Category Archives: catalyst blog

Hobby v. Real Businesses

I’ve learned the hard way that it’s possible to think you’re running a real business when you’re actually running a hobby business. Here are some differences so that you can tell them apart:

Activity Hobby Business Real Business
I make … whatever I want whatever customers want
I do .. whatever I want whatever it takes to learn what customers will pay for and then deliver it to them
I buy … whatever equipment, tools and software (a.k.a. ‘toys’) that I want only what will enable me to deliver what customers will pay for (otherwise I save my money)
I focus on … my business (i.e. my hobby) whatever it takes to make the business work (including getting a job if necessary)
I know … what customers want (they want whatever I decide to make!) that I don’t know what customers want – I must visit potential customers and learn from them.
I want … positive feedback (what if people don’t like what I make?!?) real feedback (because I’m committed to making whatever customers want)
I celebrate … low value sales (this is working! all of my dreams are validated! I should go all in!) every sale but recognise that there’s a long, long way to go before this business will generate real income
I spend my time … making things working out what will help me understand and learn from customers, and spend my time doing that.

That doesn’t mean, of course, that you can’t turn your hobby into a real business. What it means is that you must no longer approach it as a hobby or you’ll cost yourself the opportunity to run a real business (and you’ll take the joy out of your hobby).

When to quit

Seth’s book The Dip (summarised in this ChangeThis manifesto) explains the significant benefits of being the best in the (= your) world. Seth’s advice is to quit dead ends (where you can’t be the best), freeing up resources to push through the dip in areas where you can be the best.

I’ve learned a great deal from writing the catalyst blog and trust that it was generally useful to readers. It’s not, however, an endeavour in which I can be the best – that mantle belongs to Seth’s blog and others. Clearly I haven’t updated the blog for a while – today I officially quit the catalyst blog as it has existed to date and want to thank you for reading.

As to the future – where I can be the best – I have the clarity to see businesses and industries as they really are, the insight to understand what they could be and the ability to develop possibilities, solutions and processes to deliver radical improvements through radical change. I intend to use these skills to help make the world a better place and am working full time with a small team of equally committed people to turn concepts into reality. We’ve commenced early prototyping of my first major concept, one that in retrospect I realise I’ve been working toward for a number of years, and hope that within 12 months we’ll have something to announce and share with you all.

As we make ground I’ll transform my site to reflect my new focus and will advise any news through this feed. So please stand by – I’ll be in touch, hopefully with something great.

A slice of innovation

Here’s proof that there’s room for significant innovation in almost any product:

The standard pizza box design considers only one half of the problem space – pizza vendors and their need to transport pizza away from their premises. With the Green Box, eco incorporated looked at the needs of the end user – plates to eat from and storage for leftovers – and created environmental benefits as well. Brilliant.

A little more of the story is available from their short presentation at Pitchfest and thanks to Stuart for the link.


Needing to explain it

If you made this tap for use in a public bathroom, you failed. You chose to be different in a way that prevents instantaneous access to water for novice users. It’s not enough to be different – as Marty Neumeier says, you need to different and good.

If you put up the sign, you failed. You heard the complaints from the public but decided that they were wrong and the tap wasn’t broken. Instead of spending your time providing a tap that they could use instantly, you decided to spend five seconds of their time learning to use a tap that’s not fit for the purpose.

Hate me, but don’t ignore me

This 4 minute Cool Hunting video looks at Sao Paulo’s prolific graffiti artists:

A summary of filmmaker / journalist Jaoa Wainer’s points (with my comments in parenthesis) is:

  • tags made without the risk of climbing are not valued (this tribe demands commitment from its participants),
  • the tag is made up of a personal symbol, a gang symbol and the date (the artist is claiming current membership in their gang, and presumably ownership of a neighbourhood),
  • the artists are the invisible poor who say ‘I’d prefer you to hate me than ignore me’ (to me the most significant point here),
  • the tags are in a common style that dates back to the 1980s (the artists are aligning themselves with each other even over gang boundaries and the tags only understandable only by those in the culture),
  • the symbols are based on the logos of heavy metal bands (the artists belong to a wider tribe – youths around the world who have an affinity with heavy metal presumably because it expresses their feelings), and
  • the artists don’t know why they do it (self-awareness is a not a prerequisite to action against deeply held values).
For me it’s another reminder that nothing is as simple as it looks. Even cultures that most do not value contain the same degree of structure, purpose and value for its participants as esteemed cultures. And that unless the powers that be get inside the skin of these cultures as Wainer has here, they’ll never have an impact on curbing anti-social behaviour. Malcom Gladwell also speaks to this in The Tipping Point.
p.s. Thanks to Jonathan for pointing me to Matt Mason’s book The Pirate’s Dilemma. It discusses the links between graffiti, sub-cultures & advertising and is downloadable at the price of your choice. I also recommend Matt’s Pop!Tech talk on piracy.

