Wednesday, April 27, 2016

Knowledge and Creativity

To learn anything, we must first pay attention to the way things currently are rather than passively accepting established traditions.  To do nothing different and follow convention is always the easiest course, in that it requires the least effort and encounters the least resistance.

However, to undertake exploration we require leisure.  Those who are struggling to survive cannot spare the time and energy to try something new along with the risk that it may not work out.   It is no coincidence that the “golden ages” of invention, the arts, and other intellectual activities have only been achieved in cultures where the basic survival needs have been well met.

Discovery also requires having knowledge of what is already done, to enable a person to arrive at a conclusion that is truly novel rather than putting in the effort to “invent” something that already exists or is known to be less effective than current methods.   To arrive at this point, a person must know their craft – and ideally, he has learned it efficiently from other practitioners rather than having to discover it for himself.

The requirement of expertise is also a reason that creativity occurs in explosions, when there are many creative minds benefitting form the same information, than in isolated individuals in societies that are deprived of knowledge and hostile to information.   The culture must not only condone, but also support, the development of knowledge.

As the amount of knowledge grows, it becomes necessary to specialize by subdividing the various domains of knowledge and innovate in a very well defined space.  One can only be so good at “art” in every form, but can develop great expertise by specializing in sculpting marble.

Being a “Renaissance Man” was valued during the Renaissance, but today is merely a person who has very shallow knowledge of a myriad of fields and is highly unlikely to contribute anything meaningful to society.   Where little knowledge exists it is possible to know it all – and this is no longer possible given the breadth to which human knowledge has grown.   A person has to know “it all” within a very well defined area.

Granted, the trend to specialize has its drawbacks.  As knowledge becomes fragmented and the intellectuals become isolated from one another, delving into specialties of ever narrower scope, intellectuals become as the workers on the tower of Babel.  Each one is too focused on his own specific domain, does not understand other domains, and there is no common language that allows them to communicate or work together.

Another drawback to this specialization is that intellectuals become eccentric and withdrawn – the subjects of their interest are too far removed from the experience of the common person.  This causes their work to be ignored or dismissed by the culture whose acceptance is necessary for discoveries to have an impact on traditions.

Ultimately, a distinction must be drawn between knowledge and creativity – creativity must culminate in creation and is not done for its own sake.  The “aloof and sequestered” scientists who never present their ideas to culture for consumption are not producing a change in culture, and because of that cannot be considered creativity because all their work effects no change in culture until it is unearthed by someone else at a later time.

Friday, April 22, 2016

Evolution Toward Ethnography

Historically, organizations were run from the top down, with each lower rank following the orders of higher ranks without question.  Some organizations still operate according to this model – and even in organizations that have recognized that the most insight and expertise exists in lower ranks of the organization, rank is still respected – it intimidates, and is sometimes intentionally used to intimidate, people who know better into following orders they know to be dead wrong.

Next, there came an era of specialists and consultants, bringing in ”experts” from outside the firm to provide direction.  This was a slight improvement, as outsiders had no political agenda within an organization and no dedication to preserving business-as-usual, and could ostensibly be counted upon to provide a knowledgeable and objective point of view.   Unfortunately, this did not always happen because the consultants brought an agenda of their own: to be re-hired and recommended, and to do so they recognized that they could not present recommendations that were not palatable to their clients.   So eventually, and inevitably, the experts became the puppets of the ranking officers.

A further step was taken when firms recognized that their front-line employees that interact with customers regularly received direct feedback from the market.  They were able to quickly recognize the flaws in the instructions they received “from headquarters” and bore the brunt of unsatisfied and disgruntled customers.   However, the attempt to capture this information in knowledge management systems failed horribly, as employees feared losing their personal competitive edge (one cannot be “top salesman” if everyone else knows the same tricks) or retaliation if they admitted breaking rules and ignoring procedures to get the job done.

The closest that many firms have come to truly understanding the customer is through market research: interviews, focus groups, and surveys that attempt to gather feedback from the customers themselves.  However, the participation rate in these experiments tends to be low and the results are often skewed: customers rely on vague memories and speculate, and they very often posture by presenting rational reasons for an emotional reaction, a carefully process for a casual decision.  There have been many spectacular failures based on bad research, undertaken all the more boldly because there were numbers to back the decision.

This brings us to the latest attempt to gauge the preferences of the customer: ethnographic research, borrowed from sociology, which attempts to observe behavior “in the wild.”   It is particularly easy to do in online channels, where every click and keystroke can be monitored, though video surveillance in retail operations affords the same kind of data.   It is believed that actual behavior in the recent past is the best indication of what actual behavior will be in the near future, which seems entirely plausible.

