Change Pulpit by Adam Hanft

10:11 am | 0 recommendations | 1 comment

When Science and Faith Meet: A Marketing Miracle

There are a lot of arguments for eating organically. Some of them are connected to environmental and sustainability issues. Others are based on the absence of a negative: pesticides. But much of the momentum for the explosive growth in organic foods has been philosophical; it’s a kind of spiritual and mystical belief system.

That’s why I was so fascinated by a story on NPR yesterday, which reported on a study that found organically-grown tomatoes to be actually healthier than those weaned on synthetics.

The farming experiment, conducted by the University of California at Davis, found increased flavonoid levels in the tomatoes grown with manure and composted crops. And we’re not talking about marginal differences, we’re talking:

“…double the concentration of two types of flavonoids — quercetin and kaempferol — which are considered to be healthful plant compounds with potent antioxidant activity. The 10-year mean levels of quercetin were 79 percent higher than those in conventional tomatoes, and levels of kaempferol were 97 percent higher.”

The hypothesis for this unexpected finding is that the less immediately-available nitrogen in an organic environment causes the tomato to grow slower, thus allowing it to allocate its resources to the production of these flavonoids.

I don’t know if this is the first time anyone has proved that an organically-grown item is actually denser and richer in nutrient than those conventionally spawned. But it’s out there in the media ether now in a big way; a giant and ringing confirmation that the Whole Foods Way of life is better for you than the Safeway lifestyle.

I predict this is going to have some huge marketing implications. We’ve already seen the power of the first organic wave – it’s become so mass that Wal-mart is now the largest buyer of organic produce in the country.

But, as I pointed out, this powerful consumer trend has had a lot of emotional and values-driven energy behind it – but not much science. Organic produce feels like it should be better for you, and millions want to believe it, but until now, there hasn’t been any evidence that a plant recognized synthesized nitrogen any differently than the naturally-derived stuff.

With this study – which will be the first of many such investigations, of course – there is now a harvest of scientific rigor that supports the pretty emotional hypothesis.

This will trigger the second wave of organic growth, and with it will come even more profound changes in the supply chain than we’ve seen, as Big Ag will need to turn over more and more of its vast acreage to organically-grown fruits and vegetables.

And soon, the goal of weaning ourselves off our dependence on synthetic nitrogen will be as much of a cultural and political meme as breaking our addiction to foreign oil.

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DE-EMPOWERING THE SHRILL: A CASE HISTORY

Once, not that long ago, a company that received outraged complaints from either special interest groups, or a few vocal consumers, was quick to cave.

The theory was based on the parallel arguments that a) its better to avoid controversy even if it means surrendering to an aggressive minority, and b) for every one complaint letter, there are at least ten consumers out there who feel the same way, but are too lazy to put pen to paper.

That conventional corporate behavior hasn’t been the case, though, in a recent example regarding Proctor & Gamble.  P&G used to be the most conservative, reluctant-to-offend, and quick-to-fold of the consumer package goods companies -- so I was fascinated to read their response to two swirls of controversy. 

The first relates to the actions of a group called Enough is Enough. They are demanding that the company withdraw its advertising from programming on MTV and BET that they argue is profane, stereotypical, and degrading to women.  The usual grab-bag of aggrieved objections. 

The second issue grows out of the infamous gay kiss on “As The World Turns”, which comes from P&G productions.  The pucker-vigilant American Family Association has asked its members to call P&G and tell them how offended they are by this endorsement of the gay lifestyle. 

Rather than cave, P&G has turned this into a marketing event, opening it up to a vote by setting up a toll-free number where all of us can weigh on these issues.  An American Idol of kvetching and defending. 

Of course, as you’d expect, this has taken on a life of its own online.  Bloggers like Perez Hilton are urging their readers to call and take a stand, as is the American Family Association itself.  Interestingly, though P&G doesn’t feature the toll-free number of either their corporate website, or the website for “As The World Turns.”   Seems like they want to limit their exposure to the controversy at the same time they are spinning it. 

