A Prediction on the Radical Transformation of the Internet
why revealing your true identity will be the next tectonic shift in the virtual space
Posted 2010-08-19 12:15 in business, business models, culture, ethics, human nature, improvements, marketing, social networking
The role of anonymity is a topic that comes up often about the increasingly unpleasant tenor of discourse on the internet. It’s getting harder and harder for websites and content providers to deal with the incivility, abusiveness, and venomous anger that is constantly being spewed out on their forums— almost all stemming from users who never reveal their real names or identities. As I mentioned in a previous article, as the internet has moved from obscurity into the mainstream, civil and thoughtful conversation has become increasingly rare. We’re finding that it’s easy for the public to sling mud on the internet when they can hide behind their monitors. It’s common for vigilante internet mobs to form and harass their enemies. Namecalling and insults abound.
As a thought experiment, think about this for a minute: how would behavior on the internet change if you had to use your real name?
As I see it, changing this one aspect of the internet would radically reduce the level of unseemly activity in the virtual environment. In “real life”, norms of civility and politeness help us maintain our positive appearances in the eyes of others, which to most of us is pretty important; on the the internet, anonymity allows us to largely avoid consequences of bad behavior, essentially giving us license to abandon self-control. But when your name and identity is forever linked to the comments you make, you must maintain a certain level of comportment fit for someone interacting in polite society, lest you earn a permanent mark against your character. And, as a friend of mine once said, the internet never forgets.
Thus, I predict that some day, the internet will undergo a radical transformation into a dichotomized space: there will be one portion that is anonymous; its qualities will be generally seen as chaotic, unreliable, and unstructured. This anonymous internet will not be taken very seriously by anyone— even the people who use it; it will probably not be regarded very well, and people will use it either just to let off steam or to just mess around.
And then there will be the other portion, demarcated by the use of users’ real identities in communications. This latter internet will be regarded as civil, purposeful, and reliable in its information; it will be a place where reputations and communities can be built, meaningful and polite interaction can take place, and where comments are helpful and constructive rather than snarky, dismissive, and hostile. Though it may come off initially as a somewhat sterile space, as its userbase expands, it will evolve to be as the primary virtual complement to “real life” interaction. The anonymous forums of the ‘other web’ will simply be too unstructured by comparison for long-term investment of time. A company will probably make a lot of money selling you an official identity that you will use as a login for all the websites that subscribe to this part of the internet; this will prevent you from making up an identity and ruining it for everyone.
Privacy advocates will worry about this evolution of the internet into a sphere in which we give out our real names and are forever linked to our comments, but the dystopian reality of the current internet “community” and commenting as a whole is one that both the public and those privacy advocates simply must acknowledge, as the current state of affairs threatens to undermine the internet as a whole. Currently, websites are having to employ increasingly heavy moderation to weed out bad behavior, but ultimately, content providers will find that they lack the resources and manpower to corral human nature in an atmosphere where there are no rules. However, they can avoid having to deal with this problematic behavior when they understand how the presence of social norms can suppress incivility from the get-go.
People will initially be reluctant to sign up for this idea—mainly for privacy reasons and the fact that they are accustomed to anonymity— but once they realize it’s the only ticket to entering a consistently constructive and civil society in the virtual world, I think they will understand the value, and eventually embrace it. They will see how it can be leveraged it to bolster their personal reputations, build their names, and create a lifelong history of their characters. They will appreciate how the internet will go from being a glorified anonymous chatroom to being a community of real people with valuable things to contribute. They will appreciate how having the discipline to maintain oneself will make conversations more pleasant, constructive, and intellectually satisfying. They will appreciate how knowing each others’ names will facilitate the transition from being online friends to being “real life” friends.
It will be interesting to see whether my prediction will come true, and if so, how long it will take. The level of moderation necessary on reputable sites that allow public commenting (like news sites) is reaching all-time highs, and younger generations who have grown up with the internet as a free-for-all are posting with increasing frequency. Why, even the middle-aged adults who were taught growing up to mind their Ps and Qs have, over time, been socialized by the rest of the web to drop their pretenses of civility.
Given all that, my bet is that the wheels will be in motion within the next 5 years.
Corporate Social Responsibility Can't Happen By Itself
emphasis on short-term profitability stunts CSR’s ability to thrive in the market
Posted 2009-10-01 22:40 in business, business models, culture, economics, ethics, finance, improvements, marketing, sustainability, unfinished thoughts
Regulation is a pretty hot topic. And when I say “hot,” I mean that it has an uncanny ability to divide a crowd. Progressives seem to generally favor regulations as a means of limiting the damage caused by corporate recklessness, and they have been quite vocal in pushing for greater government oversight in what companies can do, and how much they can do it before incurring serious penalties. Meanwhile, proponents of the free market maintain that the only fair and effective way to handle regulation is to allow the market to do the work; they believe in an efficient economic system that automatically controls problems that really matter (i.e. the problems most people care about). I personally can sympathize to some degree with both sides of this debate, but am not convinced that either can be implemented as solutions to the problems we currently face. What follows is my logic.
Before we can go on though, we have to face facts: it’s been obvious to those paying attention that market forces have not been effective in curbing devastating environmental damage caused by companies who have ignored the social costs of their operations. It’s not limited to environmental damages, either. The recent financial meltdown almost certainly would have been prevented with more oversight.
The traditional progressive (read: “liberal”) line about all this is that these corporations are just greedy and soulless, and don’t care about anything but profit. But this views corporate activity within a vacuum, and denies the economic realities underlying their behavior. In the absence of proper incentives, no company will behave in a manner consistent with diffuse, idealized social goals. Companies by their very nature act in ways that are most beneficial to themselves in the marketplace; even companies that try to do social good still have financial and publicity incentives underlying their behavior. Why? Because if they don’t, they effectively get punished by Wall Street and the market; remember that when we’re talking about the stock market, the bottom line is that public companies (i.e. the biggest organizations on the planet, who control the most money) pretty much need to post higher-than-expected profits consistently— or else. On Wall Street, nobody gives a hoot about how socially responsible you are— unless you’re making money from it. And tragically, our system is structured in such a way that companies really cannot afford to piss off Wall Street, for a number of reasons that go beyond the scope of this commentary.
