Are You a Change Agent?

The simple answer is yes.

The only constant in our life is change. 
Business and capitalism, in general, requires it.
At the most basic level, to win consumers and build loyalty businesses must differentiate themselves from the competitive set, regardless of their industry.
Whether that’s in packing, pricing, product features, or promotions, differentiation, or creative destruction is an essential fact of capitalism.

The same is true for individuals.
The act of living is not and cannot be a stationary state.
Every bit of information we consume has an impact on how we engage with the world.
Every conversation we have either confirms or challenges our worldview.

Not only do things change us at the individual level, but also our change impacts others.
There is always someone watching our behavior.
Taking social clues.
Making a subconscious decision to mimic our behavior or to ignore it.

If you eat healthy those around you will start to think about what they eat.
If you workout often those around you will.
If you watch less tv, those around you will start to pick up a book more often.
If you have a positive self-narrative those around you will start to evaluate theirs.

You see, we are what we repeatedly think and do. As such, those in our tribe in many ways are and become what we think and repeatedly do.

We must consistently ask ourselves, am I becoming who I want my wife, husband, friend, brother, sister or co-worker to become?

We are all change agents. We can all be artists.

The question is whether we are driving change for better or for worse.

We have the power. The choice is ours.

Being First Isn’t Important

Being first is not the objective.

Nor has it been for some time now.

Sure, back when we were hunter-gathers and scarcity ruled the world being first could be the difference between whether you and your family ate that day.  Being first was often a life or death outcome.

In the world of scarcity being first matters.

However, today being first is largely irrelevant.

Friendster, Myspace, Classmates.com, and Sixdegrees.com were the first social networking sites. Each had millions of users. Then came Facebook.

Yahoo, Excite, Magellan,  and Infoseek were the first information portals that focused on search. Then came Google.

In the 90’s china.com was the future of e-commerce and the internet in China. It was one of the first companies to IPO, tripling on its first day of trading. Then came Alibaba.

In a rush to get a return on our investment, being first for the sake of being first has become a cornerstone of what it means to be part of our culture.

However, our culture has shifted and the conditions in which we live are vastly different from our days as hunter-gathers.

Instead, we live in a world of abundance.

No longer is there a premium on being first.

Today, the winner is the company or individual that makes a connection.

The person who gains our trust.

The company that show’s empathy for the nuance of being human.

The person that is patient.

The company that is generous.

None of which has to do with speed or being first.

Today, the premium is placed on engaging with others, over and over again.

The people and the companies that are generous and care are the winners.

Not the one’s that are first.

The pioneers take the arrows. The settlers take the land.

 

Why Google & FB Will Not Rule The Digital Marketing World

Google & Facebook: Digital Marketing 800lb Guerillas

The 800lb guerillas in the marketing world are Google and Facebook. Specifically, the burning question on the minds of many brand managers, advertising executives, and digital marketers is: to what extent and for how long will both companies continue to transform and dominate the world of digital marketing? I’ve spent semester lot of time thinking about potential answers.  Personally, I continue to find business theory and the history of the commercialization of the internet to be the most compelling lens through which to attempt to view what the future may hold.

The history of the internet is one of openness, a culture in which the major participants have actively held disdain for centralization. Further, broadly speaking, business industries oscillate between periods of interdependence, in which to optimize business performance vertically integrated and closed systems, such as wall-gardens, prevail, and periods of modularization, in which business performance is optimized through flexibility and the coordination of a few companies working at arm’s length. It is my view that the current dominance of Goggle and Facebook is largely attributed to the considerable performance gap, which is driven by attribution deficiencies and ROI measurement inaccuracy, in digital advertising.

As theory would predict, the interdependent wall-gardens of today are necessary for both Facebook and Google to optimize business performance and capture value. However, as the performance gap closes, over the medium to long term I predict that the digital advertising market will evolve as most markets in the history of the internet, and business more broadly, have and evolve into a decentralized and modular ecosystem comprised of a number of players executing in specific niches within the digital advertising value chain. Or said differently, Google and Facebook will cease to be the 800lb guerillas in the industry and instead gravitate to a niche within the value chain that they own, a stark contrast to their current roles of generating 100% of both the value creation and value capture within the digital marketing industry.

