Digital Digressions

Think Eco-Systems not just Issues

Take global warming or government regulation as examples - these are all very complex topics, collections of variables where solving the problem cannot be achieved through solving one issue alone, but in fact the solution rests in addressing the eco-system tying together all the inter-linked variables. In fact, seeing things on purely the issue level may in fact be contributing to the problem.

In the book Freakonomics the authors quote numerous examples of cases where seemingly complex phenomena have very simple origins, but often in an entirely different field and the eco-system magnifies the impact through all the inter-related variables and creates an impact on local, sometimes national and international levels. One of the striking examples is their analysis of crime figures in large cities in the US. The numbers were growing at epic proportions year-on year until sometime in the mid-eighties the trend suddenly stopped and began a steady decline. Experts tried to attribute this reversal to anything from an increase in spending on the police, a growth in numbers of staff, prisons, different governments, new laws etc. but the biggest impact came from the legalisation of abortion.

How could this have anything to do with crime figures you may wonder? Here the eco-system comes in: the women most likely to have an abortion back in the 60s where women in low-income households with several children already and who before the legalisation either had to risk their lives to have an abortion by often unqualified people in unsafe conditions and risk prosecution or not have one at all. Many didn't and subsequently struggled to look after their children, who often ended up in crime from a lack of opportunity in life. As abortion became legal in many states, the numbers of these 'unwanted' children dropped and the sheer numbers of disadvantaged youth decreased, thus decreasing the populace likely to commit crime. It's not to say that the other measures had no impact at all, but collectively they helped solve the problem as the eco-system of ideal conditions leading to crime gradually became more untenable.

Biofuels are another example of where eco-system thinking really needs to be applied on a much larger scale than today - touted as the solution to the West's reliance on fossil fuels, the growth of crops destined for biofuels is now accelerating across the world, leading to an increased rate of rain forest destruction (these are our most efficient weapon in clearing CO2 from the atmosphere) as land is being cleared to grow palm oil - a crucial ingredient in biofuels. Much agricultural land previously home to food production is being converted to grow crops for biofuel, putting food production in danger. The biggest irony of all is that the process of producing biofuels has a greater negative impact on global warming than fossil fuel use - proving that there is no simple 'solution' to global warming, in fact simple solutions may in fact be aggravating it further, instead we need to think in eco-systems, not just locally, but nationally and internationally.

Nancy Gibbs of Time, talks in her column about the Vatican reflecting on its mortal sins for the modern age (24th March 2008) of the fact that back in the past sloth, lust, greed, envy and anger accounted for virtually all the crimes of mankind, whereas today the issues that once were the clear culprits behind our follies and misfortunes are far more complex than the 7 deadly sins alone. Causes and consequences come together to form eco-systems, where one problem feeds another and addressing consequences is meaningless without understanding and addressing the causes. Contextualising what was once simple in our now increasingly interlinked world - Quoting Mohandas Gandhi's version of the 7 deadly sins:

• Wealth without work
• Pleasure without conscience
• Science without humanity
• Knowledge without character
• Politics without principle
• Commerce without morality
• Worship without sacrifice

The responsibility rests with the individual, but that includes the duty to take care of others as well as yourself.

Institutional hubris meets the empowered consumer: The Terminal 5 song

A while ago I treated you to the full transcript of my own experience with British Airways on my return journey, which got delayed a full 28 hours. Back last summer that was an epic delay and worthy of headlines, but it pales in comparison to the debacle known as Terminal 5.

Newspapers here in the UK have been full of articles cataloguing the events that transpired when the new Terminal was finally opened to the public, mass-scale computer failures preventing anyone from logging in to check in passengers, an incomprehensible baggage-handling system that failed as soon as it was turned on, an elaborate and beautiful glass-covered building with inadequate signing and logic to handling vast quantities of people needing to move from one floor to the next, the list is endless.

Outraged consumers have filled columns and airwaves venting their spleen about how this kind of behaviour can be tolerated and how come no one has sued the pants off BA and BAA by now - it surely would happen in the States. The most creative expression of consumer-generated discontent is the Terminal 5 song that captures brilliantly some of the madness that this episode in the history of disasters known as BA/BAA ventures and service - it's even catchy! Bring on the empowered consumer!

