A persistent situation has developed among the current political and economic climate that forebodes of large potential problems in the future.  This situation finds its source in a phenomenon that we refer to as “Evading the Obvious.”  The way this effect manifests itself is a stalwart refusal to recognize and adapt to the economic realities.  This issue is modestly problematic when constrained to people and absolutely catastrophic when employed by the political authorities.

The reason for this is because people are limited in the extent to which they can impact the overall marketplace.  However, political authorities can establish highly destructive rules and regulations that have the ability to cripple an otherwise vibrant economy.  Of the many pitfalls and problems that public officials can find themselves caught up in, there are three main principles that drive the most evasion of obvious economic truths.  These principles are that spending isn’t free, profits and losses are equally important, and that prices communicate knowledge.

Reality #1: Spending Isn’t Free

Against the backdrop of huge deficits in both the US and Euro-Zone, this truism cannot possibly be expressed poignantly enough.  Every time that any person, business, or government spends money, that money must come from somewhere.  In the cases of people or businesses, the spending frequently comes from either savings or credit.  In the case of governments, it can also come from ‘monetary expansion’ or simply printing new money.  In all cases, it is not free.

The world is a place where resources are limited.  These resources are often represented in terms of money, but there is no scheme that can ever be devised to create new resources out of nothing.  When savings are spent, those savings are not available for spending on anything else.  When money is borrowed, it must be paid back … with interest.  When new money is created, it devalues the money already in circulation.  Any time that money is spent, it represents a choice to bear a certain cost in exchange for a certain outcome.

Thus, the fundamental question for people, businesses, and governments is one of whether their money/resources are being spent in the most effective way possible.  It is certainly true that the notion of effectiveness is inherently subjective.  However, it is also true that when people are spending their own money, they do so much more effectively than people spending other people’s money.

When investors borrow to build a new factory, they do so because the rate of return from the factory is expected to exceed the cost of interest on the loan.  When people spend their savings, they do so because they value what they are buying greater than having a certain amount of money available to spend on something else.  When the government borrows or prints money to spend on “stimulus” projects, the net result is to either create or destroy value.  Projects more valuable than the alternative uses create value, and projects less valuable than the alternatives destroy value.

When one considers that political decisions are made by people who must be re-elected at regular intervals, and who are spending other people’s money, it is not difficult to see how large sums of money are spent on value destroying projects that benefit a particular political constituency.  If we seek economic growth, then net spending needs to be concentrated in areas that will generate more value than the (full) cost of the resources.  It is not possible to create affluence through borrowing to spend on value destroying projects.

Reality #2: Profits and Losses are Equally Important

Another key concept that seems to have been lost over the past five years is the importance of losses in a free market.  Profits exist to encourage innovation and risk-taking, but the risk of loss must be present to encourage prudence, and to weed-out under-performing entities so that the capital can be deployed more profitably elsewhere.  Problems emerge when the government seeks to insulate certain businesses from the impact of losses.  When profits are guaranteed, and losses are bailed out, the result is highly inefficient entities that funnel benefits to their insiders.

The reason for this is because in a competitive market, businesses who take excessive risk or have incompetent management will eventually go bankrupt.  In this scenario, the assets of the business will be sold off at a discount to other entities who behaved more responsibly.  The profit and loss system systematically channels resources from under-performing entities to those who are more effective and more prudent.

The problem that many people see in this process is the ‘creative destruction’ aspect of economic growth that pushes some companies out of business while new enterprises emerge and grow.  In response to this churn of business fortunes, many companies seek protection of their business, while people seek projection of their jobs.  Unfortunately, all of this creates a barrier against the systematic re-allocation of resources toward their most effective use.

Reality #3: Prices Communicate Knowledge

The third, and least well understood of the fundamental realities is that prices communicate knowledge.  When prices for a particular product or service are high, it signals to entrepreneurs that there is an opportunity for profit.  This opportunity attracts new competitors, and this competition often places downward pressure on the prices.  Similarly, when prices are pressed down low by weak demand relative to the amount of supply in the market, it is a signal to the marketplace that there are too many entities in competition with one another.

