to as a Strategist, rather than the larger question of "What is strategy?"

What is a strategist?
My mum still occasionally asks me "So, what is it that you actually do?" In search of a better answer, I thought I'd ask a few friends what it means to be a "Strategist", their answers included:

A strategist develops opinions on the future direction of a company and its brand, based on existing and predicted conditions, other known variables, intuition and research.
- David Lyall, Creative Strategist

A strategist uses big-picture thinking, storytelling, insights, criteria development tools and synthesis in the development of agreed-upon end-goals.
- Randy Deutsch, Design Strategist

A strategist takes a range of new media techniques and tools and combines them into an integrated approach best suited to the client's needs.
- Wil Benton, Digital & Social Strategist

A strategist analyses complex environments or problems and designs practical pathways and business solutions to achieve organisational objectives.
- Kaye Glamuzina, Head of Strategy

A strategist is someone who has the ability to see beyond the near term.
- Richard Mander, Product Management Leader

A strategist is concerned with establishing the long-term direction of a business.
- Anas, Strategy Consultant

A strategist is responsible for conceptually and holistically thinking of a future direction based on incomplete information.
- Rui Martins, Director

A strategist looks at all inputs that will be important to a business and distills them into the right solution for future success.
- Stephen Gibbs, Director

A strategist identifies choices, evaluates them and recommends the best course of action to realise the client's objective.
- Jake Pearce, Consultant

A strategist makes decisions based on a future goal, and connects the present to that future-state so that the path is perceived to be achievable by others.
- Greg Ellis, Coach and Mentor

A strategist is the thinker that informs the course of a project.
- Josh Levine, Culture Consultant

A strategist figures out how the various cogs and wheels fit together so that the whole machine hums.
- Meena Kadri, Communications Strategist

What makes a good strategist?
Being people who think about improving things for a living, my friends also pitched in with what they think makes a good strategist. Their comments included:

A good strategist is marked out by their ability to use two words: "No" and "Why".
- David Lyall

A good strategist sees problems through other's perspectives.
- Randy Deutsch

A good strategist can take control and fix something that someone else has f_cked up.
- Kaye Glamuzina

A good strategist requires a higher level view, that often comes with experience.
- Richard Mander

A good strategist can see the wood for the trees.
- Stephen Gibbs

A good strategist provides a "winning game plan which proves to be a winner".
- Jake Pearce

A good strategist creates a path that is perceived to be achievable by others. If others can't follow the path, then it is not a strategy, but only a dream.
- Greg Ellis

A good strategist has two core skills; critical thinking and writing; and if they are really good, pattern seeking.
- Josh Levine

Last words:
Overall, the themes seem to be all about future thinking and problem solving. Something else that I've noticed when I work with other strategists is that they love to have the last word. So some of my friends offered a parting shot:

Strategists are prepared to defend their strategy; frequently stridently - until contradictory or better information arises; or conditions change. Similarly to the military sense, a strategist is expected to come up with a recommendation within a certain timeframe, regardless of the quality and amount of information at hand. Just like design, there is no such thing as "no strategy", only "bad strategy".
- David Lyall

A client may ask for strategies that will assure a more profitable or a more sustainable future. A strategist may point out that these are not mutually exclusive goals and can co-exist. Strategy provides a lens through which to see projects in a certain light, one that (because it provides a wide-angle view or rationale) engages and motivates.
- Randy Deutsch

Strategy is about a bigger view point. It's about having a roadmap of products rather than working on a single product. I.e. where are we going over time? It's often about making an investment in developing a technology platform rather than just cobbling a product together. - Seeing a product as part of a solution. It's also about thinking about what order to do things in. From a business or marketing point of view, where do we focus and when.
- Richard Mander

Strategist is an overworked word like 'nice'.
- Jake Pearce

When i first flew with Singapore Airlines in September 1998 I asked one of the flight attendants why they flew a 747 from Singapore to Johannesburg and then onto Durban to pick up about 60 passengers when that seemed to be a huge expense for little return? "Ah" he said, "Old Chinese proverb: He who does not cast his net, cannot catch fish." Look how Singapore Airlines has gone on to grow and create hubs on an international scale. Likewise, President JFK had no clue how to get to the moon and back, and nor did anyone else, but he set in motion the brain power of thousands to achieve a milestone for mankind.
- Greg Ellis

I once heard that if a client is looking for a strategist, they really just mean someone who can think. In my experience, Planners tend to roost in the advertising world, while Strategists are generally in design businesses. Of course, that distinction doesn't mean much anymore now that agencies are mixing and matching their capabilities. In any case, they're essentially the same thing (with perhaps different experience sets).
- Josh Levine

Conclusion
There is a common complaint that if your bathtub is leaking you don't call a Plumbing Strategist, you call a Plumber. Even so, there is a great anecdote about a Plumber who is called to fix a leaky hot water cylinder. He quickly spots the problem, tightens a small valve and hands the homeowner a bill for $100. The homeowner demands a breakdown of the invoice, protesting "But, you've only been here for 5 minutes." The Plumber re-issues the invoice stating:
- Fee for tightening valve: $5
- Fee for knowing which valve to tighten: $95

So, whatever you call it, the ability to think before you act is still valuable in almost any context.

Five myths of B2B social media

2011-11-15T14:03:00.001-08:00

Time for some honest home truths about B2B social media

There is too much waffle in social media consulting. As a result, B2B businesses aren't taking enough responsibility for their own social media presences.

I've spotted five myths that have got to change if social media is going to become a credible part of B2B companies. It's time to start treating social media with the same commercial discipline that every other part of your business faces.

