Jab, Jab, Jab, RIght Hook

Give value before you ask. That's the advice of fast-talking social media expert Gary Vaynerchuk, author of Jab, Jab, Jab, Right Hook. Vaynerchuk was a speaker this week at Rotman and he was energetic and frenetic. He was promoting his new book, which he described as being full of specific strategic and tactical advice for succeeding in social media, wrapped around about a hundred case studies.

In a world saturated with content across all manner of media, you have to work hard to get attention. And you do that by providing people with value. Provide that value and build a relationship before you seek a transaction: to buy your product or to make a donation. In other words, Jab by providing content before you put out the Hook.

Don't use social media sites like Facebook primarily to attract people to your web site: build your relationship there, where people already are. For instance, don't start your own hashtag; jump onto an existing one. Get used to the idea that you don't own your content: once you release it, whether it's in an ad or a YouTube video, it belongs to the world.

Vaynerchuk is very excited - and, believe me, his excitement is very transparent! - about the ability to target very specific segments on Facebook. TV segmentation is about 27% accurate, whereas Facebook segmentation is about 92% accurate. He recommends going for depth, not breadth. Wouldn't you rather connect with 1,000 people highly likely to buy your product rather than 100,000 who aren't at all interested? Use Facebook dark posts to target these people; through them you can get your message out subtly without putting something right on your Facebook page*.

Vaynerchuk's strongest recommendation was this: Become a media company. Provide valuable content to build a relationship, and then slip in your message among the rest of the media. Frankly, I found this advice disingenuous: if every organization becomes a media company, the content market will become even more saturated. Only the early birds are going to catch this worm!!!

The format of this session was mostly Q&A, which worked quite well despite the fact that Vaynerchuk was participating through two-way video. His most common advice to the people with tactical questions was 'become a media company'.

* I definitely have to do more research to fully understand these dark posts. Vaynerchuk's talk was liberally sprinkled with acronyms and was clearly aimed at people who already knew a lot about social media.

Nudging Social Policy

There's a lot of buzz about behavioural economics these days, and Rotman School of Management has held several talks about the topic and has published Nudging: A Practical Guide. Using Behavioural Economics to Inform Social Policy was the title of the most recent Rotman talk by Adam Oliver of the London School of Economics.  Oliver has moved from his initial enthusiasm for these methodologies to harbouring significant reservations.  But more about that later.  First a summary of the principles of behavioural economics.

Oliver started with a very clear exposition.  Put simply, he says, mainstream classical, economics, assumes that humans behave rationally to maximize their economic gain. Behavioural economists believe the contrary, that humans behave irrationally based on a reflexive instantaneous reaction and not in their best long term interest.

Behavioural economists use their knowledge of human behaviour to design a choice architecture that will enough people to make choices in their own best interest.   Thaler and Sunstein, authors of Nudge (reviewed here), call this Liberal Paternalism.

Some key behaviours that lead people to act against their own best interests:

Loss Aversion   If people lose a certain amount, that causes about twice as much pain as they feel pleasure from a gain of that same amount. 

Present Bias   People prefer prefer present pleasure to even greater pleasure in the future.  

Probability Weighting   People have difficulty with probabilities.  They tend to overweight events that have very low probability (think of lotteries) and underweight events that have high probability.

Optimism   People are more optimistic than justified about the future. 

Oliver then went on to describe some of the main techniques that practitioners employ to influence people based on the tenets of behavioural economics:

Change the default   Requiring people to opt in to organ donation results in a take-up percentage of about 10-20%; flipping the default so that people have to do something actively to opt out results in organ donation of 80-95%.  Companies that require employees to opt in to a retirement savings see a much lower participation rate than those who change the default so that people have to take explicit action to opt out. 

Manipulation of Reference Point   The most effective way to motivate people to save energy has been to inform them of the lowest energy usage of their neighbours.  That changes their reference point for how much energy they should be using. 

Application of Incentives   While the use of financial incentives is part of classical economics, behavioural economists use non-financial incentives to trigger desired behaviour.  A good example of this was the practice of children in Iceland signing contracts around better eating, following which child obesity rates fell. 

So, on to the serious efforts to apply these principles in national policy formation. Prime Minister Cameron was the first to embrace these ideas.  He required all his MPs to read Nudge and set up the Behavioural Insights Team, popularly dubbed The Nudge unit, which 'applies insights from academic research in behavioural economics and psychology to public policy and services'.