The problem that many government’s run into regarding prices is their attempts to manipulate prices for political reasons.  Almost every politician in the world will complain about the high price of health care.  However, very few ask why health care costs are so expensive.  Much of the reason comes from the fact that most people access health care through insurance plans where they do not personally bear the costs of care.  This means that they have no incentive to economize, and often consume much more care then they would if they were directly responsible for the costs.

This phenomenon bears itself out over and over in nearly every corner of the economy.  Most of the people who are upset about prices fail to realize that the prices are communicating valuable information.  Instead, they accuse the business charging the prices of ‘greed’ when the business is really just a messenger of market realities.  High gasoline prices stem from a relative shortage of petroleum that drives up market prices.  These market prices are created by other people who are competing for the same petroleum.  The reason the prices rise is because exploration of petroleum has not kept pace with demand.  Thus, the problem is not one of rapacious oil companies, but regulations that constrain supply.  Nobody is able to maintain high prices for long when competing against somebody else who is willing to sell for less.

As we have seen, the phenomenon of “evading the obvious” has a distinctive impact on each individual’s personal, professional, and financial life.  The impact of these fallacious misunderstandings escalate as the scope of influence grows.  As each of us go throughout our own lives, we must stay aware of the fundamental realities so that we can learn to recognize opportunities and take intelligent action.  It is only through embracing the obvious and understanding the reality that we will be able to create a life of happiness and fulfillment for ourselves and the people we care about.

 

As I look out across the ocean, savoring another sunset on Necker Island, I find myself reflecting on a busy and exciting year for myself and the Virgin Group. There were a couple of setbacks: In January, I ruptured a cruciate ligament in a ski accident, which meant that I had to travel to France and South Africa on crutches; in August, a fire here destroyed the great house. But we have ended 2011 in a much happier way, with my daughter Holly’s wedding to Fred Andrews, a shipbroker. This seems a good time to jot down a few of the year’s highlights.

I have written previously that success cannot be measured in wealth, fame or power, but by whether you have made a positive difference for others. The accomplishments of the past year of which I am most proud involve my efforts to raise awareness of and financing for Virgin Unite, along with the new philanthropic ventures we launched.

Because it is our responsibility as entrepreneurs and business leaders to tackle the issues our society faces, from climate change to poverty. To find solutions, we at Virgin have had to consciously cast aside traditional thinking, form unusual partnerships and consider unorthodox answers. Here are some of our most effective actions:

1. Taking the initiative.
The Carbon War Room is a business-focused, global NGO we set up three years ago to find profitable solutions to tackling climate change: Our society does not have to make a choice between economic growth and saving the environment. CWR is a nonprofit fixated by profit.

We made great progress over the past 12 months. Rather than waiting for governments to work out policy solutions, the CWR team launched two game-changing websites: one to promote efficiency in shipping; another to rank and chart the latest in sustainable aviation biofuels.

Earlier this year CWR launched a program to help finance energy-efficient retrofits of buildings, which was kicked off with a

$650 million investment scheme in Florida and California.

2. Reducing, reusng, recycling and planning for the future.

We must also ensure that we conserve our planet’s resources and maintain diversity. This year Virgin Unite struck up a great partnership with WildAid to campaign for the banning of shark-finning, the barbaric and wasteful act of cutting a fin off a living shark.

WildAid estimates that 73 million sharks per year are killed for this dish.

This project is in its early days but we are making great progress, thanks in part to the support of Governor Jerry Brown of California, who signed a bill banning the sale and possession of shark fins.

Already, many top restaurants and hotels no longer serve shark-fin soup.

3. Championing unconventional solutions.

Over the past 50 years, drug usage has gone up and jails have filled.

Though millions of taxpayer dollars have been spent trying to stamp out this illicit trade, the prohibitions have merely fueled organized crime. It is time that we try an alternative approach. This year I was fortunate to be part of the U.N. Global Commission on Drug Policy, which found that the costly war on drugs has backfired, producing little to no results.

A decade ago, Portugal became the first European country to officially abolish all criminal penalties for personal possession of drugs – a brave and successful policy. Jail time was replaced with offers of treatment for addiction: many critics feared this would attract “drug tourists” and exacerbate Portugal’s drug problem.