1. Social media is part of the marketing function
People seem to persist in leaving social media to the marketing team. This is the most dangerous myth I've come across. Social media impacts on customer service, public relations, recruitment and even procurement. Firewalling social media inside the marketing department is a bit like reserving email for use only by the IT department.

Decisive action: Give your customer support team the password to your Twitter account, today.

2. You can outsource social media
You can outsource particular functions like social media monitoring, copywriting for the web or video editing. But wholesale outsourcing your social media is like outsourcing sex. You can do it, but it's not a long term sustainable solution.

Decisive action: Make social media one (internal) person's responsibility and let them act as a pivot point for the internal and external stakeholders so they have oversight.

3. Social media is free
Everything takes time. Every minute you invest in Facebook is a minute that you are not investing in product development or direct sales. That doesn't mean you should be afraid of the investment. Just that you need to optimise your time.

Decisive action: Start measuring how long you and your team spend online. Your companies Facebook page may look like fun, but it's work. Treat it that way.

4. You need a consistent voice across all channels
Your LinkedIn audience is probably made up of your peers and professional contacts, your Twitter followers might be developers or designers and on Facebook you are having a conversation with University Graduates or potential new hires. Each of these communities do need some visual brand consistency, but you wouldn't talk to your Grandma in the same voice that you'd use at the pub.

Decisive action: If you are automatically cross-posting the exact same content from Twitter to LinkedIn and Facebook using Hootsuite or Tweetdeck then stop. Now.

5. Social media needs more metrics
When you start with something, you need a way to know if you are winning. You need to create feedback loops. But as soon as you are up and running with social media then chasing the almighty 'follow' will incentivise the wrong behaviour. A small, tight-knit tribe that believe in the same things you do and are willing to recommend your products to their friends is much more valuable than a landgrab for extra followers. You need better (not more) metrics.

Decisive action: Change your metrics from 'growth' metrics like followers and fans, and start measuring 'engagement' metrics such as retweets or reshares. Or even better, start tracking sales attributed to digital channels.

Confessions of an Angry Ad Man

2011-10-31T16:27:00.000-07:00

This month we have a guest post from an advertising creative. He's a Cannes Lion winning copywriter who has worked with Saatchi & Saatchi, Y&R, TBWA and Ogilvy. As you'll surmise from the guest post, he's a very angry ad man. I don't agree with everything in the post but I've decided to publish it as a coherent whole.

Confessions of an Angry Ad Man: Everyone has an opinion unless their boss thinks it’s wrong.

Confession One: Certainty is not a good sign

In marketing there’s an inverse equation that I’m increasingly becoming convinced of…
The more someone either agency side or client side states emphatically that they know what works in advertising, the more of a shameless hack they actually are. Remember that, next time you’re in a meeting and a creative director or marketing manager starts throwing their weight around. The smartest people with the highest hit rate in this game are the first to admit they still don’t quite know exactly what advertising is.

And that’s just the point: it’s unquantifiable, and the more you start to pin rules on it, the less successful your campaigns become.

Our whole professional lives have been spent trying to quantify the unquantifiable. It’s hard to quantify if you like a piece of art. You just do. And it’s hard to replicate that artwork using the same constructs and have the same effect. The sooner that all the sub-professions in the wonderful world of marketing stop trying to only fine tune what works and what doesn’t, the better.

Of course you still need a campaign that works to convey your message but lay-off the stooped strategy questions. The ones that go like this: We need our demographic as the hero of the campaign. We need a twitter feed. We need our product as the central point of the ad. We like it, but can the reveal be at the start. It’s too clever. I like it but can we change this and this and this and this….

Of course, we all know the hidden reason for all this analysis. Accountability.

Confession Two: Accountability is killing creativity

With 8 levels of marketing managers and no one with the guts to question the people further up the chain, marketers (as well as agency side people) have to follow a line of Chinese whispers.

I had a friend working on a Christmas worldwide campaign for a major electronics brand, let’s just say that you’ve definitely heard of them. The line of Chinese whispers went to New York and back to Europe a hundred times through several layers in the agency and the client. By the end of the line, what ended up being produced was a Santa Claus in a blue outfit (company colours) holding the brand logo.

Are agencies really being paid millions to produce this crap?

Well the answer is yes, and it’s an all too common occurrence. The chain of steps means that things always get lost in translation. The likelihood of good quality output decreases with every person that you add to the chain of approvals. Like little flicks of a nail file, every person will buff something out, until there is no originality left.

Confession Three: We're casting table napkin sketches in stone

Marketers are now so scared of this Chinese whispers line that once they have got some Bride-of-Frankenstein approved internally then they proceed to guard it like a prison officer. The final animatic to be filmed exactly like the rough shot. The ending packshot should be exactly 4.7 seconds long. The final website has to be 100% identical to the rough artwork approved in round one. This is becoming an increasingly intolerable point of stress between marketing departments and ad agencies.

Agencies on day-to-day jobs rather than brand building campaigns, will only have access to marketers at the very end of a Chinese whispers line. The day-to-day work is buffered from the C-suite. This means that even if you can voice your concern about the quality of a creative piece being watered down the message will be distorted by the chain within the Marketing Department. So: “What’s really the problem with the strapline?” becomes “Red fish yellow football plane.”

Marketers further down the line do everything they can to justify their existence. They become fanatic at guarding something once it’s been said and signed off by the executives up the line.

Mea Culpa

So, basically I’m confessing to three things: 1. The more someone in this industry is sure of what works, the less they can be trusted. 2. The excessive trail of accountability makes for butchered ads. And 3. The rank and file marketing professionals are stuck religiously digging their heels in to guard turkeys.