P&G’s response is a brilliant step.  By opening up the controversy and instantly democratizing it, the company puts itself on the side of the angels, and of history.  In a flat, Internet-centric world where consumers are in charge, where user-generated content is king, the days of making policy decisions based on a few loudmouths are behind us. 

What P&G is implicitly saying is that when it comes to subjective issues like these, it’s far better for the community to decide than for the company to impose its own perspective.  Meanwhile, it gets P&G off the hook for the ultimate decision. 

Most important, the company is saying that it trusts the people it sells to.  Which is a sure formula for having the people it sells to, trust them.

05:20 pm | 0 recommendations | 1 comment

When Inconvenience Becomes a Branding Statement

"Closed for re-connection to our roots."

For three hours today, for three long latte-less hours, every Starbucks in America will close, and in truth, that's what the sign on those thousands of doors should be reading.

The purpose of the closure is so that the baristas can learn a "new set of standards" for preparing Starbucks' brews, a bold gesture that reflects Howard Schultz's frustration at the way the company has wandered away from its roots as a gemutlich gathering place, has lost the "Starbucks experience."

It's unusual for a brand to be so transparent in its admission of failure -- or at least its slippage -- and its need for recalibration.  But consider that in our Oprahesque, everyone-on-the-couch culture; it's become standard practice for individuals to seek redemption through confession. 

Why shouldn't companies follow suit?  While a bunch of competitors have jumped on this as a promotional opportunity -- Dunkin Donuts is offering 99-cent lattes and cappuccinos -- they feel gimmicky compared to what Starbucks has done. True, it's probably a Grand Gimmick itself.  And yes, they could have broken this complex barista course into five-parts and slid it into normal business hours.  But the flamboyance of closing the door is a gesture that attracts attention and makes a branding statement at the same time.

Indeed, the willingness to forego three hours of $4 drinks to "get it right" makes a stronger branding statement than Dunkin Donuts' jab in response. Will what Starbucks has done trigger a wave of copycat closures -- McDonald's going into temporary hibernation to give its flippers advanced deep-fat frying tutorials?  Will Apple close for a couple of hours to let their geniuses raise their IQs a few points?

I'm not sure, but I do know that we are in a new era where brands are willing -- if not anxious -- to air their dirty laundry in the interests of cleaner and fresher relationships with their customers. 

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Clinton, Obama, and the Marketing of Experience

It doesn’t appear to be working.

Senator Clinton has built her presidential brand on the value of experience and the implicit – and sometimes explicit – risk of the new and untested. But the hunger in the gut that voters feel for change and a fresh start appear to be not just neutralizing, but also trumping, the reassuring heft of the resume.

This phenomenon started with younger voters, who naturally were tapped into the message that years of experience should be taken with a grain of salt. But based on Senator Obama’s landslide victories last night, the message is gaining broader traction, as even voters over 60 – the most experience-mad of all – made a dramatic move to his column.

Both the origins and implications of the slow decay of the value of experience go way beyond presidential politics.  In the Land of Branding, experience has always been a sword with two edges. Depending upon the mood of the consumer, historicity could be a benefit – in times of uncertainty, there’s comfort in endurance. You trust the survivor, in a fearful, Darwinian way.But in times that are buoyed by a sense of possibility and optimism, new ideas and concepts – and the companies that embody them – are triumphant. Dopamine flows and different reward systems in the brain are triggered.

Over the last few years, we’ve been in a sustained period where experience means less and less. The reasons for that are all around us. It’s brands like Apple and Lexus and Google and Amazon that represent the best of what we can do.

Meanwhile, of the $100 billion of worthless subprime loans were issued by venerable financial services firms, whose lobbies boast oil paintings of now-dead founders (who were pretty stiff in those portraits as well.)

Whatever intangibles were represented by “experience” – at best a communal set of values passed down from the founders through the self-perpetuating culture of the organization – have been trashed and thrashed by avidity for cupidity.