The results of a report commissioned by the Cato Institute in April this year suggest otherwise. It found that in the five years after personal possession was decriminalized, illegal drug use among teens in Portugal declined and rates of new HIV infection caused by sharing of dirty needles dropped, while the number of people seeking treatment for drug addiction more than doubled.

Portugal’s brave stand amounts to a decision to “Screw Business As Usual” – the title of my latest book and a mantra that should be adopted by people holding positions in company boardrooms and government cabinets the world over.

4. Building for the future.

Virgin businesses have always emphasized the need to challenge the market and do things differently – values we are keen to share with a new generation of entrepreneurs in the developing world. In 2011 we continued to expand our efforts, launching the new Branson Centre of Entrepreneurship in Jamaica and moving our center in Johannesburg to new premises, under a new CEO. Both centers are focused on helping young entrepreneurs to expand their businesses by offering practical advice and mentoring.

I brought groups of business people to South Africa and Jamaica to meet our entrepreneurs; as always, the visitors were bowled over by the young entrepreneurs’ enthusiasm and passion for their work. We hope to expand our efforts further and to find financing and maybe obtain government help in scaling up these centers.

Our society’s social, environmental and financial problems remain challenging and it looks like next year will be a tough one on many fronts. We will need to look for bold solutions, because change means opportunity. Whether you can effect small changes at the local level or try to push for sweeping cultural shifts in your industry or sector, 2012 – now – is the time to make a difference.

Article source: Entrepreneur.com

 

Smaller take-home paychecks could hurt employee morale in 2012, several small-business employers say.

Sparring in Congress continues this week over how to extend the payroll tax cut. If a deal isn’t reached by years’ end, the employee payroll tax, which funds Social Security, will increase by 2 percentage points, to 6.2%.

White House Press Secretary Jay Carney speaks during the daily briefing this week in front of a monitor counting down the minutes until the payroll tax cut expires.

An extension to the employer-contribution cut now is off the table. But some business owners say they’re concerned about the possibility of sinking employee spirits.

Chris Holman, who owns a business networking website in Lansing, Mich., says most workers tend to focus on their take-home pay, rather than their gross income.

“It’s taking away some capital” from employees “and it’s just not the time to do that,” he says of letting the employee payroll-tax cuts expire.

“The problem is really one of morale,” adds Mr. Holman, who has about a half dozen workers at the site.

“It’ll probably be a nightmare for business owners if, all of a sudden, come January 1st, all your employees are taking home 2% less,” says Rosina Rubin, who runs a limousine service with her husband.

Ms. Rubin’s firm, Attitude New York Inc., has found it difficult to provide raises to its 63 employees, she says. She was relieved last year when the payroll tax cuts gave her employees a little extra cash.

The cuts would give workers earning $50,000 a year before taxes— roughly the median household income in the U.S., according to Census data—an extra $1,000 in take-home pay.

Small-business groups argue that payroll taxes are onerous because they are deducted from workers’ wages at the same rate whether the business’s sales are up or down.

Some are making it into a jobs issue. The International Franchise Association, a Washington-based trade group, says failure to extend the cuts would jeopardize the creation of more than 160,000 projected new jobs at U.S. franchise outlets next year.

Michael Alter, the president of a Chicago-based small-business payroll firm SurePayroll, says small-business owners want certainty from policymakers. “The more certainty they have about supply, prices and costs, the more ability they have to plan ahead,” he says.

Lawmakers agree that the cuts should be extended, but there are sharp differences over how to offset an estimated $120 billion loss in federal revenue of extending the employee cuts for another year.

This week, GOP lawmakers in the House are expected to reject a Senate bill passed over the weekend that would have extended the cuts for two months, while a longer-term deal was sought. Instead, John Boehner, the House Republican leader, has called on the Senate to reopen thorny negotiations.

The White House says the extra cash will help boost consumer spending and speed up the economic recovery. Small Business Administration head Karen Mills has expressed support for extending the cuts, saying that small-business owners rely on consumer spending in their communities to stay open.