I’ve often thought that if the workflow in marketing and advertising were applied to a range of other professions, that the other professions wouldn’t put up with it. Can you imagine a client coming to a lawyer, telling them a problem and asking for their advice, only to reply that they don’t really love the legal argument the lawyer has chosen and could they combine all the sections and plea ideas together?

- The Angry Ad Man, London October 2011

How to choose a tagline for a tech startup

2011-06-26T08:55:00.000-07:00

Brainstorming a tagline looks easy, but it requires careful planning.

I've been helping a software startup recently with their search for a new tagline. Like many lean startups they don't have the cash for a full brand development project. Even so, to create a tagline that works you will still need more thinking than just jumping straight onto the whiteboard and postit notes to pull a tagline out of your a__.

I recommend against DIY brand strategy and DIY tagline creation in particular. But if it helps you to understand how the process works then I'll share with you some boundaries of what a tagline isn't. My hope is that this will help you assess the options presented to you by someone who does this for a living but if you're going to try it out for yourself then these secrets will also give you an idea of what you're looking for.

The most important thing to ask is where your tagline will be used. Is it going on the back of your business cards? On the signage outside you office? My guess is that if you are a tech startup with a quirky name then you are using your tagline locked up below your wordmark as part of your logo. Lets be honest, you want a tagline hanging off your logo because your name doesn't have enough industry recognition yet for people to instantly know what it is that you actually do. So the audience for your tagline is people who are already shopping for what you have, but don't yet know whether or not you sell it.

1. A tagline is not about you
I judge B2B taglines by the "car signwriting" test. That is, when I see your company name and tagline on a car out and about I ask myself "Do I instantly know what that company really does and whether it's relevant to what I need?" B2B marketing works from the customers perspective by having a pain, and then finding a solution to it. Imagine that your customer's pain is like a group of people walking around with a big padlock on a chain around their necks. They are looking for a key to unlock their particular padlock. They'd like to choose the cheapest, most reliable, nicest key that their peers also use. But before any of that, they just want to know, "Can you solve my pain?" To answer this, people need to know what industry you are in and what industries you serve.

BMW's tagline is not the same as their brand essence

2. A tagline is not your brand essence
BMW's brand essence is Driving Excellence but they have never used it as a tagline. They have used all sort of variations ranging from "Driver's Car" to "Driving Joy" through to the perennial "Ultimate Driving Machine". But none of these external taglines full revealed their brand essence. The reason is that your internal brand essence is about what your impact is in the world. Sharing this in a tagline is just too much information too early. If you've ever done any personal development then you might have flirted with resolving your life purpose. It's likely to have been a variation on "Contributing to Others", "Leaving a Legacy" or "Loving Life". As powerful as a life purpose is, it would be a bit weird to walk up to a stranger at a party and say "Hi, my name is Bob and my life purpose is to spread joy in the world. How's your night going?"

3. A tagline is not your features and benefits
If you are asking your tagline to close sales for you then you are being premature again. You don't need to get your audience to purchase based on the tagline. Just to be interested enough to want to find out more. This also means not going to far down the line of practicalities. The goal of a tagline is to stimulate interest. The individual features of your product are irrelevant at this stage.

4. A tagline doesn't need to cover everything you do
Most tech companies have a range of products and services. Even when you are small there will be a mix of off-the-shelf products, custom builds and even a bit of consulting. I hate taglines that are a shopping list of things that you sell. Pick whichever service you are best at, get the best margin on, or that best defines your position the market.

A tagline should be practical enough to tell what you actually do.

5. A tagline is not the outcome you sell
I've talked before about how tech companies jump to selling the Why without selling the What or the How. If your tagline has the words "solution" or "profit" in it then you have made a grave error in the psychology of how people find your products. Sure, you might provide "Enterprise Technology Solutions that Increase Profitability." But so do photocopiers and HR processes. If you try to sell only the outcome it will be too vague to be useful.

6. A tagline is not unique
Never kill a tagline because “It could just as easily apply to our competitors”. In fact, for B2B tech marketing it probably means that your tagline is doing a good job of describing your industry. The uniqueness of your corporate personality will probably mean that the right tagline will still be different from your competitors. However, your tagline is not there to differentiate you, that is the job of your name, key messages and brand stories.

Next steps
The sum of all these will be a practical tagline that is probably less sexy than you were hoping. So I'll give you one final test that has a practical upside. If you've followed these rules then your tagline will be pure gold for SEO purposes. Remember people will be searching for practical tools that they can use to solve their own unique problem.

If you want to test a tagline, go to your google analytics and spot what searches people are making that hit you the most. Then use the google adwords tools to figure out what other common terms your audience are also searching for. Combine the best of these into 5 tagline candidates and then test each of them for a month as an adwords campaign to see which ones work best.

In the end, you'll have to make the final judgement call, but do keep in mind why you wanted a tagline in the first place.

Curated Identity

2011-05-30T06:45:00.000-07:00

What are the secret motivations for buying premium products?

When was the last time that you spent more on something than you should have? The chances are it indirectly had something to do with your self image. Or the self image that you want to create.

The economics of self image
Don Draper has a model in his head of what really motivates people. Every person that works in branding, design or social media has their own model of what makes people do what they do. Mine is based on my background in behavioural economics.

Economics tells us that we will spend money on things that are important to us and that we value. Even if the motivations for doing so aren’t obvious, even to ourselves.