Nevertheless, that is an economic reality; to condemn a company for being socially irresponsible overlooks the conditions that encourage the sort of reckless behavior that we hear so much about. In my opinion, it’s more of an indictment of our social and financial structure than it is of a company to say that they act irresponsibly. Like I’ve said before, we should think of corporations like organisms. They do what it takes to survive now. They typically can’t afford to think too far in the future, because Wall Street does not reward thinking far into the future; Wall Street rewards thinking about next quarter. Whose fault is that? I’d argue that it’s all of our faults. In an environment of high competition and high risk of market punishment, it’s unfair to blame companies for playing the game by the rules we ourselves constructed. Of course, it doesn’t make what they do ethically right, but like in any evolutionary context, the concept of justice doesn’t play a large role in behavioral decision-making; surviving does.
So yes, public companies do operate by almost strictly by financial motives, just like many progressives indignantly charge. But I would argue that this financial motivation should not at all detract from the actions of, say, Wal-Mart, who has done more than almost any other company in the world to enact serious green initiatives. True, they’ve done it for themselves, their own bottom line, and Wall Street— but still, they’ve done it. And if that’s the motivation they need to do it, then perhaps we should encourage that. Besides, if they were supposed to adopt a sudden conscience about their activities and rectify them, whose social goals are they supposed to strive for, anyway? Lots of different social factions have lots of different goals, and many of them have incompatible or actively contradictory goals.
For this reason, it seems fair to place the decision-making process in the hands of the public, through market forces. That allows a sort of collective decision-making process that is free from being regulated by “some guys on a board,” and allows for us to ostensibly have a shared voice in determining the direction that we take as a planet. Unfortunately, however, there are some problems that such market forces don’t resolve. For example, the economically well-endowed have a disproportionately large voice and thus the ability to unilaterally have a strong negative impact with their choices. And there’s still no guarantee that the aforementioned group will pay attention to social well-being if they’re still being held hostage by Wall Street demands. Free market economics as a means of regulation is dependent on not only market efficiency, but ethical, rational, and well-informed decision-making on the part of consumers— many of which are corporate entities.
But as consumers we are neither rational nor omniscient. We are sometimes ethical. But we can’t know everything about all the downstream effects of all our purchases at the time of purchase. This makes it pretty hard to argue the point that the market will be able to curb environmentally damaging business practices through selective consumption.
That may seem like a slam dunk for regulation, and many on the political left would love to see this happen. But it’s not that easy. The problem of regulation is complex, and it is difficult to enact regulation in a way that appears fair to everyone. Here’s the main problem: if there are regulations, who gets to call the shots?
Some might argue that we should use science to guide our regulatory policy, at least with regards to environmental concerns. But what science? Even science can have an agenda. The more you look into scientific research, the more you see how there is a chain of funding. Funding is a political process. People conducting research are subject to biases. No matter what the science says, or the preponderance of evidence suggesting one thing or another, when it comes down to drafting law, there will almost always be some arbitrary component about implementation (e.g. exactly how many tons of CO2 a company can release per year; exactly what chemicals a company can and can’t produce). And those people whose economic interests are being impinged will no more welcome the validity of the science or the arbitrary lines being drawn than a liberal would welcome Sarah Palin’s views if she was placed in charge of preserving endangered wildlife. Ultimately, any laws will be seen as political tools with embedded agendas.
Though it is debatable how much this might change corporate attitudes towards CSR, I think part of the fix is to change the nature of Wall Street. It does not serve companies or society to have such a heavy focus on short-term profitability. This structure denies companies the opportunity to act in ways that favor their own long-term efficiency, the public’s best interest, and the well-being of the planet. If companies didn’t have to keep impressing Wall Street, they could better take actions that could, over the long term, make their operations more efficient, streamlined, and less wasteful. That would be good for their bottom line and for environmental concerns. But that takes time, and it might require a few consecutive quarters of what may appear to be subpar financial performance. Right now, this is a highly risky strategy that most companies wouldn’t consider because they will not be rewarded for it.
Weirdly, even amidst all the talk about reform in the financial industry, I have not heard any talk about this. Admittedly, I’m not sure if anyone has worked out the details about how a “new and improved” stock market system would work, or if anyone has suggested a better set of economic incentives for waste reduction, but perhaps it’s time we started a national dialogue about it. It seems rather important.
Comment [12]
The New Wave of Advocacy of Financial Recklessness in Advertising
in which desperation about the economy starts to set in
Posted 2009-06-24 01:17 in business, business models, consumerism, economics, ethics, human nature
The poor economy has hit a lot of people very hard. As such, there’s been a glut of commercials on daytime television extolling the virtues of various cost-saving products. But one in particular that I’ve seen lately has been striking in its unbridled pomposity. This commercial features a nicely-dressed, middle-aged, middle-class couple talking tough about their finances. The wife reveals, in a rather distressed manner, that their monthly paycheck is “spent before we even get it.” Her husband adds that they decided that they needed to make serious cuts to their monthly expenses. “That’s why,” the woman says shortly before her husband sits in a nice leather chair opposite a a rather large, late-model flat panel television, “we switched from [a certain brand of satellite television network] to [another brand of satellite television network].” Huh?
Commercials like this trouble me. Obviously, the goal of some marketers is to get people to fork over money for things they don’t necessarily need. However, the mechanism employed by this commercial is to encourage financial recklessness by actively reinforcing the idea that certain luxuries are actually necessities. This demarcation of necessity/luxury is being increasingly blurred by advertisers, many of whom are now attempting to leverage latent consumer concerns about financial security to get them to actually spend more! By buying this [unnecessary] product, you’re actually demonstrating good financial judgment. Objectively, this assertion is not true; yet commercials like this one create an illusory social consensus about the wisdom of certain ill-advised consumer behaviors. After all, why would that nice couple on TV lie to us?