Established, experienced names like IBM and General Motors have had long and difficult struggles for relevance, leading consumers to believe that when a company has been around for a long time, like cheese in the refrigerator, it begins to stink.  So experience becomes the dread doppelganger of over-confidence, stale thinking, idea squashing, status-quo-ism at its most sclerotic.

So a brand rich in history, like Burberry, needs to turn its history into irony – by literally turning its lining and its past inside out – to remain attractive to consumers. Just as Budweiser, who used to treat its Clydesdales in a reverential and gauzy way, now uses them as post-modern quotes to show the brand is cool enough to detach from its own autobiography.

The times ahead are going to be challenging for marketers as they work towards a new calculus that re-defines the notions of experience and history.Because just as it’s a mistake to think that “Trusted for over 100 years” is a claim that’s going to motivate anybody, it’s also a mistake to think that the values of the past don’t matter. Senator Obama is succeeding, in large part, precisely because his message calls upon us to re-connect with deeply American values and lower-case spirituality. He told the young people in the audience last night in Wisconsin that the government should pay for a portion of their education, but only in return for government service. And he also reminded parent of their responsibility: “Turn off the TV” he said.

So what’s the immediate lesson: Separate the lessons of the past from the past itself. The brands that will succeed are those that speak with a fresh and inspiring voice of present challenges and ancient truths.

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Polaroid and the Slow Death of Instant Photography

Having  abandoned the camera business a year ago, Polaroid announced that it is now fleeing the film business as well.  The final, symbolic demise of the once mind-blowing technology comes as no surprise, given that digital imaging is as ubiquitious as Starbucks locations or screenplays by

Soon, the iconic Polaroid camera will take its final residence in the Land of Retro, where it will be adopted by hipsters, in the same way that they've rediscovered vinyl records, the photobooth, and the Soviet-era Lomo triple-lens camera.

What went wrong seems pretty damn obvious.  Polaroid was so stuck in its model that it couldn't recognize the unstoppage swing away from analog technology to digital, and thus ended up stuck in a mechanical, hard copy world. 

That's the easy answer.  But it's only partially right .  You see, it wasn't just a platform shift that paralyzed them.  It was that the emotional benefit Polaroid offered was being co-opted.   It all goes back to the "What business am I in?" question.  And Polaroid wasn't in the photography business, it was in the instant gratification business.

Remember how those Polaroid pictures -- often still damp and developing before our eyes-- would be passed around at a party or celebration?  It's the same way that a digital camera is passed along now, with everyone squinting at the little screen.  The magical immediacy is a potent force.

There would have been a way for Polaroid to keep that immediacy, but to maintain its differentiation and essence as well. So it would have been a mistake for them to rush into the digital camera business, and be a me-two player with Canon and Olympus and all the others.  The world didn't need, and doesn't need, another digital camera. 

More interesting for Polaroid would have been for them to continue to make instant cameras, but digitize their platform so the images could exist in tangible form, and in pixels as well.  That way, you also could hold your Polaroids in your sticky little margarita hand, and also synch them with your computer.  Permitting you to email them, photoshop them, post them on Match.com, and so on. 

With one fell swoop, Polaroid would be both competitive and differentiated.

At the same time, I would have continually evolved the form factor of the Polaroid camera itself.  There was a huge opportunity to turn the Polarid into a fetish object, something to be fondled and worshipped, like Apple has done so brilliantly. 

It would have worked.  Consumers have a deep emotional connection to Polaroid.  It evokes powerful imprints.  They would have rushed to a new expression of the brand that kept its charming mechanical magic but opened it up to the digital world at the same time.

It would have taken a new path for Polaroid to succeed in the new digital world, -- not duplicating the conventional camera makers.  But hey, isn't that what made Polaroid, Polaroid in the first place?

01:54 pm | 0 recommendations | 2 comments

The Sudden Return of the Rational Consumer

It had to happen. For years now, we’ve been blathering about Starbucks, the $3 cup of coffee, and the mass-marketing of upscale luxury in small, accessible sips.