Subsequently, Sunstein joined the Obama administration in the Office of Information and Regulatory Affairs, with a mandate to base policy on evidence, not intuitions.  In his talk at Rotman, Sunstein  claims billions of dollars of savings through following the behavioural economics principles and the office's nudging people toward good choices by making those choices automatic, simple, intuitive and meaningful, with a huge emphasis on the value of simplicity.

An article this summer in The Globe and Mail reported that Canada is also weighing the possibility of employing this approach.

Oliver described his reservations about the application of behavioural economics principles in public policy.  While it's clear using these tools can advance good policies, Oliver is concerned that some of these experiments have not been vetted to ensure that they actually produce sustained results.  Most of all, Oliver worries that the interventions based on behavioural economics require subtle, covert decisions when government should always be transparent and open. The examples quoted in publications invariably focus on indisputably beneficial interventions, but of course these interventions could also be put to less noble objectives.  For instance, corporations have known about manipulating default options. Canadians are aware of the power of the negative option. A major Canadian telecoms company, Rogers, is still remembered for its introduction of a negative option billing plan - back in 1995!  Although it was withdrawn after a public outcry, the company retains association with this ugly tactic.

As academics and politicians continue to explore the possibilities behind behavioural economics, it's healthy to question its efficacy and appropriateness.

Defining Innovation

I've just finished teaching a course called Managing Innovation at the Rotman School of Management at University of Toronto.  It's a second year MBA course and I always start the course with a discussion of the real meaning of Innovation.  Most students arrive at the class with a pretty narrow definition of innovation - and for most it centres on technological invention.

My definition is much broader than that and we had an extended discussion about our different views of innovation.  Perhaps it has something to do with me being the professor, but we ended converging on my favourite definition, namely.

I like this definition for several reasons.  I like the use of the word value.  Value doesn't just relate to profit.  The value can arise from cost reduction, or social value, or even a new way of thinking about the world.  So the definition holds for corporations, governments, or non-profits.  If we're going to solve the world's social problems, we're going to need a lot of innovation, so it's important that our thinking about innovation extends to social situations, not just profit-seeking enterprises.

The definition requires you to have more than just a great idea; you have to implement something to create value.  I like that concept of creating value.  An invention alone might not create value, and that's why I would argue an invention is not by itself enough to qualify as an innovation.

I like the use of the word fresh instead of new.  Taking an idea that's been used in one area and applying it to another fits in my definition of innovation.  Fresh captures that idea of taking an idea from one arena to another; I would classify that as innovation too.

This year, we had a particularly spirited discussion about value, and whether something had to have significant and immediate impact to qualify as an innovation.  We concluded that something had to have a measurable impact in order to be considered to deliver value.  It was an thought-provoking discussion.  You always learn from students!

TEDx has its first confirmed speaker

It's been fun talking to potential speakers for our TEDx conference. It continues to amaze me how many people are addicted TEDsters through the TED.com web site. Who would have thought that a conference (and a very expensive one at that) could give away its product and still continue to flourish? Yet, by providing greater access to its content, TED has simply increased its popularity and brand identity. It’s yet another example of offering free content on the Internet and thus enhancing brand rather diminishing value.

This familiarity and respect has made the job of the Program Committee easier. Success came early with the confirmation of our first speaker, Anita McGahan. I first heard Anita speak at a Rotman event, and she wowed me with the clarity and power of her presentation. Anita is a respected professor at the Rotman School of Management at University of Toronto, where she teaches the mandatory strategy course to all first-year students – a critical assignment in shaping Canada’s future business leaders.

But Anita goes way beyond teaching traditional business concepts. She opens students’ eyes to wicked problems of the world. Wikipedia defines a wicked problem as ‘a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. Moreover, because of complex interdependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems’.

Three of the problems Anita speaks on are the End of Oil, Global Health or Worldwide Migration to Cities. I want to hear them all – it’s like standing in front of a yummy smorgasbord and trying to decide which items you want to sample.

Anita has incredible credentials. She is a Senior Associate at the Institute for Strategy and Competitiveness at Harvard University and the Senior Economist at the Massachusetts General Hospital Center for Global Health. She’s graced the staff of McKinsey and Morgan Stanley. She’s been a faculty member at Boston University and Harvard Business School. It was quite the coup for U of T to attract Anita McGahan, and a great feather in our cap to attract her to TEDx.