This trend is not limited to premium television channels. Many cell phone commercials seem to suggest something similar about “saving” money through consumption, as do many home internet services. No doubt, these services are extremely convenient, but for most people they are far from necessary, particularly if you are concerned about losing your house or climbing out from under a mountain of debt, both of which are probably much bigger concerns. The auto company Hyundai began running ads encouraging consumers to buy their cars, stating that they would allow a consumer to return the vehicle if their income stream was interrupted in any way. Ford and other car companies soon followed suit with similar programs. The question remains as to whether it is a wise idea for anyone who is concerned about the future of their income stream to purchase a car in the first place; after all, shouldn’t such people be trying to save money for future financial straits for when they potentially lose their jobs?
This brings us to rather salient questions about marketing ethics. Marketers are already considered pretty low on the food chain in terms of ethics, but in the midst of a global financial crisis, advocacy by companies of personal financial indiscretion is still a very ugly sight to behold. We should recall that lifestyles of excess were at the root of the sub-prime crisis, and we might be concerned by the idea of consumers being egged on by industry to continue doing it. We can’t legislate morality, but as consumers we can certainly question the ethical standards of companies whose competitive business model rely heavily on their customers’ bad judgment. But to be fair, we also can’t discount the role of the consumer either; surely consumers must take some responsibility for their own financial well-being.*
Troubling as it may be, I see this as simply a continuation of what has always been going on in marketing communications: companies try to promote certain beliefs, consumers hear it and form a dialogue with it. The ideas that consumers find convenient and/or believable stick; those that do not, fall by the wayside. It’s not perfect, but at least it’s somewhat democratic. But like democracies, sometimes it’s the stupid ideas that win out in the end.
* We tend to think of the U.S. economic system as being largely modeled on free market economics, which is in many ways built on the idea of consumers making informed choices, companies responding to market needs, and companies competing with each other to provide needed goods and services. Shift all the responsibility on any one party, and the equation starts to break down.
Comment [1]
Pay What You Want (and Maybe Still Feel Like You Got Cheated!)
the complexities involved in allowing customers to call the shots
Posted 2009-04-27 20:56 in business models, economics, human nature, marketing
The PWYW Paradigm
There’s been a lot of talk within the past few years about Pay-What-You-Want (PWYW) pricing. Much of the public discussion about it has stemmed from and has revolved around Radiohead’s decision to release their album In Rainbows online, and to allow users to pay whatever they want for it— much to the annoyance of certain other artists, like Robert Smith of the Cure, for example, who doesn’t want music (especially his) “devalued” in this manner. Various restaurants, coffee shops, and other businesses have been cautiously implementing this scheme as well, many of them before Radiohead adopted it.
Honestly, I’m not exactly sure why all these people are doing this. Is it a philosophical meditation on the complex relationship between money and humanity? Is it in the lofty hopes that reliance on altruism will actually generate more profit than would otherwise be generated through standard market norms? Is it the idea that rich people will be thoughtful and generous, and knowingly offset the losses incurred by the poorer people who couldn’t afford normal prices and thus don’t pay as much? Is it a sort of neo-socialist experiment that means to question the values and by-products of our firmly entrenched capitalist system? Regardless of its intent, I’m curious about it even though my first reaction to it is to view it more as a novelty than a straight-faced business model— which of course, does not necessarily discount it as a valid business model nor invalidate it as a legitimate political statement (if it happens to be one).
A Weird Experience with PWYW
When I think about PWYW, my first thought is of a somewhat unpleasant incident shortly after my undergraduate days at Berkeley. On weekends, in the parking lot of the Ashby BART station there was a rather idiosyncratic flea market where you could find items as unusual and varied as Aboriginal didgeridoos, homeopathic medicine for every disease under the sun, and ultra-cheap tax preparation from a filthy man sitting in the back of an even filthier truck. And on occasion there was a massage school student who hung around and advertised free (but pay-if-you-want-and-what-you-want) back massages. Being that they were free and I could just tip him whatever I felt like, I one day thought I would just get one of these free massages, drop a couple bucks in his tip jar, and be on my way.
My recollection is that it was a pretty good massage, and one that I really needed. However, I found that immediately after I had emerged from my deeply relaxing 10 minute massage session, I was standing, somewhat sheepishly, before this man and his tip jar. I say ‘sheepishly’ because beforehand I had (somewhat naively) viewed the experience as a sort of free lunch. But now I instinctively wanted to reciprocate for the massage in a “fair” manner— not least because he was standing expectantly in front of me, clearly able to see how much money I was going to put in the empty jar. The shame of being seen paying only $2 in tips negated the possibility of me doing that. He didn’t know my name exactly, but yet I felt weirdly afraid of looking like, or possibly being, a bad person who paid $2 for a 10 minute massage.
So here I was, saddled with guilt for taking this guy’s services and thinking about not paying him a market price for it. Rather begrudgingly, I ended up giving him $10 for a massage that if it were advertised as being $10, I wouldn’t have gotten at all. And even then, this $10 I knew was below fair market price, but I rationalized that I was a poor student so I couldn’t possibly give him more than that. So even though I paid, I still walked away from the transaction with a sensation of guilt which follows me around to this day!
In a normal transaction, both parties presumably make a mutually satisfactory exchange and go about their days. Here, there were odd social norms that came into play unexpectedly, feelings of guilt, and lingering dissatisfaction (I walked away from the transaction feeling insecure and with unpleasant memories of what should have been a pleasant experience). I think this is a big risk for a business to take, even though the PWYW model is arguably kind of a neat and somewhat playful concept. The fact that there’s a very good chance that a customer might leave feeling like they either underpaid or overpaid is not really a good sensation to create if you want repeat business. It may be possible, however, to alleviate such problems. To understand how, we have to think about how the ambiguity of the situation might affect the thinking of someone in that position. So let’s start with and why someone might pay more than they really felt like something was worth. Here, I will use the example of a PWYW restaurant, of which there are apparently a handful scattered across the globe.
Things for a Business to Think about Before Implementing PWYW
Consumer’s fear of others’ judgments (“I don’t want my date/wife/waiters/owner to think I’m cheap so I’m going to pay more than I think this meal was worth”) will create a negative evaluation of the business because they will feel like they were guilt-tripped into paying more than they wanted to.