Best of 2006: Oldies but Goldies

So here we are; another year nearing it's end so I thought a good way to start clearing the path for new exciting topics to be meditated upon in the new Year, would be to first celebrate some of the all-time most popular posts on this blog. Without further ado here goes:

1. Life Observations in a Nutshell: best bumper stickers This hilarious selection of one-liners will have you chuckling long into the night.
2. The Secret of Happy Employees Happiness at work really isn't rocket science; very similar in fact to what makes us happy in our everyday lives too.
3. The Myers-Bricks Recruitment Method is of course a hilarious take on the famous Myers-Briggs test so liberally applied in recruitment these days.
4. A Procrastinator's Guide to Getting Things Done getting organised is really this simple. Honestly :)
5. How to Encourage Innovation in Business some rules for revolutionaries
6. Life Observations in a Nutshell: Best Bumper Stickers part II the follow up to the most popular post ever; here are some more additions to an almost unbeatable collection already
7. Death by Powerpoint never be accused of making a boring presentation ever again - here are a few tips and tricks to keep you going
8. The Essence of Intelligence is in the Ability to Understand Others nuff said
9. Worst Analogies Ever use with caution; you have been warned!
10. Running Creative Brainstorms: a Collection of 'Non-Method' Methods use these and harness the creativity of your friends, employees, family members...

So there we are - hopefully these nuggets will keep you laughing and thinking until I think of something else to blog about. :)

Deeper Sense of Luxury

In an earlier post I talked about what makes a good toy, contrasting two rival consumer mindsets against one another as partially to blame for the problem with toys imported from China: on one hand the desire (or expectation) for safety and quality at knock-down prices; on the other hand - the (almost) accepted transitory nature of many products and the subsequent unwillingness to spend money on products where safety and quality are taken extremely seriously.

So where the true cost of quality has eluded people, and the effects of low quality not being completely clear (until now), it has been an easy option for many companies caught in this dilemma to go for Chinese-manufactured products as keeping manufacture in Europe or the US would simply have created prices that consumers would not be willing to pay.

However this is beginning to change. First indications of this was the emergent trading up, trading down trend where people deliberately sought to save money through highly thrifty shopping for everyday essentials, yet splashing out on upgrading select items in luxury outlets. Yet, contributing to the warped sense of value is of course the flip-side to all this, where reports and documentaries detailing how many luxury labels charge a premium for the 'perception' of quality they embody, but in actual fact many products are manufactured just the same as ordinary priced items. Luxury items simply command a higher margin, with labels pocketing the change.

What people are beginning to understand is what exactly the elusive term 'quality' means. It appears that Quality functions like a broad stroke term to encompass high expectations on:

•     Material
•     Finishing
•     Design and Usability
•     Functionality, features and compatibility
•     Ethics and sustainability
•     Health and Safety
•     Environmental Impact
•     Service and replace-ability

Many still refuse to pay the premium that this may translate to in the short term, but as we increasingly begin to be able to factor the costs of the long-term impact of such choices - it becomes very hard to sustain the argument. Leading this change is the growing attention paid to corporate social responsibility and initiatives like the Deeper Luxury report by WWF UK where the media response to this could be the tipping point for the Industry as suggested by CSRwire

Media Response to WWF-UK Report on Luxury Brands Could Be Tipping Point for the Industry.

Last week over fifty newspapers and magazines from Britain, Brazil, Australia, New Zealand, Italy and Switzerland reported on the corporate responsibility of the world's largest holding companies of luxury brands. For the first time they had been ranked on their ethical performance in the report Deeper Luxury: Quality and Style When the World Matters, which was published by environmental group WWF-UK. The news went 'viral' through trade journals and blogs on fashion, jewelry, and celebrities.

The report "could herald a huge change in the way global luxury brands operate," states Fashion UK.(1) 'The luxury goods industry looks like it's having its own Nike moment," suggests UN corporate reporting expert Dr Anthony Miller, referring to the mid-90's criticism of labour practices in Nike's supply chain that made the company invest heavily in its corporate responsibility programme. Within days, Just-Style.com reported that "PPR Group commits to improving sustainability" as a result of the publication.(2)

 

What Makes a Good Toy?