But some economists argue that any additional sums from an extension would be spread out over the course of the year in tiny amounts on weekly paychecks, and thus, may not make a big difference in the broader economy.

—Emily Maltby contributed to this story.

Write to Angus Loten at angus.loten@wsj.com

Article source: Wall Street Journal

 

If you take the opportunity to walk into a bookstore and wander over toward the section on business books, you will see a vast multiplicity of titles on all manners of business, investment, and strategy.  Many of these books outline a ‘system’ for acquiring wealth that involves some clever means of generating superior profits from what appears to be a minimal amount of work.

However, there is a relatively simple principal that is the basis of all business success.  That principal is that you should always seek to offer a product or service that provides a greater ‘use value’ to your customer than they pay you in ‘cash value.’  Thus, the fundamental basis of business success consists of finding out what the customer wants, and profitably providing it to them at a reasonable cost.

How Can It Be That Easy?

The truth of the matter is that success never is easy, never has been easy, and never will be easy.  However, the fundamental principals of success are simple, and they are straightforward.  The problem that most people run into is that they do not apply the principals of success consistently. The building blocks of greatness are constructed from consistent application of timeless principals.  These simple principals such as providing a reasonably priced product or service where the value to the customer exceeds the cost of providing the product are truly powerful.

The simple elegance of this principal is that you will be making a practice of only conducting business in a manner where both you and your customer or employer benefits from every transaction.  If every transaction is mutually beneficial, then you will literally be helping to make the world of each customer a better place by conducting business.  Conversely, every time that somebody demands something for nothing (i.e. ‘get rich quick’ schemes or more money without providing more service) they are making the world a worse place by trying to capture resources from others without providing a commensurate service in exchange.

What Capitalism Is Really About

It has become popular to believe that capitalism is about “greed” or the belief that “greed is good.”  This represents a fundamental misunderstanding of what a market economy is all about.  Capitalism does not laud greed as being an almighty virtue, it recognizes self-interest (referred to many as ‘greed’) as being an inevitable part of the human condition.  Thus, the question is not whether or not greed will be present … greed is always present.  The question is how to harness the power of self interest so that it delivers a value that exceeds its cost to the customer.

Unfortunately, many people fail to draw a line of distinction between business activity that benefits the customer and using political avenues to extract resources from the public treasury.  Economists refer to this second activity as rent seeking … and it is the exact activity that capitalism was designed to counteract.  When government entities control resources, the people with the most wealth will be those who have garnered the most political clout.  In most cases, there is no real service that is provided to the public in this struggle for power.

Conversely, when an entrepreneur such as Andy Grove or Steve Jobs creates products and technologies that create transformational changes in peoples personal, professional, and financial lives, it becomes quite apparent that the value created by those people’s innovations vastly exceeds the (considerable) wealth that they achieve in their lifetimes.  Thus, the spite and ire being leveled against capitalism should really be directed at the government’s repeated use of public funds to funnel favors to people and businesses who are politically connected.

What About People Who Are Employees?

This principal also outlines the way to success as an employee; by providing more value to your employer than they pay you in compensation.  Similarly, if you are looking to advance in your career, the best method is to look for ways that you can provide more value for your employer than is currently being delivered.  Generally speaking, advancement and promotions are justified when the candidate is already doing work at the next level of proficiency . . . so why not ascend to the next level of productivity without being told to do so?

In the end, there is one true universal secret to business success, and it is not a secret.  It is a simple, fundamental truth that delivering value to the customer for a price that is higher than your you costs will create success.  This simple axiom has many reprocussions throughout our personal, professional, and financial lives.  The only lingering question is whether we posess the mental and moral discipline to carry through these principals of success until our goals and ambitions have been achieved?

 

While reading the myriad year-end wrap-ups and predictions for 2012, it occurred to me that one of the most defining phenomena impacting digital marketing today is not technology or channel-based nor shifts in consumer behaviors. Instead, the change in agency-client relationships away from retainer-based contracts toward project-based relationships has become the new normal in the last couple of years.

