Treatise on Political Economy

Rounding out my tour of classical economics, I've recently read Jean-Baptiste Say's Treatise on Political Economy. I have some regret that I saved this one for last - and have to admit that it's simply a matter of procrastination: a three-volume set whose title led me to expect a lengthy discourse on taxation and government spending in the nineteenth century (which is a good description of the third volume) seemed to be very oblique to economics in the modern era.

The first two volumes, however, were fascinating. Say addresses a number of topics his contemporaries overlooked, and which are particularly germane to the present age: he considers the effect of technology, the value of knowledge-workers, the rationale for customer loyalty, the service economy, the premium paid for brand preference, and many other topics that Adam Smith either ignored or misconstrued - and which the present-day scholar for whom Smith is their only exposure to classical economics continue to ignore and misconstrue.

Say's work is often a footnote in economics textbooks used to train present-day managers, which is perhaps ironic in that it seems far more relevant to the present-day economy that is increasingly based on service and dependent on technology. It should perhaps be the other way around: with Say pushed to the fore and Smith footnoted as his predecessor.

Social Media Strategy? Again.

In the time since I posted my reflections on social media strategy, I’ve been jumped buy a few aficionados of the toolset who have been very insistent that it’s of critical importance for firms to have a social media strategy. But their arguments have reaffirmed the contrary.

Primarily, the counterargument addresses the (admitted) caveat: that in order for social media to be used, a firm must have developed an audience, and developing an audience requires a sequence of activities that are sustained over time. That is to say, it requires an plan and a program.

But not all plans and programs are strategic for all firms. You also need a plan and program to order office supplies so that the materials will be available when they are needed. But efficient acquisition of office supplies is not a strategic initiative for may firms – it is a necessary task, and an important task, but not strategic.

A second point of argument is that firms whose primary business is related to social media must take a strategic approach. Whether it is a media company that looks to gain an audience to earn revenue from advertisers or a market research firm that needs a large panel of users to provide data, establishing and maintaining a large pool of contacts is of strategic importance.

I will concede that point readily, but it is only in these instances where social media becomes strategic. In the same manner, an office supply company places strategic value on having the right items in its merchandise selection; but anyone who is not in that specific industry does not.

A third point of the counterargument likens social media strategy to IT strategy – that it is just as important. This is based on the hypothesis that IT strategy is important, which seems to have been swallowed as a matter of course, but which is also not necessarily true for the majority of firms.

IT strategy is like the office supplies strategy, and it suffers from the same problems: having a strategy for acquiring and provisioning workstations and servers, and their related software and systems, is a constant pain point for organizations. In firms that are overly devoted to IT strategy, workers can’t get the software they need to accomplish tasks related to the corporate strategy because it conflicts with the IT “strategy.”

So in this case, it may be true that the need for a social media strategy is, indeed, equal to the need for an IT strategy – but not in the way that it’s intended: from the truly strategic perspective, it’s just as unnecessary, and just as counterproductive, to set a strategy for a supporting service that conflicts with the strategy for the organization as a whole. There needs to be an over-arching plan to provide the resources that workers need, but when the plan is designed and executed in a way that denies the resources to those who need them, its utter lack of importance in comparison to truly strategic initiatives becomes obvious.

I don’t expect this is the end of the argument – aficionados of anything have a tendency to be persistent and impervious to logic – the discussion will likely go on. And it’s good and well that it should.

Shovelware and Shiny New Things

It's said that the point of studying history is so that we can learn from the mistakes of the past so that we can avoid making them again - and the tragedy is that we never seem to do so. We merely acknowledge, with distressing nonchalance, that we made the same mistake a second time (or a third, or a fourth, etc.) after we've already taken action.

Case in point: I was listening to a colleague vent about how his employer was presently attempting to recreate its entire Web presence on the iPad. To his way of thinking, it was "shiny new thing" syndrome - the executives were distracted by the tablet device and shifted significant budget to pursue it ... by cutting the budget to the smartphone development initiatives, which only a few years prior was funded by cutting budget to their Web site initiatives.

Each time, the abrupt change in focus left work half-completed in the previous channel, and work in the new channel-of-obsession was done in a hectic and sloppy manner. The repetition had him discouraged, and unable to commit himself wholeheartedly to his new projects because it seemed inevitable that, a year or two in the future, there would be a new platform (the iWatch or somesuch) for which his present work would be abandoned.