I’ve been in dozens of meeting where the Seattle caffeine pusher has been held up as the Holy Grail of an experiential brand that understands how to get consumers to pay a whopping premium for perceived value.

Here’s how the meta-argument goes, whether it applies to Starbucks or Apple or Target:

Consumers are willing, if not anxious, to spend more for brands that transcend the narrow benefits of functional utility – see Virginia Postrel’s “The Substance of Style.”
Price sensitivity is out. Sensibility sensitivity is in. Consumers seek to wrap themselves in brands that offer up a cozy, self-reinforcing blanket of hipness and coolness. It’s a co-dependency of cues and semaphores, a mutual acknowledgement that brand and user are in on the game.

Well guess what? You’ve seen what happened to Starbucks sales and its stock during the last quarter. It was more than a mere froth of bad news, bringing Howard Schultz back into the CEO position to recover the missing mojo. Meanwhile, McDonalds is getting into the pricey coffee space, with their own McBaristas. And just last week, I read that -- sacre bleue – Starbucks is testing a $1 cup of Joe, a stunning capitulation

And Christmas sales were dismal at Tiffany, while Wal-Mart, long the object of retail mockery for its experience-less shopping environment (and for its heavy-gestured attempts to get more fashionable) led the pack. Apple’s stock was crushed this week on the expectation of disappointing 2nd quarter sales.

No doubt the economy is what’s operating here. But is that all that’s working in the great whirling and clanking of the consumer machinery? After all, the theory has been that small indulgences, like the artisanal beer or the imported chocolate bar that’s high in the newly-desirable cacao, are recession-proof. (And hey, we’re not even officially in one yet.)

I suspect that something else is afoot, though. I think that we could very well be seeing the re-emergence of a species long thought extinct by our marketplace paleontologists: the Rational Consumer. Which is to say that the economic situation could be revealing a level of Coolness Fatigue that’s gathering steam below the surface of our maniacal capitalism.

If the downturn provokes a recalibration of values, then what might happen when the economy regains its footing? We can’t expect the newly Rational Consumer to rush back in a giddy state of latte deprivation. In fact, what if the mutterings of the consumer start sounding like this: I’ve gotten used to my McDonalds coffee. I’ve learned to live without arugula. The Gucci bag was gauche, anyway.

To be fair, the Rational Consumer has never totally vanished, as anyone who’s ever seen the value hordes at Costco can attest. But Costco sells Apple, porcini mushrooms, and other leaders of the Hip Parade – that’s one of the reasons it does so well. I think it’s undeniable that overall, there’s been a powerful gravitational force in the consumer market that’s driving apart the Bauhausian nexus of form and function.

I have an additional hypothesis. Beyond fiscal woes, something deep is changing in the consumer mindset, and it’s driven by a combination of factors. They include the focus on global warming, the election, and more specifically, the Obama factor.

His message is profoundly resonating with many, and that has real consumer implications. We’re starting to recognize that perhaps, just perhaps, the universe doesn’t revolve around the next shiny, micro-processor powered toy. As we start thinking outside ourselves -- about the way America is perceived in the world, about immigration and the chasm between rich and poor – spending $3 for a cup of coffee may seem less like a gesture of self-reward and more like a gesture of self-aggrandizement.

10:58 am | 0 recommendations | 5 comments

Report From Web 2.0: More Creativity In This World Than the "CREATIVE" One

I spent two days at the Web 2.0 Conference in San Francisco last week, but rather than report on the proceedings -- trust me there was no shortage of blogging, Digging, Twittering, Jaikuing going on -- I'd rather comment on the broader theme of the role of creativity in business.

The point is that despite the palpable waves of self-satisfaction, and the echo-chamber of mutually-reinforcing coolness, there is a genuine rush of creativity in the Web 2.0 World that cannot be denied. And I'm talking about creativity in its purest form -- the willing into existence of a new construction, the imagining of new shapes and forms.