A restaurant could reduce the amount of personal interaction at the time of payment between restaurant staff and the customer, or better yet, reduce this contact over the course of the whole dining experience. The risk here is that even though you will be making the patron more comfortable (if with less customer service), you are running the serious risk of collecting insufficient funds to continue operations. The guilt and shame factor that comes with human interaction is one of the main principles propping up the idea of someone being generous in their payments. Without eyes being on them, so to speak, customers are more apt to shirk based on their own post-hoc rationalizations about why they shouldn’t pay what they actually thought the meal was worth.
Consumer self-perception and self-image involves how people view themselves (“I know I am not a cheapskate, therefore I should pay an amount that reaffirms to me the idea that I’m a generous person— especially when an opportunity comes up to take advantage of the situation, and justifiably be a cheapskate”). You’d like them to want to view themselves positively (by feeling self-congratulatory about their doing the right thing), and you’d like them to maintain attitudinal and behavioral consistency (that is, they do what they morally think is the right thing). You want them to hold up their end of the moral bargain, but not necessarily because of guilt. And you want them to not resent you for it. And you want them to keep doing it as a repeat customer.
Guilt aversion (“I don’t want to walk away from here feeling like I underpaid; that would eat away at my conscience”) is something you do not want to invoke. You don’t want people to leave feeling like they overpaid or underpaid; you want them to walk away satisfied, and absolved of any moral or economic ambiguity. This is difficult to do in a business model that seems not only to openly encourage it, but which invites these weirdly complex and open-ended transactions.
Overpayment as insurance (“I don’t know how much all this was worth, so I’d better give an amount that definitely covers it to avoid underpaying or looking like a jerk”) is also not good. You might like it because you are getting paid more, but it’s probably not going to make someone want to come back. If people leave feeling like they overpaid, there’s a very good chance that they will take their business somewhere else where they can get a full understanding of the nature of the transaction before they are forced to carry out the terms of the contract in a manner that is either unpleasant or unexpected.
Novelty (“this restaurant should be rewarded for being unique” or “this is such a strange and wonderful experience that I think giving more money is justified”) is probably not a good thing either. Yeah, you might get some wide-eyed golly-gee-shucks folks in who love having their expectations subverted, but I would be wary about relying on an endless stream of them popping in just because of your payment scheme. I would hope that your restaurant or business is actually remarkable in whatever it is supposed to be doing, rather than in how it collects on the bill.
Potentially Revenue-Changing Input Variables
I am curious how end-of-year revenue would differ in PWYW businesses if you could toggle certain variables. Here are the variables I would be interested in switching in order to gauge the change in the outcome:
Payment in person vs. payment in private – If there was no way to trace back payment to customer, what would change? That is, if the customer could pay without anyone but himself knowing how much he paid, and the restaurant could only calculate total sales at the end of a night instead of seeing what each customer paid, how would the revenues differ? My guess is that it would be a hell of a lot lower.
Numeric anchors – If there were numbers shown around the restaurant, perhaps referring to the standard menu pricing or perhaps even arbitrary numbers, how would this affect what people paid?
Visual and sensory anchors – If there are no numbers in a PWYW restaurant, what anchors are customer payments tied to? Decor? Level of formality of the business/restaurant? Lighting? Quality of food/products? How would changing these factors affect consumer behavior?
Geography / Politics of Clientele – How would the success of a business/restaurant be affected by the different political compositions of different geographies? I get the feeling that a PWYW business would generally play out better in progressive (‘liberal’) strongholds, where— as Jonathan Haidt’s “The Happiness Hypothesis” contends— there is a stronger focus on individuality, autonomy, and acceptance of ambiguity (“this restaurant is unique”; “these guys think ‘outside of the box’”; and “this restaurant pleasantly subverts standard market norms”) vs. in more traditional (‘conservative’) areas, where there is a higher emphasis on order, structure, and adherence to norms (“I want to know how much I’m paying beforehand— so why doesn’t this restaurant do it?”; “this restaurant tries too hard to be different”; “their payment system, while novel, just introduces confusion and unease”; and “unlike most business transactions, this one does not give me proper closure on the deal because afterwards I still retain a sensation that I either overpaid or underpaid”).
Final Thoughts
The PWYW system is an intriguing one, and for reasons I can’t really articulate, it seems like the next evolutionary step in business and cultural exchange— but in my estimation, there are some serious barriers that need to be examined and broken before it can work successfully as a widespread business model. It would be interesting to see if and how these barriers will (or won’t ) be negotiated.
Have you had an experience with a Pay-What-You-Want system? Tell me about it in the comments!
Organizations as Evolutionary Entities
the simple yet complex task of curbing unwanted behavior
Posted 2009-04-04 15:01 in business, business models, economics, human nature, marketing
In two separate incidents yesterday, I was conversing with friends who were lamenting about how awful the press is, with their sensationalist headlines, sordid gossip-mongering, and terrible invasions of privacy. “It’s awful,” my colleague remarked, “They are ruining the world. Why don’t they take it upon themselves to be more constructive and positive?”
I don’t disagree that the press is ridiculous sometimes. But at the same time, anyone who understands marketing has to understand that corporations, including the press, are mirrors of our society. They must be to survive. If sensationalism didn’t sell, no one would be publishing such stuff; it just wouldn’t make business sense.
I think of organizations as animals operating in an evolutionary context. Give a dog a treat when it acts in a certain way and it will instinctively continue to perform that action in the future in order to get more treats; it’s a simple matter of self-preservation. If you can secure your food source, you are less likely to die. Punish the dog for an action, and over time it will eventually stop; clearly, you don’t want to piss off the hand that feed you.
We like to complain about tabloid newspapers, environmental destroyers, and otherwise irresponsible companies, but when it comes time to punish them for what we claim to disdain, we do the exact opposite and throw them a treat— whether that is by buying their products, rewarding short-term profits on Wall Street, or by throwing up our hands and disavowing our own role in the process.
The concept is very simple. Money is the lifeblood of organizations. Withhold it from them and they’ll stop what they’re doing.* It just makes economic sense for them. And while that may be a hollow victory to some who want companies to acknowledge some moral responsibility for their reformations, this is probably the best they’re going to get on any global scale for now. And besides, even though it may only be for economic reasons, scientific inquiry has repeatedly shown: economics is one of the primary drivers of behavior in modern social settings— and it would be foolish indeed to ignore that.