All the recent attention focused on the toy industry courtesy of safety concerns seem to have not just caused any Chinese-manufactured toys to be viewed with suspicion and sent parents trawling through the Internet in search of advice on the matter, but also caused a wider shift in spending patterns link as parents increasingly worry about finding something for their little ones this Christmas, which won't get recalled in a few months time when someone licks it and finds it poisonous.

This in my mind doesn't just touch on ensuring even better quality control on toys, but brings in to sharp focus two potentially incompatible value-systems: on one hand - the desire for safety and quality; on the other hand - the (almost) accepted transitory nature of many products (temporary diversion rather than long-term joy) and the subsequent unwillingness of some to spend money on products where safety and quality are taken extremely seriously.

Certainly in the toy industry nobody likes to point fingers and it is a matter of ensuring that each manufacturer takes responsibility for this, however with a lot of the focus on price, China has in recent years been a very tempting solution for many trying to keep abreast with a larger consumer trend of continuously wanting everything faster and cheaper than before. Quality takes time, it costs too and that can be a problem if your company's business model can't support the investment in it.

Back to lamenting toys I was recently asked what in my opinion makes a good toy, so here's my personal list of criteria:

1. Age appropriate - small children in particular like to put everything in their mouth and are very  tactile in their play and exploration of the world - that means that the materials used and size are essential in making the toy safe. Older children have better fine motor skills and have stopped 'chewing' on everything to figure them out so can better handle small pieces.

2. Hands on - minds on: children's gross and fine motor skills along with coordination mature earlier than other parts of their brain so it is important that their toys stimulate movement and coordination, both on large and small scale. The ability of the toy to engage your mind and imagination is essential as children learn about both themselves and the outside world through their imagination.

3. Easy to learn but challenging to master - this gives the toy longevity and guarantees interest over time.

4. Many ideas and opportunities - it is important to be able to learn through the toys, but if they do not encourage experimentation and idea generation the learning will be short-lived

5. Fun alone and together - being alone and together is important for kids, both with their own peers but also with their parents, so toys that can handle both enable role-play and storytelling that kids both love to hear and to do for themselves, alone and together.

Now some toys tick all the boxes, others only some, but it's important to remember than there are many kinds of toys, each with their own strengths and a good mix is important too, but above all they must all encourage play, the more the better!

 

 

Why the Era of the Insider is Over

Now this is intentionally a controversial title for a post, but hear me out. I'm not saying that we no longer need people who know stuff, in fact we will need them more than ever before - but what I am saying is that information and expertise is becoming so ubiquitous (through the Internet) that some of the models for profiting from expertise and insider knowledge are rapidly becoming redundant.

So back to the post. Let's start by a poignant example. Here in the UK estate agents have been running amok with property prices of late and been trying their best to prop up property prices all around the country. Why? Because the higher the sale price, the better their fee (as it is often calculated as a percentage of the final sale price). So whether you like it or not, it is in estate agents' interests to get as high a price for a property as possible. [Don't even get me started on whether it is reasonable to pay half a million pounds for some house built over a century ago, where heating mostly benefits the pigeons outside and no angle in the house is 90 degrees, making office chairs on casters spontaneously migrate to one corner of the room.]

Anyway - the game has been that of poker: If we tell you the price is going up and you better get on the property ladder soon, (pandering to the human weakness of dreading to lose out) people invariably believe it and more often than not in recent years, have been extending themselves far more than what could be recommended to just get on that property ladder.

Interestingly this began changing not too long ago, first with Nethouseprices, an on-line facility that keeps track on the actual price for which a property was sold. Certainly this began drawing a lot of interest and curiosity from people, but there was still room for estate agents to jump in the middle and say - 'weeeelll, that was then... this is now and I tell you it is hotting up big time!'. What do I mean? Well, the prices listed on Nethouseprices are lag measures - they only tell you the news AFTER it has happened. It's like saying - I would like to lose weight and tracking your weight only by getting on the scales every morning. The scales will tell you your weight at that precise moment in time, but not whether you are likely to be losing some weight anytime soon.

Well, I hear you ask - how could you measure the likelihood of losing weight? By finding a lead measure instead. So if you measured how often you took some exercise and how many calories you burned every time you exercised, offsetting that against how many calories you took in and going on the theory that if you burn more calories than you eat - you will find that sooner or later you begin losing weight. That's a lead measure. Keeping track of that will tell you before you get on the scales what the scales are likely to tell you. How does this apply to the housing market?

