The index and the menu

Google killed the old-fashioned cookbook.

Why bother searching through a thick, dull cookbook of recipes when all you have to do is type in two or three ingredients and the word ‘recipe’ online? The index, the now infinite magical index of the web, helps us find whatever we want, better and faster.

On the other hand, a generous, modern cookbook doesn’t ask, “what do you want to cook?”  Instead, it says, “how about this?” A menu, not an index. 

Years ago, I was at a power breakfast in New York, a fancy restaurant jammed with masters of the universe and those that hoped to have a few minutes with one of them. The waiter came over and said, “what do you want?” There was no menu. Just tell him and they’ll make it.

Looking around, I realized that just about everyone was eating one of three popular items. With an index but no menu, the room resorted to safe and easy.

And this is the challenge every organization faces in the uber-indexed world we live in. It’s not enough to sit with a prospect and ask him what he wants. Once we know what we want, search finds it for us. No, we have to offer a menu, we have to curate choices, we have to dream for people who don’t have the guts or time to dream for themselves.

This is frightening, because when you offer a menu, often people will get hung up on their status quo and just say “no.” You can’t get rejected when all you offer is an index, but getting your menu rejected is one of the symptoms that you’re doing the hard work of making an impact.

       

The three toxic stooges of the project apocalypse

Why do ambitious projects often fail to meet our expectations? (Unambitious projects fail because they have low expectations). Why do software and other project teams so often get frustrated and stuck?

OVERPROMISING: During the magical early stages of the project, we envision not just perfect execution, but limitless features. At this stage, every project needs a truth teller (not a no-sayer, because they are easy to find and worthless, but a truth teller, someone who has been through it before and knows the difficulties that lie ahead).

“Everything takes more time than you thought, everything costs more money than you thought, and almost everything turns out not quite as cool as you expected.” Merlin Mann

UNDERSHARING: As the project gets built, our instinct is to hide. Hide our roadblocks, our mistakes, our worries. As we hide, we keep the rest of the team in the dark. As the darkness settles in, it’s easier than ever to keep hiding, because to unhide now is double the trouble.

LACK OF POLISH: The charette-driven, when’s-the-deadline mindset might be a good way to force yourself through the resistance, but it has a huge cost–you will be judged. The market will not judge you by how much work you did, we will judge you by how it works and looks and feels. And that comes from polish, and polish cannot be rushed.

Two other thoughts on this:

1. Sometimes, all three of these stooges contribute to a piece of art. Sometimes, the audacity of being underinformed, combined with the ego strength of the final push over a deadline causes a magical thing to arrive. Bravo! But it’s not dependable. If this is what you need to make art, then by all means, go for it. But be clear to each other about what’s on the table.

2. The internet has made it possible to launch sloppy and polish in public. This is a form of oversharing, right? With thousands of people seeing each iteration, you can’t hide what it looks like and you can’t hide from the feedback. Here’s what you need to understand about this: the launch isn’t the end, it’s the beginning. Back when I made books and software on floppies, you could say, “it’s done.” If you polish in public, that’s never your option. It’s not done. Have you planned for that?

       

Understanding marginal cost

How much does it cost Wikipedia to have one more person read an article? How much does it cost Chanel to produce one more bottle of perfume? How about one more digital copy of a Grateful Dead concert?

The cost of the next item produced is called ‘marginal cost’. It doesn’t include set-up fees, rent, years of training, insurance or all the other huge costs an organization might pay. It’s merely the cost of one more unit.

In a competitive, undifferentiated market, the price will generally be lowered by competitors until it is just above marginal cost. Think about that… If it costs a dollar to make something, and your competitor is selling for $1.10, then in an efficient market, you have every incentive to sell your item for a penny less than that. It’s better than not selling it.

There are many implications of this, the first being the explanation of why so much stuff online is free. Free is a magical concept, the place where trial and virality live. If the marginal cost of a new user is virtually zero (and in an ad supported business, a new user is actually profitable, not a cost) then it’s no surprise that it’s hard to charge for your app when there are other apps that do precisely what yours does.

Big, established companies have traditionally had a difficult time understanding this concept. The market for ebooks, for example, ended up in Federal court because otherwise smart people in book publishing couldn’t get their arms around the idea that their marginal cost of an ebook delivered by Amazon was precisely zero. No paper, no shipping, no ink.