* Take for example this article, which talks about how an angry internet mob banded together to stop buying Tropicana orange juice because they were angry about the redesigned package. In my opinion, a ridiculous, laughable reason to get outraged; but nevertheless, they got the company to revert to their old design by causing a 20% drop in sales! Now imagine if people were outraged about things that really mattered…
Comment [2]
Business, Social Justice, and the Problems of Fairness
Posted 2009-03-28 11:03 in biology, business, business models, economics, human nature, politics, sustainability
If you observe traffic in India long enough, you’ll arrive at the conclusion that there are no road rules in India. But this is not true. There is one rule that dictates driving behavior: Might is right. To Westerners, this is a discomforting thought, because it bypasses the systems of social justice that we are used to in the West. Shouldn’t you, as a small car, have the same rights on the road as a mammoth SUV? Shouldn’t you, as a pedestrian, be able to cross a crosswalk without fear of being flattened by a speeding vehicle?
Most Westerners probably think so. Fairness and equality is ingrained in our outlook on the world. We look for courts and governments to level playing fields for us. If someone smashes our car in an accident, we use the law to restore ourselves to the situation we were in before the accident. We call that justice.
The ideals of social justice, fairness, and equality are lofty; it’s hard not to get upset when you hear stories of unfairness (persons being wrongly convicted of crimes, people losing all their money in elaborate frauds, etc.), and it’s even harder not to demand justice when something like this happens to you. Yet, I have recently begun to understand the sorts of costs that this has had on our society, both in an economic sense, but also in a psychological sense. I fear that despite the high-minded ideals of social justice, it does not always serve us well as a society to rectify every injustice leveled against us.
I wonder about how the concept of justice fits into an evolutionary context. Does it fit in it at all? Evolution would suggest that some individuals (organizations) are better suited for prevailing conditions than others. The weak and frail will be consumed by the environment, and the strong will soldier on, and grow. Evolution is the law of nature for all beings, and it is a law that is the supposed lifeblood of capitalism. Despite this, our system (at least in the U.S.) continually ensures that those who cannot compete— fairly or not— can be sustained artificially by a system that will nurse them regardless of their strength or potential to compete effectively in the future. This is not true for all firms, but it’s true for many. Think of GM and Ford, think of AIG, think of the ridiculous amount of subsidies given to industrial farms.
You might be wondering where I am going with this. What does bailing out companies have to do with social justice? Remember why the government is currently bailing companies out; it has very little to do with the companies themselves. It has everything to do with the idea that some people unfairly lost their life savings in them, and hundreds of thousands of people will unfairly lose their jobs, and the resulting economic meltdown will unfairly ripple throughout society and affect people who had nothing to do with it. So what is the solution? A lot of people feel that ‘investing’ billions of dollars into these organizations will re-establish justice to not the auto company, but people who might have been impacted by their problems. All those hapless investors won’t lose their hard-earned money. All those dedicated auto-workers who labored at GM for 35 years won’t lose their jobs. And all those bystanders won’t be leveled in the narrowly-averted nuclear winter.
I can’t help but anthropomorphize this situation a bit by comparing it to the way a parent welcomes back the proverbial prodigal son with open arms despite the kid’s waywardness. At least to some degree, we expect this from good parents. Madonna’s song “Papa Don’t Preach” has the narrator begging her religious father for support instead of judgment despite what in his eyes is her grievous sin of becoming pregnant as an unwed teenager. But we’re talking about supporting wayward organizations here, which will have broad social impacts. Welcoming back companies that recklessly screwed over investors and their own employees should not necessarily be supported in return, though it’s tempting to do it because of the other parties that might be affected by a failure to do so. So let’s start with why it may not be a good idea to bail out these companies, and then move on to why it’s even bad for the related parties.
There’s a good chance that Madonna learned her lesson and won’t get pregnant again, but the guys at GM are more akin to heroin addicts than teenagers who made some bad decisions. They’ve been supported by government money so long, are so far from market-orientation, and so incapable of the sorts of organizational change that are necessary for detoxification that it seems impossible to give them any sort of support without tacitly feeding their addictions. Sure, you can give GM money to go rehab, but there’s absolutely no indication that they’re interested in rehab. They want to stave off the looming disaster on the horizon for one more day. If perhaps they showed the least bit of interest in market orientation and willingness to be innovative, it might be different. But that’s not the case at all. They simply expect to be saved because they always have been, and the government plays into their hands largely out of habit.
Despite this, no amount of money given to the company is going to restore the lives of the victims of corporate irresponsibility, and no amount of money alone will prevent the threats of insolvency from being constant and recurring events. Of course, we are often victims of the sunk-cost fallacy, which suggests that because we’ve already wasted so much money on these companies and they’ve already created so much chaos, that we should escalate our commitments to them to hoist them from the tarpit from which they’ve carelessly driven into (again)— which is precisely the wrong tack in this situation. The best thing to do is to walk away and never look back, despite their anguished screams.
I know that many people would be affected negatively by this course of action. I realize that many retirements will be ruined, many workers will hit the skids, and their kids may never be able to attend college. I understand and empathize with this hardship. But what worries me is that trying to correct these unfairnesses actually set us up to create exponentially more of them, and make us more susceptible to future crises of the same or greater magnitude— and it has nothing to do with the actual transfer of money, and everything to do with economic incentives.
Put bluntly, these organizations are drains on the system, and further feeding them and the people who they have hurt is an even bigger drain on the system. That said, I understand that we live in a society, and we can’t always think about things in these terms. I don’t advocate, for example, that we stop all social services, which many perceive as drains. But it’s damaging to the business environment and ultimately consumers to support businesses just because we always have. It not only encourages organizations to be reckless about their management habits, but it encourages those who work for them and invest in them to behave carelessly and greedily. Aggregated over a nation and over decades, it’s primes us perfectly for future disasters of equal or greater magnitude.
Put the right incentives in place, and you can avoid this sort of thing. If you knew that no one was going to bail you out, your company would probably act in a much more controlled manner. If you were investing your life or your live savings in that company, you might spend a bit more time scrutinizing the management practices of that company. Which is what these organizations and people are supposed to be doing in the first place.