The fact is that the housing market is catching up too and instead of reporting lag measures (i.e the price at which properties were sold and no use to you since the property is no longer on the market so you can't jump in and buy it instead!) we, the consumers are beginning to have a chance to peek into that precious secret folder that only estate agents and individual sellers had access to before - that is, how much the price is coming down WHILE the property is still on the market. Ooops! The emperor no longer has any clothes as PropertySnake, interestingly named to be the opposite of the property ladder, will show. PropertySnake tracks how much prices of properties have fallen over time and by looking up areas by post-codes you get a good sense of the overall trend in that area in addition to what is happening to a particular house. If you then are so intrigued by what you find, you can look up with what estate agent that house/flat is listed with by clicking on the listing.

It is also a step on from traditional price comparison sites, which have mushroomed recently, because again - although those sites compare the prices right now, they seldom give you any indication of where the market is going. The same phenomenon is what happens at Ebay - because everyone can bid whenever they like and only by keeping track of something over time can you see whether the demand for that is heating up or not, it means your powers of detecting broader trends are limited to your own power of observation and whatever little software widget you might have that gives you the bids that are just about to close so you can bid in the last few minutes.

All those are still tactical tools, and up till now the strategy has been left to experts, but as we begin to see with house prices and no doubt with other areas too - the last vestiges for insider knowledge is becoming undone.

Why So Few Women at the Top: The Weight of Many Small Things

An excellent article recently appeared in the Harvard Business Review analysing why so few women have made it to top management in Fortune 500 companies. Their take is an interesting one, highlighting the fact that commonly perceived reasons for lack of female career progression, such as 'the glass ceiling' are in fact outdated metaphors for what is today a much more complicated picture.

They highlight the fact that times have changed and

the glass ceiling metaphor is now more wrong than right. For one thing, it describes an absolute barrier at a specific high level in organizations. The fact that there have been female chief executives, university presidents, state governors, and presidents of nations gives the lie to that charge.

At the same time, the metaphor implies that women and men have equal access to entry- and midlevel positions. They do not. The image of a transparent obstruction also suggests that women are being misled about their opportunities, because the impediment is not easy for them to see from a distance. But some impediments are not subtle.

Worst of all, by depicting a single, unvarying obstacle, the glass ceiling fails to incorporate the complexity and variety of challenges that women can face in their leadership journeys. In truth, women are not turned away only as they reach the penultimate stage of a distinguished career. They disappear in various numbers at many points leading up to that stage.

The article goes on to explain the very complex and nuanced world, to be seen more like a labyrinth rather than a single unsurmountable obstacle that provide the reasons why so few women indeed make it to the top. A series of actions are also suggested as ways for companies to address this problem, making a strong point of the fact that there is more to empowering women than putting quotas in place.

Summarising:

1. Increase people’s awareness of the psychological drivers of prejudice toward female leaders, and work to dispel those perceptions.

2. Change the long-hours norm.

3. Reduce the subjectivity of performance evaluation.

4. Use open-recruitment tools, such as advertising and employment agencies, rather than relying on informal social networks and referrals to fill positions.

5. Ensure a critical mass of women in executive positions—not just one or two women—to head off the problems that come with tokenism.

6. Avoid having a sole female member of any team.

7. Help shore up social capital.

8. Prepare women for line management with appropriately demanding assignments.

9. Establish family-friendly human resources practises.

10. Allow employees who have significant parental responsibility more time to prove themselves worthy of promotion.

11. Welcome women back.

12. Encourage male participation in family-friendly benefits.

Full version of article

Why Some of Us Give Up and Others Try Harder

How you react to adversity is really telling - some of us throw in the towel and simply give up, and others, facing almost insurmountable obstacles, don't think twice about continuing. What makes us strong on and how do people find the strength within themselves to carry on in the hardest of times?

As an avid cyclist, reading Lance Armstrong's 'It's Not About the Bike' is of course an amazing illustration of how he turned his life around, being diagnosed with cancer, battled four cycles of agonising chemotherapy enough to make the best of us curl up in agony and came back to win a total of 7 Tour de France victories. As he puts it in his consecutive book 'Every Second Counts'

"The experience of suffering is like the experience of exploring, of finding something unexpected and revelatory. When you  find the outermost thresholds of pain, of fear, or uncertainty, what you experience afterwards is an expansive feeling, a widening of your capabilities.