The first blogger that I became truly fascinated with was Rob Horning who writes the Marginal Utility blog about using economics to understand sociology and vice versa. Rob had a wonderful article critiquing the reasons why you might buy a product that no one else would see. It boiled down to curating an identity. For me this was the missing link in understanding why people spend money in ways that are seemingly irrational but remarkably predictable.

In the course of my work as an economist, lawyer, brand strategist and social media advisor, I’ve slowly and gradually simplified Maslow’s Hierarchy of needs by noticing what really moves people. To me there are 3 types of value you can use in your branding and communications:

Identity value
Social value
Functional value

Your Hyundai would get you from point A to point B, a BMW might impress a few of your friends but a vintage Aston Martin that you keep in the garage and never drive says something about you to yourself. It becomes part of who you are.

Research shows women buy bras for themselves not anyone else.

I worked on the first stages of a product design strategy project for a women’s underwear brand. They knew full well that their competitor’s bras could technically achieve the function needed do the job (although the 3D modelling, load mechanics and engineering involved would surprise you).

They also knew that the market for bras to impress men is already pretty crowded. But more importantly, any social desire to impress a man is a gross oversimplification of how women really buy underwear.

When you dive deeper you discover that most premium underwear purchases are really made as part of a woman curating her identity. They say things like “I don’t know why, but that brand just felt like the sort of brand that someone like me would wear.” Even when no one else is going to see the product, people still want to buy something that is consistent with how they see themselves.

If you have a friend who works outside advertising or social media and is appalled that you would conflate consumption and identity. Then ask them why they buy organic vegetables at Waitrose instead of cheaper glasshouse tomatoes from Tescos. The answer will be “It just feels like the right thing to do”. Like their Birkenstocks (almost ten times the price of flip-flops) the tomatoes are part of how your friend reminds themselves who they are. Anti-consumption is still part of curating a self-image.

Curating an identity is not just vanity
No doubt the Aston Martin, the premium bra, the organic tomatoes and the Birkenstocks all lay claim to legitimate functional benefits over their commodity substitutes. But the added speed, support, taste and comfort pale in comparison to the added price premiums. People from across all walks of life are willing to invest money into products and services that help them remind themselves what sort of person they are.

I’m also not convinced by those to aggressively or condescendingly suggest that these goods are bought for simple show value and are all about keeping up with the Joneses. I love the bra example because in many cases no one else but the wearer will ever see the product. Yet the price premium remains. You choose your brand because it fits who you are (or more interestingly to me, who you want to be).

Your habitual identity
I’ve been forced to re-examine all of these issues by moving to London this year. When you move to a new city you can’t find your favourite brand of beer, olive oil or your favourite brand of business shirt or the shampoo you usually use. Mostly I’ve opted for functional choices in these categories but I’ve been confronted with little decisions at point-of-sale that we all usually make based on habit.

Research says that beer and olive oil are habit based purchases where we will probably just buy the brand that our parents used. Or the brand that we chose when we first moved out of home and went flatting. When you move to a new country you have to make all these little daily decisions all over again.

The shirt makes the man
I’ve found that Hawes & Curtis business shirts just feel right. They’re better fabric than H&M and better value than Paul Smith. The rational reasons only account for so much. Some of the functional value is in the cool collars that Hawes & Curtis have and the social value is in fun fabrics that I think will connect with clients and friends. But in the end, if I'm honest with myself then I chose the shirts because they fit my model of who I think I am (or want to be). My choices are a small slice of my identity.

Checklist of hidden motivations.

TM Lewin once held that place for me. The mix of casually understated social media and standardised but confident in-store merchandising at TM Lewin helped me feel like part of a club of working city professionals.

TM Lewin's community is a sort of unaffectedly slick club of “I forgot to bring a shirt to work today so I bought this one at the last minute on the way into the office”. But the deeper brand connection is the way that I felt when my first mail order delivery of shirts arrived at my office in New Zealand years ago while working as a lawyer. I felt connected to London, to the city, to who I wanted to be.

Clothing is an obvious example of Curated Identity but products from all industries and even B2B products can contain a mix of functional, social and identity values. What motivates people is irrational from the outside, but remarkably consistent.

Show me, don't tell me
This is a very delicate type of branding, social media and design. Tell an accountant buying power tools that he is buying the identity of toughness and resilience and he’ll run a mile. Make the mistake of only selling the functional and miss out while your competitors capture market share and gain higher price premiums by selling him a little slice of an ideal world where he knows how to fix the fence.

Moleskine invite you to create your own version of their story.

I’ve found that the best way to meet an identity need is to create strong stories, immersive brand experiences and a sense of community.

You need to equip your audience with little tools to weave your story into their own stories. Moleskine notebooks are the masters of this type of DIY identity creation.

Moleskine have just launched a new range of travel accessories. Their brand stories and social media invite you to create your own versions of what Moleskine means to you. They also sell you a functional benefit of quality paper and the social benefit of unspoken membership in a club of creative professionals. Most importantly they let you remind yourself who you are.

Behavioural economics for brand creation
You can use the Curated Identity pyramid to understand what really motivates your audience. Are you communicating with each of the parts of the pyramid? I've worked with Technology and Software clients who were so into selling the social benefit (better ROI and profit) that they had forgotten to explain the functional benefit (what the software does). You need to hit all three layers.

Behavioural economics teaches us to observe real-world human behaviour and to create models that fit the behaviour. If you are creating a brand, launching a social media campaign or building a business then you can use the Curated Identity model as a checklist to make sure you are communicating in a way that speaks to people's real underlaying motives. Not just the obvious ones.