However, even this method is not perfect – it observes only what is observable, and misses a great deal of the cognitive and emotional goings-on inside the mind of the customer that drive the decisions.  And worse, speculation is often done to fill the gap: one can see what the customer did, but can only make an educated guess as to why it was done.    But these limitations conceded, it is a promising advance that has significant potential to better align firms with the tastes and preferences of their customers.

The question remains as to how often and accurately ethnography will be leveraged.   It takes time to conduct an observational study, and in a climate of rapid change few are willing to invest the time.  It takes money to conduct such a study, and often the ROI cannot be proven because it is a research effort, so it may not be prioritized.  And just as in the earliest phases of evolution, the upper ranks of management are firmly in charge - they tend to favor research that supports their foregone conclusions, and use intimidation and threat to puppet the experts who conduct and analyze research - so just as much fake innovation and fake research is being done today (a veneer of objectivity over initiatives that are subjective and driven by gut instinct), so will this continue in the future, and it may be decades or generations before the vestiges of the most primitive approaches are at last laid to rest.

Monday, April 18, 2016

The Effort of Consumer Decision-Making

In a previous post, I considered the levels of consumer consciousness that might be employed in making a decision, and ended on the waffle of "it depends on the customer, purchase, and situation."   I still sense that to be true -no one level of effort is used by all customers for all purchases in all situations - but I likely could have gone further in considering the factors that influence the level of effort a customer will place in making a decision.   Hence, this follow-up:

In general, consumers decide how much effort they will place into the tasks of information-gatehring and decision-making for each purchase.   A person doesn't (or shouldn't) approach the task of deciding which beverage to have with a meal with the same level of effort and deliberation they approach purchasing real estate.   This much is intuitive - but to make it more deliberate, consider the following factors that may be influential:

  • Information – People can only make decisions based on information that they have.   This includes both knowledge gained in the past and information that can be obtained prior to making a decision.
  • Mental Ability – Likewise, people can only apply the systems and methods of analysis with which they are familiar or can become familiar before a decisions is made.  One cannot expect a simple-minded person to be capable of complex reasoning.
  • Experience – An individual’s level of experience making a certain kind of decision will influence the level of effort.  This can work in either direction: experience provides more knowledge and logical tools that can be brought to bear, but it also causes a person to choose to be less deliberate and rely on their instincts or repeat past decisions without sufficient analysis.
  • Importance of Outcome – A customer will place more or less effort into a decision based on the importance of the outcome they wish to achieve.  A fashion-conscious person will place greater effort into choosing a jacket than someone who simply wishes to be kept warm.
  • Relative Cost of Acquisition – Greater effort will be placed into decisions where there is higher cost, which includes not only money-price, time, and effort but also opportunity cost (the ability to use the time and money to obtain something else to serve a different need).   Few people put much effort into decisions costing less than ten dollars, unless that is all they have to spend.
  • Distraction – There are various situational factors that may prevent or obstruct an individual’s ability to acquire information and apply logic.  A common example is time pressure, which causes people to make decisions based on superficial information and logic out of panic.

There are likely many other factors that can influence the level of effort that a person can and will place into a decision.  Also, the degree to which each factor is influential is subjective.  Some people consciously decide to put a great deal of effort into seemingly trivial decisions and then take a very casual approach to more important ones - but the assessment of triviality/importance is done from the subjective perspective of the customer.

Tuesday, April 12, 2016

The Digital Leash

Mobile appeals to control-oriented individuals because of the potential to extend their command over great distances – but fail to consider that they are also nodes on the network, and are subject to the commands of others.  With a mobile device in your pocket, you are a node that others will seek to access and control.    And this can be dehumanizing and disempowering.

Consider the use of the telephone, mobile or otherwise: people delight in the ability to place outbound calls at their convenience, but find that inbound calls are an unwanted intrusion on their private lives.  While we generally do not mind the occasional call from friends and family, a call from the office or from a telemarketer is generally unpleasant and unwanted. 

Even when you yield to the schedules of others – expecting a call from someone – it is an unpleasant experience: people exhibit signs of anxiety and distraction, unable to focus on their current situation and those in their immediate environment because they are expecting the phone to ring, and show signs of panic when it does not.  This is not “empowerment.”

Security measures likewise reduce the power of the user: if you’ve forgotten a password, or accidentally locked yourself out of a device, the process to regain access is often extremely difficult.

As such, the mobile phone aggravates as often as it empowers, and it tops the list of surveys of devices that users feel they “hate the most but cannot live without.”