Pain is good because it teaches your body and your soul to improve. It's almost as though your unconscious says "I'm going to remember this, remember how it hurt and I'll increase my capacities so that next time, it doesn't hurt as much". The body literally builds on your experiences and a physique and temperament that have gone through a Tour de France one year will be better the next year, because it has the memory to build upon. Maybe the same is true for living too.

If you lead a largely unexamined life, you will eventually hit a wall. Some barriers can be invisible until you smack into them. The key then is to investigate the wall inside yourself, so you can go beyond it. The only way to do that is to ask yourself painful questions - just as you try to stretch yourself physically."

Professor Carol Dweck at Stanford examines exactly this. Through more than three decades of systematic research, she has been figuring out answers to why some people achieve their potential while equally talented others don’t—why some become Muhammad Ali and others Mike Tyson. The key, she found, isn’t ability; it’s whether you look at ability as something inherent that needs to be demonstrated or as something that can be developed.

[from Stanford Magazine] "Students for whom performance is paramount want to look smart even if it means not learning a thing in the process. For them, each task is a challenge to their self-image, and each setback becomes a personal threat. So they pursue only activities at which they’re sure to shine—and avoid the sorts of experiences necessary to grow and flourish in any endeavor. Students with learning goals, on the other hand, take necessary risks and don’t worry about failure because each mistake becomes a chance to learn. Dweck’s insight launched a new field of educational psychology—achievement goal theory.

Dweck’s next question: what makes students focus on different goals in the first place? During a sabbatical at Harvard, she was discussing this with doctoral student Mary Bandura (daughter of legendary Stanford psychologist Albert Bandura), and the answer hit them: if some students want to show off their ability, while others want to increase their ability, “ability” means different things to the two groups. “If you want to demonstrate something over and over, it feels like something static that lives inside of you—whereas if you want to increase your ability, it feels dynamic and malleable,” Dweck explains. People with performance goals, she reasoned, think intelligence is fixed from birth. People with learning goals have a growth mind-set about intelligence, believing it can be developed. (Among themselves, psychologists call the growth mind-set an “incremental theory,” and use the term “entity theory” for the fixed mind-set.) The model was nearly complete (see diagram).

To me this approach is really interesting, because not only can it influence the way we approach life, career and learning, but through the quote from Lance Armstrong - it can also be applied to physical performance. And to great result, as proven. So what does this all mean? Milton Chen talks about how children can be taught to "feed their own brains" through understanding that their brains and intelligence can be grown and how this mind-set actually improves their academic performance.

As Chen explains: "I asked Dweck about the implications of her research -- what teachers and parents should do, for instance. In an email interview, she recommended the following strategies:

 

• Teach students to think of their brain as a muscle that strengthens with use, and have them visualize the brain forming new connections every time they learn.
• When they teach study skills, convey to students that using these methods will help their brains learn better.
• Discourage use of labels ("smart," "dumb," and so on) that convey intelligence as a fixed entity.
• Praise students' effort, strategies, and progress, not their intelligence. Praising intelligence leads to students to fear challenges and makes them feel stupid and discouraged when they have difficulty.
• Give students challenging work. Teach them that challenging activities are fun and that mistakes help them learn."

Funnily enough - my own voracious appetite for reading anything and everything is very much in line with the same thinking. I believe we can learn anything we set our minds to and it is those moments that feel a little like vertigo, when new horizons of discovery open up in front of your mind's eye, that keeps me going and motivated. A full life isn't one without a continous expansion of our mind, abilities and  wisdom.

The Key to Social Media: Above all - Be Useful!

First I would like to dedicate this post to Mum of a LEGO Kid, because you just convinced me to drag myself out of my self-pity (I have a cold!) and reflect on what were my Aha-moments from last week's Conference on Social Media and User-generated Content.

So a rather intimate affair, we were around 50-60 people in total and from a refreshing variety of companies ranging from CNN, Yahoo, Coca-Cola, Deutsche Bank, TripAdvisor, E.On, Honda, Habbo Hotel, Spannerworks and many more. Although initially I was expecting something bigger, the frankness of the discussion and the willingness of people to share their thinking and ideas was great - it seems a smaller conference is more conducive to that, rather than a bigger one where you never get to know everyone there.

