Category Archives: catalyst blog

Believability


Really? Are prospective Telefunken factory workers screened against their childhood attitudes toward perfection?

Marty Neumeier, author of Zag, describes?a tagline as the outward expression of your brand’s most compelling differentiator. Surely it would help for your tagline to be believable.

Defending the line, a story that stuck

Yesterday a friend told me of a life-changing experience as a 12 year old kid. He was playing rugby and defending the try line as a very large player bore down on him, intent on scoring a try. For the uninitiated to rugby, the effects of big rugby hits look like this:

Deciding that a) his very large opponent was likely to score a try anyway and b) a trip to the hospital or morgue was likely, my friend stepped aside. At that moment a smaller teammate stepped up and comprehensively took this very large player out, preventing the try and saving the day.

My friend learned two valuable lessons:

  1. He was capable of more than he realized, and
  2. If he doesn’t defend the line, who will?

In turn he told me his story so that I’d realize I was the last line of defense for one aspect of a client’s business. It stuck in my head and changed my mind.

Chip Heath and Dan Heath tell us about idea that are made to stick – they say that memorable ideas are:

  • Simple
  • Unexpected
  • Concrete
  • Credentialed
  • Emotional
  • Stories

These map to ‘SUCCESs’ for easy recall.

If my friend had merely told me some facts I might not have paid close attention or responded. Instead he changed my mind with a SUCCESsful story that I may never forget.

Permission Ommision

Here’s full-page print advertisement that appeared yesterday on the back page of the ‘Financial Review Investor’ insert of Sydney’s Sun Herald:


The ad is timely – people are greatly concerned about their investments. It’s authoritative, credible and therefore trustworthy. It’s also located correctly – it’s in an insert for investors. And the message is clear – don’t panic.

The sole omission is permission. The company could have offered readers the opportunity to receive valuable insights like this in the future – instead they offer only advisors and a web site. An opportunity lost.

The value of dissent



Most employers dislike, dissuade and/or discipline argumentative employees but in doing so they miss the point – employees argue because they care. As a result, most employees are whingers or quiet, having accepted the inability in instigate change a long, long time ago.

 

I very much agree with Keith McFarland, who points out the need for ‘insultants’, people willing to ask the tough questions that cause a company to think critically about its fundamental assumptions. The value of insultants is that they will go to great lengths to get their companies to reevaluate a position or adapt to a changing environment.”

I’m fantastic

Yesterday I drove past a car dealership with a large animated sign saying:

Your (sic) crazy if you don’t buy your car from [us]!

Either way you look at it, it’s a stupid thing to say. The literal meaning is a claim that the vast majority of car buyers (who buy from other dealers) have a mental illness. Not only is it unwise to mock prospective customers (who have previously purchased their cars elsewhere), the statistical rate of mental illness in our community would indicate that this claim is patently untrue.

The obvious intended meaning, however, is that this dealership believes itself to be so fantastic that customers who use other dealers miss out. But miss out on what? They haven’t bothered to tell us. Instead of telling us what we would find remarkable about them, they’ve instead decided to shout ‘We’re fantastic’ at tens of thousands of passing motorists.

Later in the day I saw a life-size poster of a male hairdresser standing in front of four models with bad wigs. A tagline boldly proclaimed:

[Hairdresser’s name]. More than just a hairdresser.

What does ‘more’ mean? What about him being ‘more’ is of any use to me? What’s the intent behind the phrase ‘just a hairdresser’ (why denigrate your core offering)? Finally, why give the models bad wigs when you could show four women with fantastic haircuts?

We consumers don’t want vendors telling us that they’re fantastic – we’ll be the judge of that.

Communicating

Today I received a handwritten note from a local real estate agent informing me that she has ‘a genuine buyer looking for a property in this vicinity’. I was impressed by the time and attention she had given me until I realised that it was a photocopy, made on coloured paper to appear genuine. I don’t like being taken for a ride – even one that lasts only a few seconds – and most definitely will not be trusting her with the sale of my house.

On the weekend I needed to use a service station restroom but didn’t need fuel. As I was deciding what unnecessary item I would buy from the service station store in reciprocation, I encountered a sign sternly informing me that toilets were for customer use only. As I don’t pay for the use of toilets, I felt relieved of the need to reciprocate and left without buying anything at all.

Last week I visited a tea shop. Below every display of teapots and other expensive items were signs informing me that if I broke anything I must pay for it. I had assumed that this was the case before I read the sign – now I felt accused of being both careless and unwilling to take responsibility for my actions. Instead of freely touching and interacting with the beautiful teapots – a commitment/consistency step toward purchase – I stood at the same respectful distance I would give priceless Ming Dynasty china in a museum.

More harm than good.

The thin veneer of luxury

The probable journey of luxury handbags:

  • Cows in a field,
  • Cows in a truck,
  • Cows killed and skinned in an abattoir,
  • Cow hides in a truck,
  • Cow hides at the tannery,
  • Leather in a truck,
  • Leather on a container ship,
  • Leather in another truck,
  • Leather in a factory (or sweatshop),
  • Leather cut to size,
  • Leather sewn into handbags,
  • Handbags labeled, packaged and placed in nondescript cardboard boxes,
  • Handbags transported in a truck/container/ship/truck,
  • Handbags in nondescript boxes delivered to a retail complex by delivery staff,
  • Handbags stored in nondescript boxes in a retail storeroom,
  • Handbags removed from nondescript boxes by staff on minimum wages,
  • Handbags placed carefully by staff on aesthetically beautiful display units in luxurious retail premises, priced at $3000 as befitting the true luxury & status of the brand.