What Social Media means for Branding and Design

2011-04-19T09:42:00.000-07:00

My new local cafe in Clerkenwell, London.

As social media and digital communication accelerate, the impact is being felt beyond mass-consumer advertising and bursting into all part of the business world. From large B2B companies to your local cafe.

I’ve long argued for the business value of design and creativity, but what does this mean in the new digital context? The answer starts with the increasing volume of your customer’s voice.

Louder voice of the customer
In a social media and digital space there is nowhere for bad service to hide.

I just had a great coffee at a cool new cafe that has opened this week in my neighbourhood in London. They are lucky it was great because the first coffee that I had there was pretty average and they were about to be on the receiving end of a series of bad reviews across Facebook, Twitter, Yelp, Foursquare and Google Places. Potentially brutal? Yes. Increasingly common? Absolutely.

Social media has permanently changed the balance of power in a consumer transaction. Giving a new voice to customers. Amplified by three main changes:

Speed: Before my iPhone it would have taken days or even weeks for me to tell my friends about a new cafe (good or bad), now it takes just seconds. It also only takes seconds for them to pass it on. And, it’s now faster to create the review in the first place. Google has a new app that allows me to create reviews of your business with a single tap. Faster to create and faster to spread. Quite a combination.
Reach: The most obvious change is that before Twitter, Blogging and Trip Advisor my review would have been private to all but a few friends that I emailed or told in person. We are all now a mouse click away from global publishing to an unlimited audience. This democratisation of communication gives everyone a voice. Do you like what they are saying?
Location: Before geo-location based services my review would have been hidden in plain sight on a long forgotten Blog or a Facebook post. Anyone that wanted to read it would have had to actively search for it. Now my review is geo-tagged to the corner of Clerkenwell Rd and St Johns Street in Farringdon, meaning that anyone who walks past that location and searches for a cafe can instantly see the review. And everyone else's review as well. We don’t find information, it finds us.

So, what does this mean for a business considering how much to invest in brand creation, new product development or innovation? It means that your customers now have a louder voice and that to survive you are going to need more empathy for their experiences. So that you can create brands and products that get positive word of mouth.

Building a brand based on empathy
Creativity, design and empathy are soft skills much forgotten within hardened businesses who suffer aggressive competition and price pressure on margins. I take an unashamedly commercial view of the world because it lets me understand how a business is going to keep score. But a short term financial view isn’t enough anymore. You need to invest in branding and design that delights your customers because if you don’t then your customers can tell you, and everyone else.

Banks and healthcare companies ignored their customers for years and your local cafe could often trade on the foot traffic of their location long enough to get away with bad coffee. This is changing. I’ve been involved in several new brand launches where we’ve had public and vocal customer feedback within minutes. This has increased the need for empathetic design and pre-launch testing. It’s also increased the need to get it right first time. Because customers are listening to each other, you need to be listening to them as well.

Starbucks is a big company but they are fast learning that their customers now have more power than ever before. They are embracing this through a number of social media initiatives using empathy as a key tool. My favourite is the “My Starbucks” site which allows passionate users to request and review new ideas for the chain’s cafes. Whatever you think of their coffee, at least they are listening. The first step in real empathy is listening.

Business impact of branding
The barista at the new cafe in London stopped by my table to ask how the coffee was. Reminding me that there is no substitute for real-life listening in-person to your customers. Social media is a great way to get feedback but think of it as a first step, not the only one. Your brand is built on the sum of all of a customer’s experiences.

If Social Media means an increased volume of feedback, and the intensity of feedback means that you are going to need more empathy, then where does this leave branding and design? Even with more vocal customers on Social Media, design thinking is still the best route to empathy with your user so its more important than ever. To build a brand based on empathy you need all the tools of design thinking: ethnography, un-focus groups, research for insights, archetypes and most importantly a compelling brand vision. Design thinking for a brand means putting the customer at the centre of the brand. Not you.

If people are going to be talking about your brand then you need to give them stories worth telling. The business impact of branding and design has increased because any changes you make are amplified through feedback and discussion of your brand in every channel. People talk.

Net Promoter Score: A metric for love?

2010-11-20T17:12:00.000-08:00

Icebreaker prides itself on word of mouth.

A client of mine recently wanted to do a written customer survey.

I'm usually allergic to these generic and prosaic insight-free-zones. But Jeremy Moon from Icebreaker recently put me onto a metric that might actually be worth testing for in a customer survey. Jeremy is an independent advisory board member of Better By Design which is the design and innovation team within New Zealand Trade & Enterprise. He has always been a real inspiration to me because of the integrity of the Icebreaker merino products and the passionate tribe of fans that the brand attracts.

The metric is called the "Net Promoter Score". It is a test of how many people love your product enough to tell other people about it. It is important because if you are building a tribe of people that love your brand then what people say about you is more important than what you say about yourself. I've always believed that "Your brand is not what you say it is, it's what they say it is."

The version of the net promoter score below is a simplified version that I've used in customer surveys and differs from what Jeremy suggested and the official Net Promoter score. I'm sharing it here because it's worked for me. If you want to check out the official version you can take at look at the Net Promoter Score on wikipedia.

The calculus of love

My simplified version of the NPS score is calculated by asking the question "How likely would you be to recommend our product to a colleague, friend or family member?" and rating the answers:

5 equals "I have already recommended your product."
4 equals "I would recommend your product."
3 equals "Not likely to recommend or discourage your product.
2 equals "I would discourage people from using your product."
1 equals "I have already discouraged people from using your product."