Interestingly, there were also plenty of different approaches to the subject matter - from literally how to do corporate blogging by VisitBritain.com to my own talk about how we at LEGO strive to not only involve lead users in our product development, as was the case with LEGO Mindstorms NXT, LEGO Hobby Train and now the LEGO Universe MMOG but also have created ways for everyone to design their very own LEGO products via LEGO Factory and are gradually setting up structures to open up our business platform to our fans and LEGO certified professionals, creating an business ecosystem around LEGO.

Honda contributed with a case studies of their recent marketing campaigns on 'Hate Something Change Something' and 'Hondamentalism', both which I thought were brilliantly executed campaigns, but somehow I was a little disappointed not to see a truer user-focus from them - i.e users really having a big say in what Honda does, more than just interact around the campaigns.. perhaps it is hard to do as a car manufacturer, but somehow I would like them to be different and do it anyway! (call me a hopeless romantic!)

Coca-Cola talked about how coke music was the spring board for many a young aspiring artist and how the community here took off - of course needless to say, music has a strong tribal effect particularly on young people so hats off to Coke for making it happen. Another piece of inspiration came from Yahoo, whose Yahoo Answers is an interesting way to create discussion around a topic and find answers to all your questions, whatever they may be. Not that revolutionary you may say, but think of it this way - Wikipedia is great if you want to find the explanation to something you have stumbled on, but aren't sure of the details. Yahoo answers is great if you have a question, but don't know the answer.. You with me? Hmmm... perhaps not the best explanation - but essentially I'm trying to say that here community interaction is focused around problem solving, where the collective brain of hundreds of thousands of Internet users can come to your rescue whatever the problem.

Also, I can't help but love the pixelated world of Habbo, created by my fellow Finns at Sulake Corporation - also a massively multi-player on-line game, this one primarily at teen-agers and very funny in its approach to characters, locations - you name it.   

So ultimately if I was to distill my thoughts from the conference without making this too long a post it would be this:

1. Create an open platform - platforms work better than closed solutions, because you can never quite anticipate how people will use things you create. If you have a platform, more things are possible and it is easier to reconfigure stuff that doesn't work. Open platforms means its easy for advocates to get others on-board, and you do want a bustling community for it to make sense!
2. Unite people behind something they care about - Social networking is great, but after you've got all your mates on Facebook or Myspace, why would you go anywhere else? Good question. Ultimately we tend to be more open about meeting new people when it is around a subject we are really in to - immediately we have something in common with these strangers and it is easy to strike up a conversation. On-line it is very similar too.
3. Make it useful - Whatever fancy community you want to create, this links to the above point. Many an idea dies a horrible death, because beyond the novelty factor, it really doesn't do much. The bits that people come back to over and over again are the useful bits. Wikipedia is useful. Linked-in is useful too, these things have a purpose people get and hence I predict they will be around for a long while. Facebook has a chance of being around far longer than Myspace, because they went for an open platform, allowing people to come up with tons and tons of widgets and applications (some useful, some less useful), but at least they are there and things happen at a breakneck speed, so there is a reason to keep coming back for more than just checking on your mates.
4. Don't manipulate, facilitate - This one is very much about the approach. Meaningful things happen trough facilitation, only bad things happen through manipulation. Enough said. Help people to make a difference and you help yourself.
5. Be truthful and honest (and humble) - No, Social Media is not some sort of smoke and mirrors thing you can douse a failing product line in and miraculously see it recover.. it is essentially a dialogue and nobody wants to discuss anything with a liar and a cheat. To involve users you have to be honest and truthful, not think you can use this thing to warp people's perception from bad to good. Moreover, treat people with respect - always. I get so furious for instance when I hear people talk about driving traffic to websites by comment spamming - no, it doesn't work. You look like an idiot trying to advertise Cillit Bang by posing as Barry the character from the adverts on someone's blog..
6. Have some fun! Yes it can all be very serious sometimes and uniting people in laughter is a great one, however - it's more of an ingredient, as not all people will find all things funny all the time. Also, people who share a common interest or passion are more likely to be able to share something funny between them and boy, sometimes we all need cheering up!

