Episode #149: Free-Rider Friday, June 2017

Ed’s Topics

The VeraSage Symposium and Art of Value Conference

We are excited to announce the Art of Value Conference and VeraSage Symposium being held in Allen, Texas on November 8-12, 2017. You can attend one or the other, or both. Find out more about these two events, the agendas, and register.

Marketing to confuse the competition

Article by Rory Sutherland in Ranconteur, May 25, 2017. Listen to his appearance on The Soul of Enterprise.

Uses the 1980 movie Airplane! as an analogy. Most businesses are run like air traffic control: there’s rules, routines, regulations, standards, metrics, targets; optimize, copy, repeat.

Other parts of a business don’t work this way: marketing is one of them. It can never be standardized. Truly efficient marketing is not marketing at all, it’s merely noise.

Remember, a flower is a weed with a marketing budget

EasyJet’s and British Airways’ approach to safety are similar, but the marketing of their brands are diametrically different.

Rory Sutherland

Rory Sutherland

Grand strategist Edward Luttwak argues against obsession with efficiency.

Strategy demands doing the least efficient thing possible to gain the upper hand over your enemy by confusing them.

In our aspergic age, it’s easier to get fired for being illogical than for being unimaginative. By dressing marketing up as a science, your protected from the CFO, but you’re using statistics as a drunk uses a lamp post: for support, rather than illumination.

Competition or anti-competition

Amazon’s patent that blocks shopping bots while in store.

Amazon Prime exclusive show: The Man in the High Castle was discussed. First two seasons are out, and the show is just excellent!

Say what!

A new phrase for our lexicon: Stylized fact: “A simplified presentation of an empirical finding.”

Russ Roberts’ podcast, Econtalk, on emergent order from June 12, 2017 is excellent. Russ has written a poem, It’s A Wonderful Loaf.

Here’s the money quote from the show, from economist Michael Munger

Fundamental insight: If you and I disagree about the value of something, we can probably agree on a price. So all prices that are agreed on probably result from a disagreement about value.

 Prices reconcile disagreements on value.

Ron’s Topics

“Rules of the road,” The Economist, May 6, 2017

In 2008, an unemployed Los Angeles chef, Roy Choi, started a business, which led to a reality TV show, a hit movie (Chef), and jump-started a $1.2B industry: Food trucks.

Portland, Oregon has had them for decades, over 500. But Chicago, with over 7,000 restaurants and 144 breweries, has only 70 food trucks. The regulations in Chicago are onerous:

  • Food trucks can’t be within 200 feet of an eatery
  • They can’t park for longer than two hours
  • They are required to carry GPS or face heavy fines

New York and Boston are little better, with a 15-year waiting list to get a license, or $25,000 to rent one on the black market.

One of trucks in Portland’s is named: Kim Jong Grillin’.

Brick and mortar - Amazon 

Amazon Just Invented the Bookstore,” Foundation for Economic Education, M.G. Siegler, June 8, 2017

Amazon Books, opened in New York City and looks like a Borders.

The pricing is innovative: you pay the online price if you’re an Amazon Prime member, or the jacket price if you’re not.

More on the suckiness of Performance Reviews 

Performance Reviews Suck, Here’s What We Do Instead,” Matt Rissell, Forbes, May 26, 2017

The co-founder and CEO of TSheets, Matt Rissell, wrote:

Your typical performance review is an inaccurate representation of how your employees are performing, and more often than not, they're a giant waste of time for you and your team. Let's call them what they really are: a massive distraction and worst of all, a demotivator.

It surveyed employees and found they hated annual performance appraisals, rankings, but wanted more feedback. Here’s what they do instead

  1. Hold consistent one-on-ones with your employees
  2. Ask employees how they think they’re doing
  3. Make it go both ways (how you doing as a leader)
  4. Don’t tie feedback to compensation
  5. Encourage employees to be proactive

I would only add that the first paragraph above also applies to keeping timesheets in professional firms. 

The Adaptive Capacity Model for Supermarkets

 Surge pricing comes to the supermarket,” Tim Adams, The Guardian, June 4, 2017

In 1861 Philadelphia shopkeeper John Wanamaker introduced price tags, with the slogan, “If everyone was equal before God, then everyone would be equal before price.”

Before this, haggling was common. The fixed price changed the relationship (business model) between the store and the customer and led to price wars, loss leaders, promotions, etc.

It’s said that Facebook has over 100 data points on every user. Orbitz was charging Mac users 20-30% more to book a trip, and Uber allegedly looks at a user’s battery life to help determine price.

French, German, and Scandinavia retailers are changing prices 90,000 times per day.

Dynamic pricing in Britain, at Spar stores, for bread created a 2.5% uplift to profit, while waste dropped 30%.

This puts under threat Oscar Wilde’s famous quip: The cynic knows the price of everything, and the value of nothing.

Today, the price may be changing. Pricing the customer continues.

Comment

Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.