You then subtract the passionate critics (1's) from the raving fans (5's) this gives you a "Net Raving Fans Score". Next subtract the malcontents (2's) from the advocates (4's) this gives you a "Net Advocates Score". Ignore the neutral (3's) because they are boring people who will passively consume your product without generating word-of-mouth for better or for worse. Finally add the Net Raving Fans to the Net Advocates and rate them as a percentage of the total. This gives you the "Net Promoters".

The maths reads:

((5's - 1's) + (4's - 3's) )/ (5's + 4's + 3's + 2's + 1's) = Your score

Benchmarks

The results are vulnerable to local expectations of personal customer service (which heavily influences the likelihood of recommending a service), and to cultural attitudes towards recommending products to friends. Even so, it's a metric that drives the right sorts of follow-up questions in a survey and is the right sort of metric to be chasing in a customer centred business.

What gets measured, gets managed

In the end, the Net Promoter Score is interesting because it tells you "of those who buy my products, how many love it enough to generate buzz and build a community". If you are trying to create a powerful brand I'd want to know the answer to that question. And be working to increase the score.

Commercialising your Intellectual Property

2010-07-03T03:42:00.000-07:00

For an idea to be profitable it needs to be bought to life.

I’ve been mentoring a couple of technology start-ups on how how to take their ideas to market.

The sad fact is that no matter how good your patent is, if no one can buy your product then you don’t have a business, you have an invention.

Business, Idea or Business Idea?
My favourite is the cold-calls from inventors who tell me that they can’t tell me what their invention is without a Non-Disclosure-Agreement.... Now, I respect the importance of IP law and priority claims in patents as much as the next guy... But, if the only thing protecting your business model is NDAs, then you have a bigger problem than strategy or design.

Execution eats strategy for breakfast
The world is not at a shortage of good ideas. It’s at a shortage of people who can take those ideas and turn them into reality. Executing a business plan to commercialise an idea is the hard part. So far, I’ve seen 3 routes to commercialisation that work:

Turn the idea into a product and build a business.

License the idea to a big player and let them turn it into a product.

Do number (1) so that you can do number (2).

Proof of life
I’m increasingly in favour of number 3. Which I call the “Pay to Play” commercialisation model. Basically, what you do is create a sample product in a niche market using your idea as the core. This allows you to provide potential investors, licensees and partners with a “Proof of Concept”.

In practical terms, it means that you’ve proven your commitment to the idea by being willing to sweat to see it come to life. It sounds harder than just rocking-up to a big company with your idea and selling it outright, but the chance of success is increased dramatically by having an example product in your hands.

Image: iPhone design templates from designer Oliver Walters.

Using social media in your new product development

2010-01-23T21:23:00.000-08:00

My office for the week, a cafe in Melbourne.

The traditional ways for a brand to communicate range between television, print campaigns, advertising and PR. All of these traditional communication efforts use design, language and flow through the normal communication channels.

Social media demands a totally different approach.

In essence, the traditional approaches to communication were one-way. A brand or business created content, infused it with key messages and expressed it through channels out to the customers. The new media channels are much more about two-way conversation.

Listening before talking

The way to encourage a brand to take the step from a one-way communication thinking into two-way communication is to really get the business and the brand to start listening. In fact, my preference would be for a brand to really become obsessed with listening so that it infused throughout the culture of the whole business before embarking on any new media.

I really want to see the senior management team, marketing team, communications, and PR all involved in listening to customers. Particularly, the new product development team, design and engineering all need to be really listening to users in:

informal ways through focus groups and end user observations
formal ways such as user surveys, feedback forms, and warranty claim analysis.

I’ve found that once you get a business listening to their customers (and to their end users) then starting to have a two-way conversation is much easier than asking a brand to go straight from one-way communication into two-way communication.

What can you learn from Apple, if you’re not Apple

Apple is often used as a case study for brand consistency, design identity and technological innovation and even for end-user centred innovation. The dirty secret of Apple’s brand is that they really don’t listen that well. Maybe they don’t have to (certainly no one can doubt their success), but as a model for other companies to learn from I would actually be looking much more at a company like Harley Davidson in terms of their engagement with their customers.

Apple has website feedback forms, they have user forums and they have the ability to provide feedback on their software built into the software itself. All of these are useful but they don’t get used, at least as far as we can tell, to drive new product development in the same way as a company like Harley Davidson which creates new products genuinely based on customer feedback and customer ideas does.

Apple regularly takes an intuitive leap beyond customer feedback, which is great if you have Apple’s design team. But if you don’t, then I’d suggest you start by listening to your customers more closely.

If you are going to be listening to your users, and observing their behavior to derive insights then you will need a new set of tools that go beyond normal market research. It's likely that you're going to need to adjust the culture of the whole organisation to be more customer centered. This may take some time but is almost always worth it.

Tools to listen

This really highlights the overlap between social media and new product development based on end-user centred design. A practical focus for your company could be to run through 3 steps when you start getting into social media:

The first step is to diagnose exactly where you are up to across the organisation in terms of your online presence.
The second step is to identify the key goals that you want to achieve using social media. Think in terms of consumer engagement, increased sales and/or increased customer retention.
And the third thing to do is to set priorities in terms of online presences and particular websites or web tools that are going to use.

Getting these 3 things sorted is going to help start off your brand down the track of building a conversation rather than a cacophony where only one side is talking.

Note: This post was dictated into my iPhone while having a coffee at one of the hidden cafes in Melbourne's cobbled side-streets. It was transcribed in the UK by a virtual assistant from elance and the photo was taken by a local Melbourne DJ.

The difference between marketing and design

2009-08-06T03:08:00.000-07:00

Most common words on this blog.