Last, but not least I'll do a plug for our friends at Spannerworks, who have created a no-nonsense guide to all things social media in a nifty E-Book you can download and dazzle your friends with in-depth knowledge. Or as Forrester research puts it ‘Social Computing is not a fad. Nor is it something that will pass you or your company by. Gradually, Social Computing will impact almost every role, at every kind of company, in all parts of the world.’ Forrester Research, Social Computing - How Networks Erode Institutional Power, And What to Do About It

Understanding what makes your consumers and employees tick

Here's an excellent interview of Chip Conley, author of Peak - How companies get their mojo from Maslow by Mark Hurst of the GoodExperience blog, a treasure trove of articles on experiences and the thinking behind the design of them. Check him out at the GoodExperience Blog.

Chip Conley is CEO of Joie de Vivre Hospitality, the world's second- largest boutique hotel company. After a severe downturn in his business after 9/11, Conley read Abraham Maslow's works as inspiration for his turnaround plan. It worked: Joie de Vivre is again thriving, and Conley has written a book about what he learned - not only from Maslow, but from companies like Nike, Apple, and Harley-Davidson, which follow Maslow's thinking. Chip's book is

Chip will also speak at Gel 2008 in April in New York:

Q - What's the main idea of "Peak"?

The main idea is that we're all humans in the workplace - whether employees, customers, or investors - and those companies that succeed and become peak performers touch us as people in the workplace, by focusing on higher needs, as opposed to base needs.

Q - How is Abraham Maslow significant?

Maslow wrote about the hierarchy of needs in the mid-20th century. There's no psychologist or psychiatrist quoted more in business schools or corporations than Maslow. Drucker, Covey, Bennis, and Collins all write about him in their books - they mention him in two or three pages, mostly talking about the hierarchy of needs.

What's interesting is that the psychology profession - including Freud, Skinner, and others - commonly looked at the worst practices in behavior in defining the human condition. Maslow says, let's look at *best* practices - people who are fulfilled or self-actualized, who can "be all you can be" and have clicked in to doing what they're supposed to be doing.

Q - Describe the pyramid containing the hierarchy of needs.

There are five levels in Maslow's pyramid. At the base are physiological needs. Then come safety, social belonging, and esteem, and at the top, self-actualization, which is where people are more likely to have peak experiences - what ought to be, is, and life feels great. Reading Maslow woke me up to the idea that if there are self-actualized people in the world, then maybe there could be self- actualized *companies*, since companies are just collections of people.

So in "Peak" I break down Maslow's pyramid and apply it to key relationships - employees, customers, and investors. I took Maslow's five levels and turned them into three levels: the first two levels, physical and safety needs, are just survival. Levels 3 and 4, social and esteem, are just success needs, how the world sees you. At the top of the pyramid, self-actualization, is a transformative state, where you've moved beyond your own ego. So I created the "transformation pyramid": survival on the bottom, then success, and transformation at the top. I then applied those three levels to the motivations of employees, customers, and investors.

Q - OK, what do you say about employees?

For employees, what's the survival need? Money, compensation. Sure, some CEOs are almost exclusively motivated by money. But for most people, it's just a base need. Every survey I've seen shows that money is not the primary motivator for employees. As nonprofits will tell you, the base foundational need is important, but the differential from one company to the next is not huge. Money as a differentiator isn't important.

The success need is being recognized. Marcus Buckingham's book "First Break All the Rules" showed that the number one reason people leave their job is their relationship with their direct supervisor. People join companies, but they leave their bosses.

The top of pyramid is something different, intangible - in the pyramid we're moving from the tangible, to the physiological, to the very intangible. For an employee, it's meaning. This is somewhat blasphemous for companies; it's hard to measure what's intangible. Yet MasterCard says what's true, that what's most important is "priceless," and that's intangible.

How do you put your attention on the top of the pyramid? The three levels represent money, recognition, and meaning: let's translate each to a word that describes a person's relationship with their
work: a "job", a "career", or a "calling." Employers that move their employees up the pyramid get more happy and fulfilled and productive employees, who are much likelier to stay longer, and a positive spirit in that workplace. The fact is, I have 3,000 employees, and 1,200 of them clean toilets for a living. So it's a challenge for me to create that with my employees.