Consider this: a herd of antelope will never try to nurse or save an injured antelope, regardless of whether it was maimed by a predator or by another antelope. To do so would jeopardize the future of the rest of the herd. Standing around and attending to the injured puts them all at risk. And indeed, some antelope will need to serve as fuel for the predators. These predators probably aren’t viewed positively by the antelope (if they have such a capacity), but in a way, they are actually protecting the antelope society as a whole because they enable a systematic checks-and-balances that promotes a balanced ecologic sphere that keeps the antelope’s environment stable. Without this, the antelope would overpopulate and eat themselves to famine. Then all of a sudden, the seeming prosperity would reveal itself to just be an elaborate illusion, and they’d see that actually there wouldn’t be enough food or resources to go around. Does this sound at all familiar?
On Self-Rationalization and Justification for Moral Lapses
We usually get what we want… somehow.
Posted 2008-09-07 10:22 in business models, consumerism, economics, experiences, human nature, law, marketing, politics
Some time back, I was sharing an office with someone, and had a shelf next to my desk that I had placed a few books on. One day, I came in to find that the shelf had been moved next to the other guy’s desk, and my books had been tossed upon my desk, along with a note explaining why my officemate needed that shelf more than I did, and how I would be able to get another shelf from some other person in the office if I really needed a shelf (this, of course, invites the question of why he didn’t get the shelf himself from some other person to begin with).
The rationalization in his head followed this trajectory:
1) I want a shelf for my things.
2) There’s a shelf over there.
3) And it only has a few books on it.
4) Given that it only has a few books on it, clearly the owner doesn’t really need that shelf.
5) Given that he doesn’t really need it and I do, I really deserve that shelf more than he does.
6) It’s wrong for him to have that shelf when I need it so much more.
7) I’m just going to take the shelf since I will receive greater utility value than him.
You can see how such self-rationalizing logic has a way of subverting standard social norms such as “ownership” and “right to use.” I was somewhat bothered by this turn of events, but once I started thinking about it, I realized that such behavior happens all the time, and enters into some of our most proverbial ethical dilemmas.
The question of Is it wrong to steal a loaf of bread to feed your family?, for example, is another similar ethical quandary that enters into our popular consciousness.
However, one of the most prevalent examples of this in recent times is the issue of music downloading through P2P networks. The tech-savvy youth of the world, on the whole, have absolutely no problem with downloading copyrighted music from the internet (full disclosure: I have also done it before). This is despite the fact that most of the same people probably recognize stealing items from local stores as morally wrong.
But, comes the argument, this isn’t really theft. In a theft, someone is deprived of an item because someone else takes it. Here, something is being duplicated so I have a copy and the original owner still has his copy.
True. Yet, one could make the same argument about stealing cable, and I have not heard anyone argue that this is morally sound. After all, there are cable companies who have large amount of fixed assets tied up in cable lines, maintenance, and other expenses that come part and parcel of delivering cable. If everyone stole cable, clearly the cable television system would collapse. Is the same not true for the music industry?
Well yeah, but the music industry hasn’t adapted to changes in the market and the way that consumers want to shop.
Maybe, but in every other sphere of the consumer economy, if consumers don’t like the way that a company does business, they simply don’t do business with them. Why is it that you feel justified in stealing property in this case? If you really want a new Ford car, but you really hate Ford dealers, how is it that you are justified in stealing a Ford from their property so as to bypass interacting with the dealers?
Look, I’ll admit that this does hurt the record companies, but you know what? They deserve it. Those suit-and-tie business guys are all about the money; they couldn’t care less about the music, and in fact they’ve have done everything in their power to destroy music! I support the artists, and the record companies just screw them over anyway. Artists only get, like, 10 cents on every CD sale anyway. They make their real money off of touring.
But what gives you the right to decide that the artist shouldn’t have that 10 cents per CD? Sell a million albums, and that’s a lot of money. Isn’t that their decision to make?
Artists who say that are just being greedy! They’re already rich and famous and now they want even more money! Can you believe these guys?
But that’s their job. Surely you’d want to be paid for things you took time to develop and sell, right?
No way! I’m above that. If I were an artist, I’d be happy that people were listening to my music and coming to my shows. It’s all about the art, dude.
Just because it’s ‘all about the art’ for you, doesn’t mean that it’s ‘all about the art’ for everyone. Would you still feel the way you do once you were depending on that income for your livelihood, and your continuing ability to fund that livelihood?
Of course! I’m not looking to make money off records. I’d make my money of touring, and connecting with my fans, and selling merchandise and stuff.
What if you didn’t want to tour?
But that’s how you make money.
That’s one way you make money. The other part is selling records. What if you only want to sell records and that’s all? And don’t you, as the artist, have a right to choose the channels through which you distribute?
Ok, let’s stop this right here. You can see where this is going. Ultimately, the P2P downloader in this conversation is finding ways to justify his decision to download music. He gives all kinds of rationalizations for it, from blaming the companies, to blaming the artists, to giving ideological reasons, to technical explanations of why it’s not bad.
Clearly, this argument was built backwards. The downloader started with the idea of I want to have free, unrestricted access to any music I want whenever I want. From there, he found ways to justify any behavior that led to him getting that. This involved dismissing valid counterarguments through insular and self-justifying means that, while they might apply to his own worldview, are not necessarily shared by those who he is taking from. Nevertheless, he is able to project this ideological view of “how things should be” onto the world, and then convince himself that what he’s doing is actually the valorous thing to do, bravely fighting against an archaic system that enslaves and rips off consumers— when all he really wanted was the music to begin with.
Thus, a base drive to get free music has now taken on an ideological bent and has morphed into some kind of jihadist war on record companies. The guy could just have just admitted he wanted the free music. Why bother blowing all that smoke? Well, he doesn’t realize consciously that he is blowing smoke.
Apologists have this same problem. They’ve decided that George Bush, or Hillary Clinton, or Alex Chiu, or James Dobson, or whoever is right. Now that they’ve come to this conclusion, they can no longer stop to evaluate events critically. Suddenly, they find themselves excusing all kinds of behavior that they would skewer someone else for; and not only will they overlook this behavior, they will defend it— passionately! After all, they wouldn’t want to admit that they were wrong about this person this whole time.
