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Unimaginable Clarity

Thursday, June 30th, 2011

It is often the case that highly sophisticated knowledge exists long before it’s significance in a broader context begins to resonate and be acted upon.  There lies enormous brilliance hidden in cross fertilizing knowledge; a conscious effort to rethink our strategies through a new lens unleashes richer opportunities for our products and services, as well as our customers and employees.

For decades our greatest leaders were typically economic whisperers of sorts, with highly sophisticated knowledge of market forces.  More recently we are discovering that this can only take us so far and is much more powerful when combined with a proficient knowledge of psychology; with deep awareness of our cognitive behavior and what really motivates us.  Cognitive and neurological sciences have long ago discovered what we are now just beginning to scratch the surface on at a conscious level in context of business and leadership.  July-August’s issue of Harvard Business Review has a number of great articles that begin to tap into this emerging discussion (The New Psychology of Strategic Leadership by Giovanni Gavetti and The Unselfish Gene by Yochai Benkler).

As our focus on customers, employees and communities continues to evolve, advancing our awareness in physiological and neurological sciences will become imperative.   I was first introduced to these concepts by Cynergy’s Kes Sampanthar through the framework he has developed called Motivational Design.  While this framework is geared towards technology, the principals are universal.  I have since read Daniel Pink’s Drive which will not fail to surprise you about what motivates us, it is a great read that I highly recommend.

Nothing has had more of a profound impact on my approach than learning the basic principles of what motivates us; it adds unimaginable clarity and a powerful dose of humility at the same time.   We are formidably guided and shaped by our biases and irrational predictability, learning about why we are the way we are empowers us to manage ourselves more effectively.  Equally altering, it provides great clarity in our ability to unleash innovative new business strategies and engage with our employees, customers, communities and stockholders in much more collaborative ways.

Is This Simply Behavioural Economics or is Trust the Issue, or Both?

Wednesday, June 22nd, 2011


I am fascinated by how Predictably Irrational we are! And despite my awareness of it and keen eye to detect it, there are still times I catch myself falling into illogical reasoning.  When I first read about Spirit Airlines charging $5 to print passengers boarding passes for nonstop flights in the New York Times, I immediately thought “this is criminal!”, one commenter remarked “what’s next toilet paper?”.  As I read on, the article explained that Spirit had lowered their fare for nonstop flights by $5, essentially enabling customers to save $5 if they choose to print their own boarding pass.   Given this context it is a win for customers but the problem is that people will forget quickly that the price was lowered and pay much more notice to the emotional response of being charged for something that used to be free.

But I don’t think this is all about our irrational predictability, we have also been conditioned to distrust the airline industry.  In many cases we have seen fees added for things like baggage, snacks, and seat selection without a reduction in the fare.  With the exception of a few airlines that put customer experience at front and center stage (ie. Porter Airlines), the industry broadly is failing miserably at customer centricity and as a result we assume the worst every time a change like this is made.

Logically we should be giving Spirit Airlines big props, but instead they are receiving very mixed reviews. I am wondering if this had been presented it in a different way, would they have had more popular results?  Something like…

(Assuming the old fare for a nonstop flight from A to B was $350)

Lowest fare fully discounted $245 (allowing them to achieve the lower price point to attract more customers).  Then in the booking process list optional discounts from the full fare and include $5 discount for printing your own boarding pass.

Prior to this NYT article I had not heard of Spirit Airlines so I checked their site out and their prices are remarkable, but when I googled “Spirit Airlines sucks” there are a tons of people that have gone to great lengths to describe their dislike for the Spirit customer experience.

Bottom line: With regards to pricing strategies, smart companies are fluent in understanding the behavioural economics behind our irrationality and simultaneously earning trust from their customers through their customer experience.

Organic Strategies Drive Thicker Value

Monday, June 6th, 2011

Organic food is the fastest growing sector in the food marketplace, growing at a rate of 17-20% per year versus 2-3% for conventional foods.  The demand for authentic food has been on the rise for many years primarily driven by growing concerns for personal well being and the environment.  The long term environmental and health affects of our fast food culture motivated this change.  This despite the cost of organic food being 10-40% higher than conventional alternatives.

The organic food movement has matured and expanded far beyond food, its now about organic living, you can see this reflected in art, architecture, design and lifestyles broadly.  Even our business community is going organic; the demand for authentic products and services is growing, primarily driven by concerns over the compromised ethics and economics we’ve seen take front and center stage over the past decade.  The focus is now on creating thicker value derived from the basics, the people (customer experience, employee experience and our communities).  The long term affects of our obsessions with quarterly results are finally motivating this change.  And just as we have seen with organic food, we are willing to pay more for thicker value in our products and services.

Appreciating the basics, the authentic core elements, applies to all of our thoughts, actions and consumptions.   Try rethinking some of your business and personal strategies through this powerful lens.