Their response was to talk about all of their fixed costs (which are real, and which are important). Things like typesetting and advances and editing and promotion…

But none of those things are marginal costs. That means that someone entering the market, someone with nothing to lose, is happy to wipe out as many fixed costs as he can and then price as close to zero as he can get away with. It’s not nice nor does it feel fair, but it’s true and it works.

The only defense against this race to marginal cost is to have a product that is differentiated, that has no substitute, that is worth asking for by name.

If your product has a low marginal cost and a traditionally high price, particularly if it’s one of a kind in its market, then you’re in a great position to benefit from sampling. Which is why vodka companies are happy to sponsor parties and why cell phone companies will do almost anything to get you in the door.

Until you understand the true marginal cost of your products or services, you can’t make smart decisions about pricing or customer acquisition.

Industries with zero marginal-cost products and services are inherently unstable until someone figures out how to become the king of the hill, the leader, the one worth picking because everyone else is. When that happens, the truth above about efficient markets goes away… because a market with one dominant leader isn’t efficient any more.

       

The secret of the five top

The person who invented the banquet table, the round table for ten, wasn’t doing it to please those at the banquet or even the banquet organizer. He did it because this is the perfect size for the kitchen and the servers. The table for ten is a platonic ideal of the intersection of the geometry of bread baskets, flower arrangements and salad dressing. Bigger and you couldn’t reach, smaller and there’s no room.

But, here’s the thing: the table for ten isolates everyone at it. You can’t talk to your left without ignoring your right, and you can’t talk across the table without yelling. And so, the very thing you’ve set up to engage the audience actually does the opposite. This is even true if you’re taking nine people out for dinner–ten at a table undermines what you set out to do.

Worse, if you’re brave enough to have a speaker or a presentation at your banquet, you’ve totally undermined your goals. Half the audience is looking in the wrong direction, and there are huge circles of empty white space that no microphone can overcome.

In my experience–I’m sharing a hugely valuable secret here–you score a big win when you put five people at tables for four instead. Five people, that magical prime number, pushes everyone to talk to everyone. The close proximity makes it more difficult to find a place for the bread basket, but far, far easier for people to actually do what they came to do, which is connect with one another.

Thousands of speeches later, I can tell you that the single worst thing an organizer can do to her event is sit people at tables for ten.

If you want to let the banquet manager run your next event, by all means, feel free. Just understand that his goals are different from yours.

       

Magic beans (three steps to a successful marketing promise)

You know the story: Jack traded the family cow for some worthless beans that turned out to be magical.

How did that deal go down?

1. The individual has to be open to hearing the offer at all. Jack was bored, disillusioned and aimlessly walking to market. Sure, it was a shady guy on the street, but Jack’s standards were low. If you want to do business with people with more resources than Jack, it helps to have the trust that comes from previous engagements, and the permission to deliver your message.

Most of all, Jack was in the mood to buy. Creating a mood is far more difficult than finding one.

2. The person hearing your story has to want to believe it. This is more subtle than it sounds. Uber, for example, offers a newfangled way to call for transport in big cities. Many people haven’t heard of it or used it, largely because they don’t think they need it, aren’t open to something new, or are unwilling to go through all the steps necessary to get the app, etc. So, even if it works as promised, there’s no urgent need felt by some, so they don’t care. 

In Jack’s case, the prospect of escaping his dreary life (and getting rid of the pesky cow) were both welcome offers. He hoped they’d be true.

3.  It has to be true. You must be able to keep the promise. If not, you’re ripping people off and shortcircuiting any chance you have to build something of value. If the beans hadn’t grown, end of story. Future sales will come when Jack tells his friends…

Marketing failure occurs because at least one of these three elements isn’t present.

 

Thinking about money

    Many marketers work overtime to confuse us about money. They take advantage of our misunderstanding of the time value of money, of our aversion to reading the fine print, of our childish need for instant gratification and most of all, our conflicted emotional connection to money.

    Confusing customers about money can be quite profitable if that’s the sort of work you’re willing to do.