This took me back to 1994, a time when the Internet was relatively new to business, and their immediate reaction was to stop doing print and re-create all of their existing print documents online. As a result, many Web sites were a jumble of disorganized information, shoveled from archives of print documents that were written at different times, for different purposes, and for different audiences - and clients completely ignored the nature and potential of the new medium.

Perhaps I shouldn't complain too much, as it was the start of a fairly decent career when one savvy executive recognized the problem and reached outside the IT industry to get someone with a communications background to help make sense of it all - but one of the most frustrating aspects of my work from that day to this has been fighting against the shovelware mentality and the gormless enthusiasm for shiny new things.

No-one seems to have recognized that the mistake that is made when there's a heated rush to adopt a new channel and shovel over the content and functionality of older ones without regard to the nature, capabilities, and usage patterns of the channel. Or worse, they do recognize it, but issue the order to "just get something out there" and fix it later. But later, some other distraction comes along and the work that was done in a sloppy, heated rush is left that way indefinitely. Or worse still, the sloppy work that was done in other channels sets a precedent - it becomes a standard way of doing things that should be imitated in new channels for the sake of providing a consistent customer experience. Consistently awful, but consistent nonetheless.

I'm feeling far too pessimistic at the moment to propose a solution to the problem. Perhaps anyone with a long enough memory can use the example of the past to suggest we avoid, rather than repeat, the shovelware mistake in future. Or given the shorter span of time between platforms these days, perhaps it doesn't take so long of a memory to provide an example.

The point being that when the Internet came along in 1993 (or more accurately, that's when it went commercial and opened itself to the general public), there was not much in the way of a precedent. I think it was around the fifth century when books came to replace scrolls and tablets, and the originals probably were little more than collections of parchment and papyrus scrolls, cut apart and bound together without regard to whether the collection made much sense.

It took centuries to get books right, and decades to get the Web sorted out (if, indeed, it could be deemed "sorted" even today), and new media are bubbling up at such a frantic pace that it remains likely that decision-makers will latch on to them compulsively for a short amount of time, adopting them with reckless lust and abandoning them prematurely.

Historically speaking, it's a great time to be working in this industry if you enjoy fiddling around with shiny new things ... not so much if you care about doing things well.

Social Media Strategy?

I got dragged into a discussion with an acutely obnoxious individual over the topic of social media strategies. His take on it was that every firm ought to have a detailed social media strategy and commit significant budget and resources to its pursuit, but he seemed to take the necessity of social media as axiomatic.

His point was social media is something that should be a strategic initiative "just because" and was unable to present a reason that it should be pursued. Though looking into his profile after the debate, it became apparent to me that the "because" was "because my firm makes a great deal of cash selling products related to social media."

So I remain unconvinced ... but rather than reacting to an argument based on a feeble premise, I mean to explore the reasons I maintain that social media is not a strategic initiative.

Fundamentally, it has to do with the nature of strategy itself: a strategy is undertaken to gain a benefit (or respond to a problem). While there are a number of case studies that demonstrate the tactical (read "not strategic") outcomes of leveraging social media, even its strongest aficionados are hard pressed to suggest that having a million Facebook friends results directly to the accomplishment of any goal (unless the goal is merely to have a lot of Facebook friends for the sake of having them, which again becomes a tautology).

An analogy: if your goal is to build a house, you need a plan to build the house. And while a hammer is a useful tool that will be used extensively in achieving that goal, there is not a need to have a "hammer strategy" - and doing so can in fact become counterproductive if your desire to use the tool causes you to focus exclusively upon it, to the exclusion of more productive tools that might be more efficient and effective to a given need.

That is, a hammer is great when you need to drive a nail - but it doesn't drive screws, cut plywood, lay tile, and do any of the other tasks needed to accomplish the goal. And granted, an hardcore hammer-fan might be able to find a way to use it to do these things, but it would merely be a circus trick, and the outcome would likely be worse than using the right tool for the task.

That is to say that the goal of a company is serve the needs of its customers, and to be successful in that goal it needs to serve its customers well, attending to the core value they seek to obtain by doing business with it. Customer experience is a component of that strategy, which may itself be seen as strategic because the core product or service can be considered as an element in strategic activities (customers may accept a more expensive or less serviceable product if their entire experience of interacting with a firm is positive).