Indeed, the ways in which raw technology is being reshaped to challenge the old structures actually compares favorably to the level of sheer creativity we're seeing in the popular arts of film and television. I know this runs the risk of sounding runny and gushy, but let's take Twitter as an example.

Twitter is a form of performance art -- an Internet platform that lets people connect through their daily mental jottings. Its creators have digitally sanctified the demotic, bringing forth a mesmeric mash-up of McLuhan, Warhol, and Dada. And oh yes, it's also Proustian in its lavish, voluptuous self-absorption.

Web 2.0 was aswirl with people in the creative process of connecting technology to some deeper needs -- of theirs, of yours, of mine. Yes, there's talk of "monetization," but in some cases that is truly an afterthought, with the sudden and unexpected elegance of a new idea taking precedence. That may be the sign of another bubble, but the lack of commercial exploitability doesn't diminish the originality rocketing it. Indeed, it might amplify it.

By comparison, the carbon copy factories that churn out the vast majority of popular culture appear grim in comparison. Television and film (including the independent, documentary world) are generally iin the one-degree business: get out your protractor and innovation becomes an exercise in incrementalism. Someone hits a home run with a documentary about spelling bees, and the clone army rushes to other examples of obsessive little worlds involving kids: chess, ballroom dancing. Meanwhile, originality triggers anxiety.

It used to be that the creative world turned up its nose at business. Today, the olfactory revulsion should be going the other way.

10:02 am | 0 recommendations | 1 comment

Innovation: Virgin Money: It's The Mischievous Bailing Out the Mischief-Makers

There is something positively delicious about Richard Branson and his band of irreverent
up-enders about to turn North Rock -- which was the fifth largest mortgage lender in the U.K.
before it journeyed from its eponymous solidity to a hard place -- into Virgin Money.

There was a time when financial services marketing was as grim as an undertaker's visage,
when austerity equaled credibility, and humor (and god forfend, irreverence) were as unwelcome in the travertine palaces of these august institutiions as a Black or a Jew in the boardroom.

I had Citicorp (as it was then known, before it made the trek to Citigroup and now the noisome, faux-friendly, Citi) and Chase and Nation's Bank as clients, and though they were different cultures they were equally adamant about the need to project gravitas.

Of course, we've learned something different. While financial institutions can project anything they want on the outside, the sub-prime crisis has revealed what they are on the inside: Sleight-of-hand tricksters, playing a game of three-card monte, moving bad credit around so fast that in the blur, no one can tell what's what.

Now we knw better. Seriousness and honesty are not even distantly related. So our perspective on solidity and trust has shifted to the point where the Virgin brand, and its iconoclastic, industry-destabilizing approach -- fueled by cheeky humor and joyful, provocative challenge -- can actually be welcomed as a white knight, riding in to bail out the stiff, pompous and now desperate "bankers."

On the global market dollars convert to pounds and rupees and and even Iranian rials, but gravitas and self-importance can no longer be converted into confidence.

Anyone who has flown Virgin and American Airlines will not need to be convinced that Branson can deliver. (Even though, as the Guardian points out, his previous efforts in financial services never got off the ground.) Of course, he's no philanthropist. At the very least, he wants to make money for himself, and us at the same time. That's not a bad partner to have.

And what does this mean for other markets -- like insurance -- where the ancient marketing verities still hold? Just wait.

10:59 am | 0 recommendations | 2 comments

Innovation: Everybody's got the Skype Write-off Wrong

EBay has this little button on their site that exhorts customers "Buy it Now." Well, that's just what they did with Skype, paying over $3 billion for the Internet telephony service. On October 1st, they wrote down that investment by nearly 50%, and conceded that they over-paid.

Well, yes. But the reason they over-paid, in retrospect, wasn't that they over-estimated its growth potential; Skype has continued to add customers at a rate consistent with its valuation. What eBay over-estimated was their potential to integrate Skype into their auction system, and by doing so turn it into a platform for monetization -- either by upsell, or by ad sales.