    A few things to keep in mind:

    1. The amount of money you have has nothing to do with whether or not you’re a good person. Being good with money is a little like being good with cards. People who are good at playing cards aren’t better or worse than anyone else, they’re just better at playing crazy eights.
    2. Money spent on one thing is still the same as money spent on something else. A $500 needless fee on a million-dollar mortgage closing is just as much money as a $500 tip at McDonalds.
    3. If you borrow money to make money, you’ve done something magical. On the other hand, if you go into debt to pay your bills or buy something you want but don’t need, you’ve done something stupid. Stupid and short-sighted and ultimately life-changing for the worse.
    4. To go along with #3: getting out of debt as fast as you possibly can is the smartest thing you can do with your money. If you need proof to confirm this, ask anyone with money to show you the math. Hint: credit card companies make more profit than just about any other companies in the world.
    5. There’s no difference (in terms of the money you have) between spending money and not earning money, no difference between not-spending money and getting a raise (actually, because of taxes, you’re even better off not-spending). If you’ve got cable TV and a cell phone, you’re spending $4,000 a year. $6,000 before taxes.
    6. If money is an emotional issue for you, you’ve just put your finger on a big part of the problem. No one who is good at building houses has an emotional problem with hammers. Place your emotional problems where they belong, and focus on seeing money as a tool.
    7. Like many important, professional endeavors, money has its own vocabulary. It won’t take you long to learn what opportunity cost, investment, debt, leverage, basis points and sunk costs mean, but it’ll be worth your time.
    8. Never sign a contract or make an investment that you don’t understand at least as well as the person on the other side of the transaction.
    9. If you’ve got a job, a steady day job, now’s the time to figure out a way to earn extra income in your spare time. Freelancing, selling items on Etsy, building a side business–two hundred extra dollars every week for the next twenty years can create peace of mind for a lifetime.
    10. The chances that a small-time investor will get lucky by timing the stock market or with other opaque investments are slim, fat and none.
    11. The way you feel about giving money to good causes has a lot to do with the way you feel about money.
    12. Don’t get caught confusing money with security. There are lots of ways to build a life that’s more secure, starting with the stories you tell yourself, the people you surround yourself with and the cost of living you embrace. Money is one way to feel more secure, but money alone won’t deliver this.
    13. Rich guys busted for insider trading weren’t risking everything to make more money for the security that money can bring. In fact, the very opposite is starkly shown here. The insatiable need for more money is directly (and ironically) related to not being clear about what will ultimately bring security. Like many on this path, now they have neither money nor security.
    14. In our culture, making more money feels like winning, and winning feels like the point.
    15. Within very wide bands, more money doesn’t make people happier. Learning how to think about money, though, usually does.
    16. In the long run, doing work that’s important leads to more happiness than doing work that’s merely profitable.

     

    Adopting the post-obedient mindset

    It’s not uncommon for teenagers to whine that there’s nothing to do in this town.

    Or for college students to talk about the limits of their institution, about the paucity of opportunities at the placement office or the lack of campus activities.

    And of course, those that complain that the boss won’t let me.

    All three complaints are based on a view of the world that requires permission and easy access.

    In the connection economy, the valuable asset is the ability to convene. When we are able to initiate, to make something happen and to be trusted, we not only create value, we create a life.

    So in the post-obedience world, that means that the entire world is available, not just what’s on campus or within a skateboard ride of your house. It means that the best jobs are off campus, and that the limits of any (every) institution are actually magical boundaries, because knowing where they are makes them easier to cross.

    And crossing boundaries is where we thrive.

     

    Appropriate cheating in the nine-dot problem

    All geeks, nerds and puzzle folks are aware of the nine-dot problem, along with the lesson it is frequently used to present.

    NinedotHere’s a pencil. Here’s a piece of copy paper with nine dots on it. Without lifting the pencil or folding the paper, connect the nine dots using four straight lines.

    The narrator smiles as you try as hard as you can, unable to do it. Then he ends your frustration and points out you’ve been tricked by your own limits, because, of course, there’s nothing in the rules that says you can’t have the lines go beyond the edges of the nine dots.

    The thing is, this isn’t the end. This is the beginning of the cheating, and anyone who stops here, satisfied at his breakthrough, is missing the point.

    Some innovators point out that because the dots and the pencil have width, it can actually be done with three lines. (Here’s how). At this point, some people get uncomfortable because a lot of what we assumed (the edges of the nine dots, their magical zero width) is being challenged.

    I think we can go far beyond this.

    What revolutions do is change more than a few common conceptions. If you roll the paper into a tube, with the dots on the outside, you can go round and round and round (like an Edison music cylinder) and do the entire thing with just one line. Without folding the paper.

    That’s cheating! (You could also burn the paper and just call it a day at zero)…

    Wikipedia is that sort of solution. So, in fact, are just about all of the innovative successes of the last decade. They took an assumed rule and threw it out. People who have been online for awhile have seen this happen over and over, and yet hesitate to do it with their own problem. Not because it can’t be done, but because it’s not in the instructions. And the things we fear to initiate are always not in the instructions.