Social media, meanwhile, is a tool that is leveraged in order to improve customer experience. Where it supports the strategy, it is to be applied; where it does not support the strategy, it is not. But most importantly, it is a tool that is used to support the strategy, and not a strategic initiative unto itself.

Counterpoint

I can think of one counterpoint to the position I've taken: social media is not a tool that is ready on demand. That is, a company that has shunned the social channels cannot successfully turn up whenever it needs to use them and expect to have success - which seems to be what many actually do, and have a correspondingly dour perspective on its value - but it must instead put ongoing effort into developing and fostering its social connections in the digital channels.

Another comparison: when it comes to meatspace social networking, you must place effort into meeting and establishing a relationship with people long in advance of asking them for assistance. The fair-weather friend who turns up only when he needs something from you is generally unwelcome, and is unlikely to get it.

And in that sense, online social channels require an ongoing process of support and development - so while having a million "friends" is of no strategic value, to have that resource ready for use in pursuit of a stratagem when the time of need arises requires a great deal of ongoing effort in times when it is not.

I don't think that makes it strategic, per se, but that does not mean it's unimportant to undertake the necessary actions to develop and maintain the tool because there are instances in which it will be needed. It requires a great deal of time and effort on an ongoing basis in order for it to be useful when it has the potential to contribute to something that is strategic, and expending that effort will pay considerable dividends when and if the need for it should arise.

So in that sense, a firm may have a series of actions it must undertake to acquire and maintain a social media presence that can then be leveraged when there's a strategic need for it. And the breadth and scope of those activities is something like a strategy ... but I'm still left with the sense that it doesn't really live in the same realm.

It could merely be that the English language lacks a proper word to indicate that something is desirable because of its potential uses in accomplishing strategic goals, and that "strategy" is an important-sounding term that bridges this gap, but it's ill-fitting and somewhat misleading.

Engagement and Purchasing: Mere Correlation

I read something that seems dangerously unintelligent: the longer a prospect engages with your brand, the more likely it is that they will purchase your product or service - therefore, if you wish to improve your conversion rate, you have to find ways to get people to engage with your brand for a longer period of time.

I have no doubt that this is true, up to the "therefore." It should come as no surprise that a person who ends up buying a product spends more time considering it than a person who does not - as the non-buyer can tell at a glance, or after considering a few basic questions (Is this something that would benefit me? Is it worth the price? Is it better than alternatives?) that the product is not desirable and they do not wish to purchase it, and immediately disengage, whereas the first-time buyer must engage long enough to answer those questions and others that arise before committing to buying the item.

(As a side note, the amount of time likely decreases again for the loyal customer, for whom purchasing the item is an automatic decision and needs little deliberation. In fact, the loyal buyer will seem to be the least engaged of all. This likely skews the overall numbers, but for now I'll stick to the intended situation of a new prospect's decision to buy for the first time, except to beg the question of how you identify whether a person who does not purchase is really in that situation.)

The assumption seems to be that if you can somehow compel a person to spend more time with the brand, they will eventually convince themselves that it is desirable. My sense is this is exactly the opposite to the way that buyers think and behave. The initial reaction is an emotional one - a sense of inexplicable attraction based on an immediate reaction leads to the primitive impulse of "I want." Or in some instances, it's "what is that?" followed by curiosity and discovery. But ultimately, the logical side steps in to attempt to restrain or counteract the emotional reaction: you don't need it, you can't afford it, there are better things to spend your money on. It's only when logic agrees with emotion that a prospect has the intent to purchase.

As such, the notion that a customer must be compelled to want a product is when the product is inherently undesirable. In that instance, your choice is to improve the product to make it desirable or utilize tactics that are meant to overcome resistance. Even at that, there are better tactics to use than badgering a customer: a brand that inflicts itself on a person who has already decided not to purchase isn't appealing ... it's annoying. Hence the reason most salespeople are considered to be about as pleasant as a dose of scabies.

The notion of pressure-sales also reminds me of a sound-bite from a salesman who said, in so many words, that the reason for his success was not so much in being able to identify likely prospects as it was identifying unlikely ones so that he could avoid wasting time trying to sell them - which is exactly opposite to the notion of compelling longer engagement to convert a person who is uninterested in buying ... and which makes much better sense.