Generosity

As the web has exploded, so has generosity. I think there’s at least three kinds of generosity that we see today:

I can’t use it so you have it.
This is where the giver can’t benefit directly from what they own and therefore gives it freely, often to obtain an indirect or non-tangible benefit. Two examples might be the author who gives away part of a book to increase book sales, and the blogger who gives away small ideas in the hope of building a reputation or tribe.

I won’t miss it.
This is where the giver could directly benefit from what they own but it represents only a marginal benefit to them (and therefore only a marginal cost to give it away). The patronage of the wealthy, tipping and a $25 loan on kiva.org might be good examples.

Your need is more important than mine.
This is the traditional view of generosity, where the giver gives in spite of incurring a significant personal cost to do so.

Proportionally speaking, the vast majority of generosity used to be either ‘I won’t miss it’ by the very wealthy or ‘your need is more important than mine’ because prior to the web the costs of facilitating gift-giving were very high, making the smaller transactions inefficient. Sharing an idea with the public required buying media so only the most important ideas were shared. The end-to-end cost of completing a gift transaction meant that only large gifts were efficient. And the cost of near-perfect information (will my intended recipient receive my gift?) meant that certainty was available only for the large foundations or large-scale charities who could afford to chase this information down. These inefficiencies prevented the smaller scale and ‘I can’t use it so you have it’ generosity that we see today.

Are all three kinds true generosity, however? I’m a traditionalist here – I think true generosity is ‘your need is more important than mine’, where the giver incurs a real cost in making their gift. Regardless, all three forms of generosity should be valued not as moral credit to the giver but as realised benefit to the recipient – even something useless to the giver can be another person’s treasure. Whatever the giver’s motivation or cost, we can all be thankful for the explosion in generosity that we enjoy today.

p.s. Clay Shirky has some good thoughts on designing for generosity which have no doubt inspired mine.


Incentives

My eldest son is in the 1st grade and his world is full of incentives. Every hundred books he reads, he gets a certificate from his teacher. If he’s helpful to his teacher he receives a 10 cent voucher to spend at the school canteen. If he’s often and conspicuously helpful, he’s presented with a certificate and an ‘Aussie of the Month’ badge in front of the whole school. And teachers control large groups of children with arbitrary races – ‘Who’s the first to be quiet with their hands on their head?’. The kids love it.

Incentives are offered to children because they work. They work because the kids perceive them to be valuable, but they’re used by teachers because they have a low cost. Incentives to children contain little intrinsic value.

In the corporate world there are also a great number of incentives – public praise, a higher position on the corporate ladder, social status, a glass office and a BMW for a company car. At Christmas time employers give hampers, throw big parties and give awards. And employees love it. You love it.

Incentives are offered to employees because they work. They work because you perceive them to be valuable, but they’re used by your employer because they have a low cost. Your incentives contain little intrinsic value.

Diminishing experiences

The Apple iPod was launched in 2001 and quickly became extraordinary – your entire music collection in your pocket. Then it just got better – along came photos and video. Increases in memory size all the way up to 160GB for the iPod Classic. Then came the iPod Touch – a much larger screen, incredible interface and wide range of applications – it’s not an MP3 player, it’s a computer running a stripped-down version of the Mac OS. And in 2005 Apple launched the iPod shuffle designed to be a small, inexpensive player for price conscious music lovers.

The first generation shuffle was reasonably small and it came with a neck cord for carrying it around. My niece has one and likes it but I think it’s only so-so – the edges are sharp making it uncomfortable to hold, the plastic feels cheap and the USB cap falls off.

firs generation ipod shuffle

The second generation shuffle was a big step forward – much smaller but with large controls, no parts to lose, constructed from anodised aluminium and – in true Apple style – it’s a work of art. With a built in clip it was billed as ‘the most wearable iPod ever’ and Apple tapped into the active user market.

2nd gen ipod shuffle

The third generation was released days ago. Where the 2nd gen shuffle was small, this is tiny – only 50% of the volume.

3rd gen ipod shuffle

You’re no doubt familiar with The Law of Diminishing Returns. Almost all product strategies are subject to it – as soon as you and your competitors take a particular aspect of your product over the point of diminishing returns, that particular value is all but commoditised. Near-pure water is pure enough. Mercedes and Volvo enjoyed a price premium for safety until the 90s – now even Kia can reach a 5 star NCAP rating. Mobile phones got smaller until our fingers and the distance between our ear and mouth made making them smaller impractical – now they’ve become larger again to accomodate compelling new features. The iPod classis used to come with either 80GB or 160GB – now it’s only one model at 120GB. So too the iPod shuffle – I’d argue that the size of the 2nd gen iPod shuffle was just fine for almost everyone. Some reviewers even found the new size problematic, losing the device more than once.