Your marketing sucks. But then again so does everyone else's. It's been driven to blandness by a combination of focus groups that couldn't "get" your new idea, repeated changes from your management team, internal squabbles and old marketing ideas from a time when advertising spend equalled market success. But maybe there is a deeper problem...

Put simply, if you don't have a great product then no amount of sales, marketing, branding or advertising will help you. What might just help is design. In particular, a way of approaching new product development and marketing problems called design thinking. You still need traditional marketing to execute but for new ideas or new brands you need a new approach.

I work in a field where design thinking is well defined, well understood and well appreciated. But today a marketing manager stopped me in my tracks in the middle of a meeting. She asked me, "So everything you've told me about design thinking just sounds like good marketing. What gives?" I was lost for words and this blog post is my attempt at an answer after the fact.

Design is not just good marketing. It's a fundamentally different way of approaching problems within your business.

Marketing thinking is all about seeing people in aggregate so that you can communicate with them as efficiently as possible. Design thinking is all about seeing people as individuals so you can delight that one person and extrapolate that out to others.

The best place to see this is in a focus group. Focus groups that are reviewing a concept will tend towards the views of the average. This results in the overwhelming blandness of the products that you see on your supermarket shelves. There is a very healthy place for focus groups in the insights, research and needs identification parts of the process. But not in testing or reviewing your new brand or new product.

A wise old friend (stanford MBA), a successful company CEO and entrepreneur recently reminded me that in business you only have 3 options:

a) be the biggest and win by being the cheapest,
b) be the smallest and win by staying under the radar, or
c) be different.

If you choose option (c) you'd better get aware of how design can help your whole business understand your customers and create difference. - And fast. Because someone pursuing option (a) with an army of marketing experts and someone pursuing option (b) with an invention in their garage are both after you.

To be fair, you still need a marketing strategy and you still need to tell your story. But maybe it's worth having your own story to tell first. We've found that using a marketing approach too early on in the process leads us to ask:

What will please the greatest number of people just enough to buy our product?

Using a design approach at first tends to lead us through empathy, user centrednesss and creativity to ask:

What will delight those who buy our product so much that they tell people about it?

Fundamentally, marketing is about talking to a group, design is about listening to an individual. Both are important skill sets at different stages of the process. But in the end, would you rather buy from a company that talked or one that listened?

Business case for design: One widget at a time

2009-06-12T18:58:00.000-07:00

William Stout Architectural Books, in San Francisco for DMI conference.

Usually design thinkers and product developers wait until a product is in market to test the financial impact that it has had on the business. I'm proposing that for your new product development projects that you include an accountant early on and that as part of the story telling and stage gate process you include financial models of how the product would work for the business.

A telling way to do this is to focus on one product unit at a time. This is very different to the “we could sell xyz of these in the first quarter” type financial modelling for design. Instead you’ll be aiming to tell a story along the lines of:

If the current working prototype was taken to manufacture it would cost $10 in materials, labour and manufacturing. It would cost an additional $5 per unit in go-to-market expenses and we could sell it for $30 based on the value it would deliver to the user.

This gives your management team a $15 gross profit per unit or a gross margin of 50%. There would be a lot more to determine but it provides a rapid prototype that helps people not directly involved in your project to understand it. The numbers you'll need are:

Cost of physical materials
Cost of manufacturing
Distribution, packaging and go-to-market expenses
A slice for sales & marketing directly related to the widget

Keep in mind that the aim here is to communicate the value of your project and the careful design process you are using, not to let financial analysis overrun your empathy, insights or creativity. On the contrary, the goal here is to use finance to defend it.

Top 5 cubicle grenades to help you build the case for design

2009-05-23T19:01:00.000-07:00

Using design thinking in your business is all about organisational culture. To change culture, you need to change conversations. To change conversations you need a conversation starter or maybe a "social object".

When was the last time you talked with someone in your organisation about ethnography, deep empathy, future thinking, prototyping, end-user focus or niche marketing? A great way to start these sorts of conversations is to drop a cubicle grenade which prompts a story or a question. Try this:

Print one of the cartoons below on an A4 sheet and put it somewhere visitors to your workspace will see.
Talk to people about it, ask them what they think of it, ask them what they think of the idea behind it, tell them about why it matters to you, how you found it or who made it. - Tell them a story.

"Cube Grenade" is a new word for an old idea. An object or picture that prompts a meaningful conversation. Each of the cartoons below have the potential to prompt conversations about design thinking, stories about users, a narrative about your brand, insights and even empathy:

1. The Hughtrain:

2. Quality:

3. It's not what the software does:

4. Wolf vs. Sheep:

5. Dinosaur:

These cartoons are all by Hugh Macleod. Hugh is a seriously talented copywriter, artist, strategist and creative business person. I'm pretty excited about his "end-user cause" based approach to marketing Stormhoek Wines (and other clients like Microsoft). In future posts we'll come back to Hugh's work to look at how you can use the design thinking tools of empathy, research, prototyping and story-telling in more and more creative ways.

Hugh has recently invited readers to use twitter to suggest which of his cartoons are their picks for publication as fine art prints. You can tweet him your thoughts at @gapingvoid.

Of course, all the images above are absolutely copyright to Hugh MacLeod. You should check out his blog to find out more about how you can use, share and enjoy his work.

Business case for design: Easiest way to value your intellectual property

2009-05-11T03:47:00.000-07:00

You might not want to hear this, but if you can't put a dollar value on the benefit of your design project then you may not have a project at all. You may have a registered trade mark to protect your brand design. Maybe even a patent or design registration to protect your product designs. But how much intellectual property is there really in your business? And how much is it worth?