Why are consumers satisfied by so thin a veneer of luxury? Do they not know or just not care what goes on behind the scenes?

There is momentum building for systems that make the ecological footprint of products visible to consumers – a history that travels with each product. This will no doubt reveal all aspects of production, including the source & conditions of labour for each product. Manufacturers will find transparency forced upon them – those who move fast to voluntarily and openly provide transparency will be the winners. Will this transparency also limit the mystique that marketers can generate around a finished product?

Homaro Cantu, remarkably mad restauranteur

If you thought you’d seen everything there was to see in food, you haven’t come across Homaru Canto of moto cuisine. He offers a degustation menu that’s so different it’s truly remarkable, using liquid nitrogen, class 4 lasers & a patented polymer oven to create visual and textural plays on food beyond anything I’ve ever seen.

This may not be your thing – Howard doesn’t care. I’m sure the place is booked months in advance by people who absolutely love it. Here’s what he and business partner Ben Roach had to say at PopTech in 2006:

 

Nike’s House of Hoops

I’ve been enjoying the BusinessWeek Innovation of the Week podcast series recently – here’s a quick summary of & some thoughts on the Nike House of Hoops retail store discussed in this episode.

Niche
No longer ‘all athletic things to all people’, the Nike House of Hoops concept enables Nike to ‘go much deeper into people’s lives’, with this retail concept exclusively for people who consider themselves to be part of the basketball community. Nike are doing this in other areas – the second floor of Nike Town New York, for instance, is dedicated to the runners who use Central Park.

Consumers are forming into tribes & identity is the next big marketing tactic. Big brands must align closely with each tribe so as to not lose ground to smaller, niche players.

A physical presence
A website can only go so far – this retail presence allows them to be part of their everyday communities, making a stronger relationship with consumers through a physical experience. Nike will localize each store to the immediate community, allowing customers to have a sense of personal ownership.

Brand leverage & partnering
The store is called ‘Nike House of Hoops presented by Footlocker’. Here’s a paraphrase of a Nike representative on the Footlocker relationship:

We ‘ve had a longstanding relationship with Footlocker, literally from their first store in the 70s. Footlocker represents the biggest basketball destination in the US so it was only natural that we progressed to this level of co-operative association. The world is changing and you can’t do everything by yourself any more.

Even Nike leverages other brands – think about that for a second. What are the implications for your business?

Learning
Nike are planning to launch 50 of these stores but they want to learn about this first store first – even the first few hours of opening provided valuable insights for them.

You can invest heavily into research and design but even Nike doesn’t know what will happen until you open the doors to the public. Nike have learned not to become complacent nor to rest on their laurels which is what innovation is all about – being prepared to make mistakes, optimise and relaunch as you go. If you’re not prepared to make mistakes, you can’t innovate.

Information assymetry

In his excellent book The Undercover Economist, author Tim Harford discusses (among many other topics) the problem of information asymmetry, first identified by Nobel prize winner George Akerlof in 1970.

Information asymmetry
Information asymmetry is a market condition where the sellers of a certain good know more about the product than the buyers. Akerlof’s example was the second hand car market where sellers know the foibles of their cars but buyers cannot tell the good cars from the bad. Buyers therefore compensate for this uncertainty by offering a price lower than the sellers of good cars are prepared to accept, preventing the sellers of good cars from entering their car in the market at all. Ultimately the effect of information asymmetry is that the second hand car market becomes a market for lemons.

Solution #1 – Experts
Given the value to both sellers and buyers in reducing uncertainty, a variety of businesses have been created to solve the state of asymmetric information in a number of markets. Two examples might be pre-purchase vehicle inspections in the second hand car market and building & pest inspections in real estate. Of course, experts sometimes have different incentives to that of their clients – real estate agents, for instance, have little incentive to get the best price for their clients, instead looking for turn houses over as fast as possible. Freakonomics discusses one study which found that real estate agents kept their own houses on sale ten days longer (waiting for a better offer) than the average, getting 3% more than the price they obtain for you and I.

Solution # 2 – The internet
Of course, the most powerful antidote for information asymmetry has been the internet. Information is no longer controlled by the powers that be – it’s now democratised and readily searchable through Google. It’s also changed the speed at which information is available so that everyone gets it at the same time. Finally, a large number of comparison services have been created to deal specifically with this issue, be it a restaurant guide or customer reviews on Amazon & eBay.

Solution #3 – Other signals of quality
Where information asymmetry persists in spite of experts and the internet, Tim Harford explains that consumers look to other signals for quality that have nothing to do with the product itself. A car dealer with a marble-floored showroom would therefore be viewed more favourably than someone who operates from their garage. This is because their larger investment suggests they are more interested in protecting that investment than doing a dodgy deal and leaving town. I see two problems with this, however, where significant financial investment is involved:

a) Apparent risk only
Investing in non-product quality signals speaks to apparent risk rather than real risk – the marble flooring makes no actual difference to the quality of the BMW parked on it. Being an inefficient solution it may worsen the problem – sellers may seek to recover their investment by massively inflating prices, selling lower cost goods or hitting you with hidden costs.

b) The past, not the future
The second problem with this high-investment solution (such as a showroom) is that it’s an indication of a previous commitment, rather than a future commitment. That prior commitment might also involve high levels of debt, requiring solid-looking businesses to close without warning.

What does all this mean? It’s hard to get people to trust vendors in faulty markets. For you and I who want to sell things, this is a serious problem. In a future post I’ll discuss an inexpensive solution that any business can employ.