What particularly troubles me about the 3rd gen iPod shuffle is that while reviewers have been generally impressed with the size and construction, they’re not with the user interface, saying it’s difficult to use except when standing still. This is a step backward over the 2nd gen, particularly for the active users that Apple managed to attract. Apple is normally a company that creates outstanding design to deliver outstanding user experiences, but here it seems the design is at the expense of the user. This is more of a Bang & Olufsen approach than the Apple we know and love and I think it’s a mistake.

So given the law of diminishing returns (and competitors who follow as closely as they can), what’s a company to do?

Part of the solution is to know the point from which making your product harder, better, stronger, faster – whatever your current approach is – will no longer provide compelling benefits to your customers. Don’t make a significant investment in your approach beyond that point, but look for a new paradigm to smash – whatever will provide a compelling new benefit to users and give you an edge over the competition. Clearly, Apple has done this time and time again with previous versions of the iPod.

If, however, you’ve genuinely run out of paradigms to smash in your current product set or industry, it’s time to smash them somewhere else – in a related or different environment. Apple did this with the iPhone. Dyson’s just done it with the air blade. Nokia did it when the rubber business wasn’t crash hot, again when cables were commoditised, again when consumer electronics plateaued and yet again to become world’s largest manufacturer of mobile phones.

Either way, until you’re ready to smash another paradigm, don’t make the mistake of pushing your existing trajectory too far. It’s better to release a small and incremental improvement that customers will appreciate rather than deliver a technically impressive product that customers do not. Time will only tell whether the 3rd generation iPod shuffle falls into this category.

A corny UGC campaign

Doritos is running a series of TVCs in Australia to induce some User-Generated Content (UGC):

The others in the series are here, here and here.
I suggest that there are two types of UGC – Natural & Induced. Natural UGC is the spontaneous user response to a product or service that they love. This is the best form of UGC because:

Passionate users do what they do for the sheer joy of being associated with the brand, particularly if the brand publicly acknowledges them – consider the iPod touch or Star Wars.

Creators of Natural UGC are users who selflessly share their love for a product are entirely credible while advertisers are not.

.

By comparison, Induced UGC is what’s generated when companies seek UGC by offering inducements – prizes or offers of recognition. Given the benefits of Natural UGC, it’s clear to see why Induced UGC’s of interest to a corporation – it also allows for a sense of involvement, connection and collaboration between brand and user. There are problems, however with Induced UGC:

Credibility is lost the instant you offer a reward – love and money don’t mix well.

“Sheer joy” simply doesn’t apply to most products, in which case an Induced UGC campaign is probably a meatball sundae. (The solution isn’t to reverse engineer passion for your existing brand and products, it’s to make your brand and products worth being passionate about.)

Most Induced UGC campaigns attempt to have two bites of the cherry:

1) kudos from everyone (users and non-users) for running the campaign/competition, and?

2) kudos from the UGC generated.

I suspect that many campaigns would have more impact if the campaign was run privately with their tribe of customers and non-customers saw only the end result, the UGC?that invites them to join the tribe as well.

As for this Australian Doritos UGC campaign, I’m concerned that it’s likely to detract from the brand:

If marketers sell stories, selling the story of “we can’t think of a reason to buy Doritos – can you help us?” is dangerously poor. If Doritos marketers have identified that their 16-24 year old demographic wants ‘belongingness’, this is a call to belong to … nothing.

The all-too-common ad storyline of ‘ad people making an ad’ is self-indulgent – advertising creatives need to create stories that prospective customers relate to, not ones that remind them of bad days at the office. At the very least they could have made a TVC about teenagers making their own Doritos ad, selling both the competition and the bigger Doritos story in one hit.

Together this might explain why the Doritos UGC campaign is on TV -?you can buy TV time whereas on the internet (where 16-24 year olds are) you need to earn it (and you have to do a lot better than this).
No doubt this campaign is an attempt to replicate the response to the US Crash the Super Bowl Doritos campaign which this year promised “win $1 Million by taking down the ad pros with a Super Bowl commercial written, directed, and made by you”. It’s an audacious competition, aspirational prize and accordingly in 2007 it resulted in 2 million visitors to the Dorito website. The only problem is that even in 2007 the Super Bowl spot cost USD2.6M – the whole campaign probably cost $1.50 per website visit. Now in 2009 they’ve added a $1M prize – if your strategy is to pay people to turn up, you’ll need to increase the payments to sustain novelty until it’s no longer economically viable.
Buying yourself a tribe by Induced UGC or any other means is a short-term and unsustainable approach. Businesses need to take a much longer term view – cultivating a brand worth following, a tribe that follows it and ways for individuals in that tribe to share their love.