In previous posts we’ve mentioned accurate but hard ways to value your intellectual property using financial analysis. There is also a fast and easy way of valuing intellectual property. I call this approach Naked Valuation™ because you are going to compare your business to a similar business without your intellectual property.

This technique will help you make the business case for design thinking more easily by quickly providing additional economic evidence that investment in design will increase the value of your business. To get started, ask:

“If I copied all your land, buildings, equipment & machinery, and then employed dozens of well trained but totally inexperienced laborers to do your jobs. Then what can you do today that they couldn’t do?”

The answer may well tell you a lot about where the real intellectual property is in your business.

Asking yourself this question about the comparable “naked” business will often bring up the value of relationships, channels to market, designs, production problems you’ve solved, trade secrets, tweaks to your systems and even deep knowledge by a couple of key staff.

Whether it’s product design, brand design or innovation processes. Each time you invest in design you are going to add value to the assets that are hardest to copy. It may seem easy to replicate intellectual property such as a physical design or a logo but once you realize that the IP is infused into every element of your business its easy to realize how hard it is to replicate.

To perform a Naked Valuation™ on a product instead of a business, simply identify the value of an asset with the trait that you are valuing and compare it to a similar asset without the trait. For example:

Coca Cola sells for $2.69 for 1.5 litres at my local store, the private label store brand sells for $1.39 for the same volume. A value on intellectual property of 48% of the total price.

A 2009 Lexus ES sells for $41,000 whereas a Toyota Camry from the same manufacturer with the same design sells for $32,000. To be fair the Lexus includes upgrades that if added to the Toyota would cost around $3,000. Even so, the branded premium is still $6,000 or 15% of the total price.

A nice New Zealand Sauvignon Blanc will retail for $30 whereas an unbranded “cleanskin” version of the same wine could sell for as little as $10. For a brand and reputation value of 66% of the total price.

There are lots of other reasons for these price differences and the total return on intellectual property is a function of both price and volume. Even so, the insight remains… to get a quick test of the value of a piece of intellectual property, look for the nearest substitute without your intellectual property and compare the economic value of the two.

Top 5 powerpoints to help you build the case for design

2009-04-05T08:00:00.000-07:00

Powerpoint is a dangerous tool. Even so, it's useful to see how five of the top design and innovation firms describe what they do.

Below is one example each of how these design and innovation firms present to a general business audience. A couple of them were made for specific events so don't get too distracted by the detail.

You can certainly take your time with them but the goal is to absorb an overall picture of what would work for yourself to use as a tool in describing your own work to your CEO, CFO, engineers and even the marketing team.

Adaptive Path

Subject To Change: creating great products and services for an uncertain world

Continuum

Radical Innovation

Frog

Design In The Age Of Convergence

Ideo

Design Thinking

Stone Yamashita

The Worlds Largest Innovation Lab

Each of these presentations is a different take on the core issue of how we describe end-user centred design, design processes and design thinking to a business audience. Vote in the comments on which you feel are the best and worst...

Top 5 metrics to help you build the case for design

2009-03-24T08:00:00.000-07:00

The big consulting firms (McKinsey, Booz Allen and BCG) would all love to get you to use more metrics to analyse innovation. Partly because it allows them to apply their existing left-brain analytical skills to your right-brain creative design challenges. Everyone has their own take on the role of metrics in design. Whatever side you take there is a lack of easy metrics that you can use to quickly explain to your CEO and CFO why design is important to your company's growth.

Below are the top 5 metrics that you can pick up today to benchmark your business against your competitors. These are not the only metrics but they are the ones that you'll be able to use to make a strong case for investing in design:

1. Vitality Index

Sales from products created in last 3 years / Total sales

2. Contribution margin

(Sales - Direct costs) / Total sales

3. Return on assets

Net profit before tax / Total assets

4. Brand value

Expected net annual cashflow from your branded products / Your target annual return on investment percentage

5. Return on intellectual property

Total sales / (Market capitalisation - Physical assets)

Warning, these are not measures that you will be using to manage your design process. Later on we'll cover metrics such as delivery in full on time as specified (DIFOTAS), Return on innovation investment (ROII), Time to market (TTM) and a whole host of activity measures.

Next week we'll calculate the numbers for these metrics for a couple of example companies so that you can compare your own performance.

How far has the economic case for design come?

2009-02-21T08:00:00.000-08:00

Your business case for investing in design will include both qualitative and quantitative evidence. This blog focuses on the economics of innovation so we won't spend to much time on qualitative arguments like case studies, war stories and theoretical arguments. Instead the focus is on ways that you can make a compelling financial and economic business case for design.

That said, you'll still need to balance both by including examples along with your analysis and there's a great post from back in 2007 by Brian Gillespie who had just attended the DMI Conference "Improving and Measuring Design’s Role in Business Performance“ which cried out for more case studies and more qualitative examples. In short, he wanted to see more effort put into articulating the role of design in:

Influence on the purchasing decisions
Enabling strategy (new markets)
Enabling product and service innovation
Reputation/awareness/brand value
Time to market/process improvement
Customer experiences
Cost savings/ROI
Developing communities of customers
Good design is good for all: triple bottom line accounting for social, environmental, and business impact

Since 2007 a lot of evidence has emerged on each of these and we'll be reviewing them in turn over the next couple of weeks and including a few new areas where design can add value. Paste any of your favorite micro-examples of end user centred design and design thinking adding practical economic value in the comments below and we'll include them as we go.