Q - What's the customer pyramid?

For a customer, the survival need equates to having one's expectations met. If you don't meet their expectations, you haven't met their survival needs; you've created buyer's remorse. It comes down to the difference between expectation and reality. Most companies get very focused on the base; that's what customer satisfaction surveys are about. "Was your check-in process efficient?" Well, sure it was, but I hated this and that other thing, which the survey won't ask me about. We most notice the intangible. Pure customer satisfaction is at the base of the pyramid.

The success need is having desires met, which companies deliver either via technology or training. Good examples of using technology are Amazon and Netflix, which use mass-customized technology. The more I use them, the better they know me and my desires. Similarly, Four Seasons hotels are more high-touch. Through great training, the people there know my desires. That creates customer loyalty - and this second level is where it builds, not at the bottom of the pyramid.

Now for the top of the pyramid. Henry Ford said, "If I listened to my customers, they'd tell me to get a faster horse." By meeting the unrecognized needs of a customer, which the customer may not be able to articulate themselves, you create a customer evangelist. So there's customer loyalty in the middle, and *evangelism* at the top. A self-actualized customer is so thrilled you've met a need they didn't know they had, that they become believer. Companies that do this include Apple, Whole Foods, Southwest Airlines, and JetBlue. You get on a JetBlue flight and find your own TV at your seat. More importantly, you have some control at a time you'd otherwise feel out of control. Companies that do this well create not just loyalty but a marketing machine.

Q - What are some best practices of companies that use the customer pyramid to great effect?

There are four qualities that define companies that are creating these customer evangelists. First, they help their customers meet their highest goals - allowing a customer to achieve their ideal goals from using the product. Apple enables its customers to go out and exercise their minds. Nike encourages customers to "just do it." Google gives you exactly what you're looking for. These companies are helping customers meet their highest goals.

Second is giving your customers the ability to truly express themselves. By buying a Harley-Davidson, a middle-aged accountant from the Midwest can feel like a rebel. In the case of boutique hotels, you might say, "You are where you sleep." If a hotel has a personality that represents an aspiration for you, then hopefully when you check out it will have rubbed off on you a little bit. Similarly, there's a halo effect of being an Apple user; and Starbucks has tried to become a curator for a lifestyle for its customers. These are customers who feel like they can express themselves through the purchase of a product or service.

Third is making customers feel like they're part of a bigger cause. Hummer buyers may feel that connection, but most people would say that it's lacking a socially responsible element. Patagonia - the company, not the region in Argentina - runs its "1% for the planet" campaign, and its loyal customers are "Patagoniacs." They love being associated with Patagonia because it's part of a bigger cause. For people who buy from Apple, it's not just "I'm an iconoclastic rebel," but "I'm part of a bigger cause," the anti-Microsoft attitude. At Whole Foods Market, you may go there because you love the product, but lots of people buy there because they love the sustainability cause. People like buying a Toyota Prius because it makes them feel good about both buying a car *and* doing something for the planet, even though that's a rather oxymoronic thought.

The fourth quality is offering customers something of real value they hadn't even imagined. That's what JetBlue did with the TV screen. That's what FedEx did when they created overnight delivery. It was a remarkable thought, 25 years ago, that you could send something overnight. But that innovation became a commodity over time. A lot of people entered FedEx's market, and Fred Smith, the founder, said, "I thought I was in the transporting goods, and then I realized that I was in the business of creating peace of mind." So he created a logistics program to allow customers to track packages. Now the innovation, what people wanted, an almost unrecognized desired, was: if I'm sending it overnight, the person on either end wants to know where it is. FedEx went from being an also-ran to going to the top of the pyramid again and taking market share away from its competitors. FedEx's innovation in terms of tracking was addressing that peace of mind that customers were looking for.

Q - How can any company start to put these principles into practice?

The easiest way is to consider how Maslow's hierarchy can be applied to your customer. For example, for a hotel customer, the physical level is a clean and comfortable bed. Safety might be offering an electric card-key instead of a regular key, and making sure there's good lighting in the parking lot. And so on. Just remember that there is a hierarchy of needs of employees, customers, and investors, and you can help people around you understand that.
See also:

- More Good Experience interviews: where this interview originally came from!