“History doesn’t repeat itself but it often rhymes” – Mark Twain

To understand the current Internet ecosystem, a good place to start is taking a look at its early beginnings. Specifically, the 1982 Bell Systems anti-trust ruling that resulted in the spinoff of AT&T. The ruling ultimately led to the lack of a dominant firm in the computing or communications industry, which proved to be crucial to the growth of the internet. The ruling played a pivotal role in the growth of the internet because it resulted in an environment of decentralization where multiple organizations had the discretion to act. This decentralized environment has persisted over the last ~20 years of the internet’s existence. Moreover, while there have been brief periods of dominance by individual players, market dominance has not persisted over an extended period in any Internet vertical. What we see over and over, in the manufacturing of mainframes, email services providers, chip manufacturing, web browsers etc, is the process of creative destruction at work.

Specifically, each market experiences innovation from the edges, in which entrepreneurial players experiment and innovate to create better market solutions that create value for consumers and erode a portion of the incumbents’ value, resulting in a decreased and more narrow scope for each player in the value chain. It is my view that moving forward the internet will remain a decentralized ecosystem. In addition, creative destruction is as healthy as it has even been within the digital advertising vertical, as illustrated by Data Xu, Acxiom, Shop Kick, Oracle, to name a few, of the many innovative companies, experimenting and successfully innovating at the edges of digital marketing. It is my prediction that, just as it has thus far in every major internet vertical, creative destruction and innovation from the edges will produce a few companies that gradually erode some of the value creation of both Google and Facebook, resulting in increased specialization by both incumbents to protect value, over time.

 

Interdependence vs. Modularity: It’s all About Circumstance

In Innovators Solution, Clay Christensen provides the below diagram as a framework to help businesses answer the question of whether they should integrate or outsource.

The left side of the diagram indicates that when there is a performance gap—when product functionality and reliability are not yet good enough to address the needs of customers in each tier of the market—companies must compete by making the best possible products. In the race to do this, firms that build their products around proprietary, interdependent architectures enjoy an important competitive advantage against competitors whose product architectures are modular, because the standardization inherent in modularity takes too many degrees of design freedom away from engineers, and they cannot optimize performance.

Moreover, over time, integrated companies get better at meeting the needs of consumers, closing the performance and delivering functionality and reliability at or above the expectations of consumers. Yet, once companies overshoot the desired performance, nonintegrated competitors disrupt the integrated leader. These competitors are typically modular in nature which allows them to compete on the criteria in the upper left of the diagram – speed, responsiveness, and convenience because they can update and redesign individual subsystems without having to redesign everything, as the entirely vertically integrated incumbent does.

Further, Christensen’s’ theory of Interdependence and Modularity can be applied to the digital advertising landscape. Specifically, the vertically integrated, walled garden structure of both Facebook and Google is the result of their effort to close the performance gap that exists in digital advertising. Digital marketers are all too familiar with the challenges of attribution and the inability to accurately measure the ROI of marketing initiatives. To take it a step further, you could argue that the walled garden structure of Facebook and Google is necessary, as sharing the information with their clients would only imped the speed at which each company closes the current performance gap that exists.

However, industry consensus is that attribution challenges and ROI accuracy will be overcome in the near to medium future. At that point in time, the platforms of Google and Facebook will be forced to evolve, as tinkering with new features and functionality will no longer be in the interest of CMO’s. Instead, the focus and key performance driver will be learning. In this world, Google and Facebook will have two choices 1) cooperate and provide data to its clients to help them learn and foster closer relationships with their consumers, or 2) suffer the consequences of the commoditization of their data, resulting in lower advertising revenues.  However, if theory holds, option number two is likely to become a reality no matter what, as more nimble and modular companies come along to disrupt Facebook and Google because of their ability to quickly identify and conveniently match consumers across channels, with or without the help of Google and Facebook, because of 100% addressable media and accurate ROI measurement.

Exceptionalism is Dangerous

By no means is the prediction above inevitable. Specifically, the industry landscape will be shaped largely by the actions of both Facebook and Google. Both companies operate at large enough scale that it’s not inconceivable that they both can effectively execute actions that deter the entrance of smaller competitors. In addition, both companies have shown both a skill and willingness to acquire businesses that pose a threat to their core operations. However, to argue that the above prediction will not manifest itself in some shape or form would be to contend that the digital ecosystem/internet is exceptional in some way, which is a view that I think has proven to be misguided time and time again when it comes to technology, the internet, and business in general.