Thursday, April 7, 2016

Urgency in B2B Marketing

I previously meditated on the potential and problems or urgency in consumer marketing: the way in which a customer can be motivated to make a purchase now rather than later, and the way in which these tactics have been so thoroughly abused that attempts to create urgency are met with cynicism rather than compliance.    I’ve since been asked whether the same tactics (and problems) are applicable in B2B marketing or even in promoting an idea within a company.  My sense is that they are.

Organizations are notably slow and stodgy, designed to maintain current operations and resist change – whether that change is buying a new product, switching to a different vendor, or taking action on an internal proposal.   This is quite often by design: the organization realizes that rash decisions are often bad decisions, and places procedures and committees in the way of any change – such that even good changes require a great deal of effort to gain consent and adoption.  An organization is even more guarded and conservative than an individual, which makes the user of fear tactics much more difficult.

Just as with customers, organizations rank proposals according to the hierarchy of needs: anything that threatens the status quo is dealt with first, anything that presents an opportunity to improve the status quo is second.   A competitive threat to their existing market base is prioritized over the opportunity to expand into new markets – even if the second is more profitable than the first and the firm would be better off making the change.

The second criterion of prioritization has to do with the degree of impact, which is generally monetized into a ROI or ROE calculation.   Things that have the potential to have a high cost or generate a lot of profit, relative to the investment required to act, are given higher priority than things with a lower cost or profit potential. Ideally, this would be done without regard to whether the proposal represents a threat or an opportunity – but again, threats are seen as more pressing because they speak to psychological needs that are much closer to the base of Maslow’s hierarchy: hence maintaining business as usual is valued more than innovation.

The third criterion of prioritization is proximity to the present time.   If the amount of profit or loss is the same among two or more opportunities, the one that can be acted upon more quickly (or needs to be acted upon more quickly) takes priority.  This is in the same way that a young employee prioritizes paying off student loans over paying for retirement – he feels he has decades to deal with the second, and the first impacts his everyday lifestyle in the present.   Net present value can help neutralize the proximity effect, but things are not always done in a sensible manner.

Thus considered, an organization faces the same fears and applies the same criteria as any individual does – but it is most often done in a slower and more deliberate manner to avoid making a rash decision.   And while this seems entirely sensible, it often means that time-sensitive opportunities are lost by firms that move slowly to prevent the kind of mistakes that are made by acting in a panic.

Friday, April 1, 2016

The Inventor and the Entrepreneur

The difference between an unusual idea and a creative idea is that a creative idea causes something to be brought into existence – and not merely in the form of a prototype that sits unnoticed in the workshop, but in the form of a product that is delivered to the market.   The primary reason that many inventors an innovators are unsuccessful and unrecognized is that they failed to turn their unusual ideas into creative ones.

Consider the shopworn example of the graphical user interface (GUI) that is now commonplace on every desktop computer and digital device.  Very often, the credit for this innovation is given to Apple Computers, whose original Macintosh computer replaced the command prompt with a field of icons that could easily be used to launch programs and open files.   However, the GUI was invented nearly a decade before, by a research lab in silicon valley – but this is not known to many because the company that owned the research lab (Xerox, FWIW) failed to bring it to market.

The same can be said of most of the major inventions and innovations: few people recognize the individual who invented something, but instead associate it to the company that delivered it to their hands.   Some nerd will likely speak up to say, “That was originally invented by [someone else]” and no-one will know or care.   But more important that recognition, the original inventor received no reward from the sale of his invention – the riches went to the entrepreneur who delivered it to the market.

It’s suggested that this is merely a consequence of personality – that inventors are academic types and visionaries who aren’t concerned with the mundane and vulgar world of manufacturing, marketing, and distribution.  The inventor discovers something, marvels at his discover, then places it in the corner to investigate something else.   Some may see this as an admirable quality, but it seems entirely foolish.   And moreover, it seems all the more justified that the inventor is unrewarded and forgotten by history – as he did nothing to deliver the benefits of his work to the rest of mankind.

And ultimately, that is what is important: to come up with a great idea and then bury it delivers no value to society.   To recognize a good idea, even if it is not your own, and then help others to benefit it creates great value, and earns a significant reward for those who undertake the effort.

I wouldn’t go so far as to say that the entrepreneur is more important than the inventor – as if it were not for the inventor, there would be nothing for the entrepreneur to market.   But if it were not for the entrepreneur, the inventor’s work would be in vain.  And this considered, I have no qualms with the financial success of the entrepreneur: he has provided something to others, and is justly rewarded for doing so.