    Toward zero unemployment

    A dozen generations ago, there was no unemployment, largely
    because there were no real jobs to speak of. Before the industrial revolution,
    the thought that you’d leave your home and go to an office or a factory was, of
    course, bizarre.

    What happens now that the industrial age is ending? As the
    final days of the industrial age roll around, we are seeing the core assets of
    the economy replaced by something new. Actually, it’s something old, something
    handmade, but this time, on a huge scale.

    The industrial age was about scarcity. Everything that
    built our culture, improved our productivity, and defined our lives involved
    the chasing of scarce items.

    On the other hand, the connection economy, our economy, the
    economy of the foreseeable future, embraces abundance. No, we don’t have an
    endless supply of the resources we used to trade and covet. No, we certainly
    don’t have a surplus of time, either. But we do have an abundance of choice, an
    abundance of connection, and an abundance of access to knowledge.

    We know more people, have access to more resources, and can
    leverage our skills more quickly and at a higher level than ever before.

    This abundance leads to two races. The race to the bottom
    is the Internet-fueled challenge to lower prices, find cheaper labor, and
    deliver more for less.

    The other race is the race to the top: the opportunity to
    be the one they can’t live without, to be the linchpin we would miss if he
    didn’t show up. The race to the top focuses on delivering
    more for more.
    It embraces the weird passions of those with the resources to make choices, and
    it rewards originality, remarkability, and art.

    The connection economy continues to gain traction because
    connections scale, information begets more information, and influence accrues
    to those who create this abundance. As connections scale, these connections
    paradoxically make it easier for others to connect as well, because anyone with
    talent or passion can leverage the networks created by connection to increase
    her impact. The connection economy doesn’t create jobs where we get picked and
    then get paid; the connection economy builds opportunities for us to connect,
    and then demands that we pick ourselves.

    Just as the phone network becomes more valuable when more
    phones are connected (scarcity is the enemy of value in a network), the
    connection economy becomes more valuable as we scale it.

    Friends bring us more friends. A reputation brings us a
    chance to build a better reputation. Access to information encourages us to
    seek ever more information. The connections in our life multiply and increase
    in value. Our stuff, on the other hand, 
    becomes less valuable over time.

    … [this riff is inspired by my new book…]

    Successful organizations have realized that they are no
    longer in the business of coining slogans, running catchy ads, and optimizing
    their supply chains to cut costs.

    And freelancers and soloists have discovered that doing a
    good job for a fair price is no longer sufficient to guarantee success. Good
    work is easier to find than ever before.

    What matters now:

    • Trust
    • Permission
    • Remarkability
    • Leadership
    • Stories that spread
    • Humanity: connection, compassion, and humility

    All six of these are the result of successful work by
    humans who refuse to follow industrial-age 
    rules. These assets aren’t generated by external strategies and MBAs and
    positioning memos. These are the results of internal struggle, of brave
    decisions without a map and the willingness to allow others to live with
    dignity.

    They are about standing out, not fitting in, about
    inventing, not duplicating.

    TRUST AND
    PERMISSION: In a marketplace that’s open to just about anyone, the only people
    we hear are the people we choose to hear. Media is cheap, sure, but attention
    is filtered, and it’s virtually impossible to be heard unless the consumer
    gives us the ability to be heard. The more valuable someone’s attention is, the
    harder it is to earn.

    And who gets
    heard?

    Why would
    someone listen to the prankster or the shyster or the huckster? No, we choose
    to listen to those we trust. We do business with and donate to those who have
    earned our attention. We seek out people who tell us stories that resonate, we
    listen to those stories, and we engage with those people or businesses that
    delight or reassure or surprise in a positive way.

    And all of
    those behaviors are the acts of people, not machines. We embrace the humanity
    in those around us, particularly as the rest of the world appears to become
    less human and more cold. Who will you miss? That is who you are listening to .

    REMARKABILITY:
    The same bias toward humanity and connection exists in the way we choose which
    ideas we’ll share with our friends and colleagues. No one talks about the
    boring, the predictable, or the safe. We don’t risk interactions in order to
    spread the word about something obvious or trite.

    The remarkable
    is almost always new and untested, fresh and risky.

    LEADERSHIP:
    Management is almost diametrically opposed to leadership. Management is about
    generating yesterday’s results, but a little faster or a little more cheaply.
    We know how to manage the world—we relentlessly seek to cut costs and to limit
    variation, while we exalt obedience.