They couldn't figure out either one. Google monetizes by selling relevant ads based on search behavior. Now if Skype was run by Alberto Gonzales's Justice Department, they could develop a technology that listens into our phone calls, pulls out the relevant terms, and then delivers appropriate ads. Which means that if you're talking to your friend and you mention how hungry you are, a Pizza Hut message would appear on your computer. Cool, but privacy kryptonite.

Nor could Skype upsell "premium" products, which is the way that free internet services make their loot. Basic Hotmail may be free, but if you want to store more than a handful of messages, they'll charge you for it. Currently, there aren't many premium services that telephony offers -- beyond the standard fare of voicemail, call forwarding and the like. The territory is wide open for innovation, but Skype didn't deliver on any of it.

So what happened was that Skype made a spectacularly rapid journey from technological marvel to boring commodity. It lacked the innovative edge and branding sparkle to lift itself out of the rut of providing a boring service that consumers take for granted. We'll pay for innovation and psychic rewards that validate our coolness -- ask Steve Jobs and Howard Schultz -- but not for demotic functionality.

Ebay's problem wasn't that they over-paid. It was that Skype under-delivered.

02:16 pm | 0 recommendations | 2 comments

Whole Foods Fight; John Mackey’s Yahoo Rants Are The Dark Side of Entrepreneurship.

When it was revealed that John Mackey, the celebrated founder of Whole Foods Market, had posted hundreds of messages, using an alias, over an eight-year period on Yahoo finance message boards -- some blasting competitors, others lavishing praise on himself (even his own haircut) - most were shocked.

How could the subject of such business hagiography, an entrepreneur who transformed the face (and the aisles) of supermarket retailing, a vegan who made the organic lifestyle the New American Badge, a passionate advocate of small producers who introduced us to more kinds of honey than we thought there were bees, behave in well, such an inorganic fashion.

After all, Whole Foods Market is all about transparency. You know in sometimes excruciating detail about where you persimmons and your pork chops come from, but in the case of John Mackey’s opaque postings, you were completely in the dark about where they were manufactured them.

I view this turn of events as the dark side of passionate entrepreneurship. Mackey lived and breathed his business so profoundly, and he is such a competitive animal, that he simply could not resist the temptations dangled by the Internet’s fortress of anonymity. And once having been seduced by being able to hide in plain sight under the user name “Rahodeb” – a scrambling of his wife’s name - Mackey just kept going and going and going.

Recently, I read about a sociological study which found that our personality traits are amplified in the online world. Introverts become more introverted, and extroverts become more in-your-face. This is clearly the case with Mackey, who by all accounts is a fearsome competitor without the comfort of anagrammatic doppelganger.

But probably the most fascinating and telling quote I’ve read about the whole episode came from Mackey himself. According to the Wall Street Journal, Mackey said “his anonymous comments didn’t reflect his or his company’s policies or beliefs. Some of the views Rahodeb expressed, Mr. Mackey said, didn’t match his own beliefs.”

That’s pretty amazing, when you think about it. Mackey moved beyond using Rahodeb as a mouthpiece for himself, as a vehicle for bashing Wild Oats and its then CEO Perry Oldak, and onto a meta level of performance art where he used his alias to try on different viewpoints and test different arguments. There was something irresistibly seductive in the sheer thrill of pretending.

That such a successful entrepreneur – one for whom a cultural of ethical behavior has long been a business imperative – could be driven to these levels of clearly inappropriate behavior is a cautionary tale. This risk isn’t that we’re going to see a string of copycat behavior. Far from it. The risk, rather, is that unbridled CEO involvement with a business, fueled by the competitive landscape in all categories, and stirred by a culture that tolerates bad behavior, will create disturbing levels of entrepreneurial acting out in oth"er ways.

Mackey was able to hide for a long behind his bad behavior. Other CEOS may not have that luxury.