Strange thing, this cognitive dissonance.
Further reading:
Mistakes Were Made by Carol Tavris and Elliot Aronson. Harcourt, 2007.
Comment [2]
The Pleasant Green Illusion of Trader Joe's
why one of America’s fastest growing stores is not quite what it appears
Posted 2008-09-02 10:44 in branding, business, business models, consumerism, marketing, postmodernism, semiotics
I recently moved to Madison, WI, and found that my new apartment is just blocks away from Trader Joe’s, the perennial grocery store of choice of a group I will describe as “progressive yuppies.” Don’t get me wrong, I love Trader Joe’s. They have a somewhat interesting— if a bit odd— selection of food, low prices on alternative-lifestyle staples like Morningstar Farms Vegetarian Meats, Hummus, and Dr. Bronner’s Soap, and the staff usually seem engaged and friendly in a way that you rarely see in the bigger chains.
Yet despite these virtues, there’s always been something that I’ve found very curious and fascinating about the store given its primary clientele: they package the hell out of everything. I’m talking about putting often unnecessary plastic bags around nearly all their produce (which is, incidentally, prepackaged and shipped from afar), hard plastic shells around fruits and tomatoes, and things like individually wrapped biscottis inside yet another layer of paper bags.
The produce sections of standard grocery stores like Kroger and Safeway aren’t much better, but you can tell that there’s a lot less waste going on, on the whole. You can buy fruits and vegetables without using a plastic bag at all, but if you choose to use one, very thin plastic bags on a roll are offered. You can stuff your plastic bag with as much salad mix as you want. The bags at Trader Joe’s are much thicker, presumably so that they can ship without incurring damage to the contents of the bag, but they are sealed so that if you want 10oz of salad mix, you’ll be forced to buy two 5oz packages of the stuff.
Now, the interesting thing that I’ve noticed is that if you talk to people about Trader Joe’s, you will see that many if not most of its clientele view the store as being ‘environmentally sound’, espousing the values prioritized by the politically and environmentally progressive consumer, words like: organic, sustainable, socially-conscious, green, fair-trade, healthy, whole-grain, eco-friendly, and so on.
Strangely, as the store is able to capitalize on those concepts, there is little in the direct customer experience that should really suggest any of those things any more than any other grocery store. Not all of Trader Joe’s produce is organic or whole-grain, not all of their coffee is fair-trade, and not all of their eggs and meat are cage-free or free-range. Few customers know anything about what Trader Joe’s has to say about labor rights, politics, or environmental issues, but if you asked, I would bet they’d place them in the top 20% of American companies in all these categories. And yeah, they sell canvas bags, but they still bag your groceries by default in paper bags.
Yet both Kroger and Safeway both have sections dedicated to organic and whole-grain foods. Both also sell fair-trade coffee and free-range eggs and meat. Nobody considers those companies progressive in any way.
So what exactly is going on here? Why does Trader Joe’s get a free pass on environmental concerns and get to capitalize on all the standard jargon of the socially-minded left while the other guys are left to be viewed as the mainstream guys who don’t really give a damn about broader social concerns?
Part of it, I think, is that Trader Joe’s is a much smaller store than Kroger and Safeway. It’s a mere fraction of the size by volume, but they carry a similar variety of foods but certainly not the diversity of brands. And for that matter, many of the brands they do carry are not to be found in other grocery stores. They don’t, for example, carry Kraft Macaroni and Cheese or Tropicana Orange Juice. Sometimes such products are on their own private label brand (whose name changes depending on what product it is; their Mexican products are stamped with “Trader Jose” and Italian products have the ridiculous name “Trader Giotto’s” on them). They also carry an unusually large percentage of imported or apparently exotic goods. These don’t by themselves convey the aforementioned concepts, but these features do set them apart in the minds of the consumers, which is important.
Another part of it, while subtle, is the décor. Contrast the feeling you get while walking in the close, friendly quarters of the Trader Joe’s store with one you get when walking the cold, labyrinthine halls of Kroger. Contrast the warm wood paneling and comparatively low ceilings of Trader Joe’s with the stony white floors and high ceilings of Safeway. Notice the prevalence of baskets in the Trader Joe’s store, and the gargantuan supermarket carts elsewhere.
Also, and this is important, notice the clientele. There is a very obvious difference in who the typical shopper in each of these stores is. It’s impossible to tell without some form of surveying, but I would be extremely surprised if the average Trader Joe’s shopper wasn’t more educated, of a higher socio-economic status, with a higher disposable income, and a more liberal bent. But is it the store’s ostensibly progressive values that attracts this clientele, or does the store get its progressive image from the people who shop there? Certainly, there’s a feedback loop happening here, but it’s also true that there wouldn’t be such an attraction to these sorts of people without some compelling cause.
One possible cause could be that progressives are attracted to each other and teem into places where there are people like themselves, even in the absence of any gastronomical pretense. Possible, but I don’t find it very likely to be the root cause in the case of Trader Joe’s; after all, why would this trend begin in the first place? A more convincing reason for the progressive psychographic’s descent onto this store is its decidedly eclectic selection of food, where exotic foods like shitake mushrooms and shelled edamame are placed fashionably next to staples like baby carrots, and exotic Hollandic stroopwaffels oh-so-nonchalantly next to chocolate chip cookies. This post-modern melting pot of food is likely the central point of resonance at Trader Joe’s. After all, if we are to cull the messages from all the progressive radio stations, left-wing talking points, bumper stickers, and Bay Area street fairs, it is this very quality of “diversity” that presents itself as some kind guiding principle of progressive thought and which shapes the idealistic visions of progressive society. It is in this world that “diversity” in itself is considered a virtue, even in the absence of any dialectic.
Of course, diversity of foodstuffs is one thing, but where does the image of social consciousness come from? The household cleaners aisle, which is right next to where you’d buy “natural” toothpaste (do Poloxamer 335 and Propylene Glycol really count as natural?), doesn’t feature the usual allotment of chemicals like Ajax and Windex, but instead has products like all-purpose ‘natural’ orange cleaner made from degreasing compounds apparently found in citrus fruits, and mouthwashes with tell-tale signs of products that are trying to market themselves as ‘natural,’ muted brownish packages.