    Leadership,
    though, is a whole other game. Leadership puts the leader on the line. No
    manual, no rule book, no überleader to point the finger at when things go
    wrong. If you ask someone for the rule 
    book on how to lead, you’re secretly wishing to be a manager.

    Leaders are
    vulnerable, not controlling, and they are racing to the top, taking us to a new
    place, not to the place of cheap, fast, compliant safety.

    STORIES THAT SPREAD:
    The next asset that makes the new economy work is the story that spreads.
    Before the revolution, in a world of limited choice, shelf space mattered a
    great deal. You could buy your way onto the store shelf, or you could be the
    only one on the ballot, or you could use a connection to get your résumé in
    front of the hiring guy. In a world of abundant choice, though, none of these
    tactics is effective. The chooser has too many alternatives, there’s too much
    clutter, and the scarce resources are attention and trust, not shelf space.
    This situation is tough for many, because attention and trust must be earned,
    not acquired.

    More
    difficult still is the magic of the story that resonates. After trust is earned
    and your work is seen, only a fraction of it is magical enough to be worth
    spreading. Again, this magic is the work of the human artist, not the corporate
    machine. We’re no longer interested in average stuff for average people.

    HUMANITY: We
    don’t worship industrial the way we used to. We seek out human originality and
    caring instead. When price and availability are no longer sufficient advantages
    (because everything is available and the price is no longer news), then what we
    are drawn to is the vulnerability and transparency that bring us together, that
    turn the “other” into one of us.

    For a long time to come the
    masses will still clamor for cheap and obvious and reliable. But the people you
    seek to lead, the people who are helping to define the next thing and the
    interesting frontier, these people want your humanity, not your discounts.

    All of these assets, rolled into one, provide the
    foundation for the change maker of the future. And that individual (or the team
    that person leads) has no choice but to build these assets with novelty, with a
    fresh approach to an old problem, with a human touch that is worth talking
    about.

    I can’t wait until we return to zero percent unemployment,
    to a time when people with something to contribute (everyone)  pick themselves instead of waiting for a
    bureaucrat’s permission to do important work.

    Most people, most of the time (the perfect crowd fallacy)

    Most people, most of the time, aren’t creative, generous or willing to stand up and contribute worthwhile work to the community. At least not the contributions you’re hoping for.

    The myth of wikipedia is that, when given the chance, hordes of people stepped up and built it. In fact, 5,000 people contribute most of the value on the site.

    The myth of ebooks is that now that anyone can publish, enormous numbers of people will use this new platform to create countless numbers of new classics. In fact, most self-published ebooks just aren’t very good.

    And the same is true for just about everything that’s open. A few people do an enormous amount (non-profit volunteers, community organizations, online sites), a few people are vandals or merely taking what they can take, and the masses participate, but aren’t at the heart of the project.

    To dismiss the crowd is a huge mistake, though.

    Here’s the fascinating part, call it the golden shoulder: We have no idea in advance who the great contributors are going to be. We know that there’s a huge cohort of people struggling outside the boundaries of the curated, selected few, but we don’t know who they are.

    That means that the old systems, the ones where just a few people were anointed to be the chosen authors, chosen contributors, chosen musicians–that system left a lot of people out in the cold. The new open systems embrace waste. They understand that most people won’t contribute and most contributions won’t be any good. But that’s fine, because this openness means that the previously unfound star now gets found.

    The curated business, then, will ultimately fail because it keeps missing this shoulder, this untapped group of talented, eager, hard-working people shut out by their deliberately closed ecosystem. Over time, the open systems use their embrace of waste to winnow out the masses and end up with a new elite, a self-selected group who demonstrate their talent and hard work and genius over time, not in an audition.

    Go ahead and minimize these open systems at your own peril. Point to their negative outliers, inconsistency and errors, sure, but you can only do that if you willfully ignore the real power: some people, some of the time, are going to do amazing and generous work… If we’ll just give them access to tools and get out of their way.

    Mostpeople

    (The curated block isn’t reality, it’s merely what the curator claims–that his magical powers will find all of the great talent, without error or waste. Of course, a quick look at Hollywood or even an expensive mutual fund shows that this is a fable. The ‘open’ block includes the low-quality stuff as well, but since that work is created without a lot of expense, pruning it is no tragedy. The secret is embracing the talented and dedicated people who choose themselves.)