And speaking of muted packaging, it just might be that as a whole, Trader Joe’s packaging is of a more muted health-food store color than their mainstream rivals. With the notable exception of the produce section where colors like brown and white are not typically indicators of quality, the remainder of the store makes use of these earth tones in a manner not consistent of mainstream stores, where bright colors and fluorescence are used in packaging the same way that circus carnies shout and prod passers-by with their staccato brayings.
Trader Joe’s expertly weaves a tapestry that references all the signals that progressives look for and can relate to in their political identity, but much of the “follow-through” is only implied. But the store has called out so many of these reference points, that it creates the illusion that it’s all there—an illusion that many of the store’s patrons seem to appreciate as much as if it really were.
UPDATE (11/12/08):
I had an interesting encounter the other day as I was shopping in Trader Joe’s. In the seafood section, my girlfriend and I noticed that they were selling orange roughy. This particular fish is one that is listed as endangered, as it takes nearly 30 years for it to reach maturity— far longer than most commercial fish— and it has a long lifespan as well, often living up to 150 years. With the U.S. fishing industry hauling in about 19 million tons of the fish a year, and many of those fish being more than a hundred years old, it is not an exaggeration to say that this fish may be extinct within our lifetime.
Regardless, we were perturbed by the presence of this fish at this ostensibly progressive grocery store, and decided to talk to the management about why they are selling this endangered fish— at $6.99 a pound, no less. The manager was quite up front about it. “We don’t consider ourselves a ‘green’ company,” he said, obviously a little tired of once again having to answer to the legions of progressives that shop at Trader Joe’s, and explain why they stock items perceived as being unsustainable or hostile to liberal consumption ideologies. He continued: “We let our customers vote with their dollars about what we put on our shelves, and though I understand your concerns, we sell a LOT of orange roughy.” He tilted his head towards the sky when he said ‘lot.’
So there’s the confirmation. The idea that Trader Joe’s is a somehow progressive or green company is a total myth created by the brand’s phenomenal marketing— which is largely based on word-of-mouth.
See also: my followup to the discussion on endangered fish at Trader Joe’s.
Comment [2]
Some Ideas for Cell Phone Companies
Let’s not embrace stagnancy
Posted 2008-07-18 15:00 in business models, improvements, marketing, social networking
Sometimes I feel like cell phone companies have no idea what they’re doing. I’ve thought of any number of simple concepts that would make phones so much more useful. Here are some ideas:
1) You know the routine; you spend 5 minutes typing out a text message on your cell phone for an idea that it would take you 2 seconds to say. There are times I want to tell someone something, but I don’t want to talk to them or spend time texting it out. I want to be able to call someone’s phone and immediately reach their voicemail, but bypass causing the person’s phone to ring; instead, it should be a system that allows the caller the option of going directly to voice mail as opposed to allowing the phone owner to be in charge of that decision.
2) Allow me to use the GPS to find out whether my friends are physically near me. Update: I found out that a third party company is developing technology to do this.
3) Let me input information regarding my interests into my phone, and let me know if there are any people near me who share my interests. This could also potentially be used as a dating tool.
4) A memo function that allows you to quickly store to-do’s, reminders, ideas, and whatever else you may want to leave for yourself.
Those are just some thoughts. But given the competitive sphere of the cell phone market, why aren’t companies being more imaginative about their products? We’re talking about Fortune 500 corporations with billions of dollars in R&D money in an innovation-driven, high-tech industry that for reasons unexplained, cannot be bothered to push the boundaries!
Standing Out
Live up to your potential!
Posted 2008-07-12 14:28 in business, business models, improvements, marketing
It always perplexes me as to why many manufacturers in saturated industries don’t take more efforts to differentiate themselves from their competitors. Take beer for example. Budweiser, Miller, and Coors have been fighting in the domestic beer market for ages, and despite the aggressive, multimedia advertising campaigns, the multi-million dollar Superbowl ads, and the painstaking and often pathetic efforts in making ‘sticky’ slogans, you’ve got products that many consumers still think are pretty much interchangeable (even if they have a brand preference). There are other beer brands too, like Sam Adams, Dogfish Head, Sierra Nevada, Heineken, etc. But oddly— except for Red Stripe— they all come in bottles that look exactly the same. Sure, some are green and some are brown, and some are clear, but in terms of the bottle packaging, they’re pretty much the same.
If I were the maker of a brand that needed to build some equity, I would forgo the usual bottle and go with something that would generate interest in people who normally wouldn’t notice my beer. And I’d give them something that might make them buy my beer for a reason other than the beer itself!
I’d make my bottles blockish (perhaps the Jagermeister bottle might be a good model to imagine), and make them so they could interlock. That way people would feel inclined to keep them around the house and find uses for them, like propping things up, building shelves, making huge towers, using them as bookends, etc. The sort of things that college students might want to do. (SEE UPDATE AT BOTTOM)
This is only one example of what you could do. There are many cool things you could have instead of useless round beer bottles. How about a beer bottle in which glass can be easily punched out and be converted into a tobacco waterpipe? College students would love that. Maybe it could be something you could keep your change or pencils in. I haven’t invested a lot of time thinking about other potential ways to change package design because it’s not my job. But just think about how things might change if people wanted your product for more reasons than just the obvious one.
I think the people behind M&M Minis realized this when they started packaging their product in little plastic containers that would perfectly hold a roll of quarters (which many people, particularly young people, could use to hold their laundry money). I think the people in charge of Icebreakers, Altoids, Eclipse Mints, and Mentos Minis also realized this when they started producing useful, well-designed, and reusable containers for their candies. Sure, they are more expensive— a pack of Icebreaker Sours costs some $2.30, which is a lot for candy— but people want those containers.
Perhaps many companies out there might have products that might be able to take a lesson from these guys. Of course, there are logistical hurdles, but there are always logistical hurdles. Wouldn’t it be better to make your product different, to have people want it for many reasons, and have them looking at your products all day instead of just when they’re using it for its primary purpose?
UPDATE:
Apparently Heineken has now developed a brick-like bottle, just like the one I described.