Many of you on the agency side of the digital marketing marketplace will be nodding along with me as you read this while brands and client-side marketers may be shrugging their shoulders in a resigned way and thinking, “Deal with it.” But we should all acknowledge the impact this shift has on the strategic outcomes and business health of both agencies and clients. It is far from a best-case scenario for anyone.

How Did We Get Here?

Economic necessity mostly. When business collapsed in 2008, marketing budgets were slashed to the bone. Like everyone else, brand shepherds were asked to do more with less. As media and production budgets got chopped, brand marketers couldn’t justify or afford agency retainers. Brand marketers instead started to use agency partners where for rare discreet projects they could not execute with internal resources. Agencies were happy to maintain the connection to the client and feed the work to their teams in those troubled times but it was the start of the end of the committed two-way relationship between marketer and agency.

Emphasis on testing. As more marketers became attuned to the test-and-assess mentality that is so much a part of digital marketing, it bred confidence to take baby steps into both established and new digital channels like mobile and social. A test is by definition a short-term trial approach – a project by any other name.

The rise of social media. Almost everyone is still trying to figure out this channel and to quantify its impact. As new paid-earned-owned opportunities sprout almost daily, it requires regular testing. When you see an entity that has put a long-term stake into social media and has made a similar commitment to its internal or agency social media partners, it has usually evolved beyond projects and incorporated testing into a regular, planned approach to optimize social media results.

The Impact on Agencies

Provides no incentive for strategic planning or thinking. If the only commitment you have from the client is for this next project, you are less likely to think long-term and invest in specific talent, industry knowledge, or competitive tracking. The project approach institutionalizes short-term thinking.

Loss of dedicated staff. Having dedicated staff that wake up every day thinking about the client’s business brings positive results. If agencies only can plan for projects, that is how they must staff.

Loss of margin. Every project needs to be sold in. This leads to spec work and an outsized investment in business development. Agency staff spends way more time selling and doing spec work than they ever did before. This puts expensive talent on non-billable work for a good chunk of their day. Client lead times to get projects approved has lengthened considerably, further magnifying the impact as layered approvals and multiple presentations stretch the decision over many months. If an agency is lucky enough to win the project, it may not even recoup its investment. That may sound like a bargain for marketers but you want your agencies to have healthy businesses to continue to reinvest in talent, technology, and think time on your behalf.

The Impact on Clients

Supports short-term thinking. Discreet projects may or may not be connected in a common strategy thread that helps to move the business forward over time. It’s also harder to take the learning from one project to the next if different teams or people are working on the projects or doing the planning.

Loss of continuity. Customers are always on – why aren’t you? If you are only messaging, responding to, or communicating with your customer base inconsistently, you may be missing opportunities to maintain a valuable presence, dialogue, or listening post.

Clients lose valuable partner perspective. Agencies used to have a unique perspective on the business that added significant value. They had enough insider knowledge and enough investment to be informed, but yet enough distance to avoid group think and could question/prod/move the business in ways not possible from the inside. If agencies have only a partial mandate and partial information, they cannot offer that perspective reliably or effectively.

The Impact on the Industry

New hiring realities. Full-time jobs are harder to come by in agency land. Agencies have to staff in a way that mirrors the commitment they get from their clients. That means lots more freelancers and more virtual workers today. On the one hand, it allows talented specialists to stay busy working for lots of different agencies. Before it may have been a lifestyle choice for some freelancers, but now it is a necessity. For those who might have flourished in a team environment, this is a shame.

New management challenges. Ad hoc teams impose their own challenges and require more intense project management to keep any kind of order, results, or profit margins in the picture.

It should be recognized, of course, that there is a legitimate place for project-based digital work. They include: trying out a new partner; having a distinct need that your current partners can’t meet; having sudden budget infusions; or encountering a new digital opportunity. In a best-case scenario, that project would go to your long-term agency partners because they have the background and insights to help you integrate, succeed, and learn from that one-off effort.

As we continue to climb slowly out of the recession, it behooves marketers to advocate for the return of one of their most effective support structures – their agency partners. But agencies can only really be partners if they are empowered as such. It is time for us all to stop thinking short-term and fuel all our businesses with the commitment and strategic thinking that bring true results.

Build-A-Bear vs. eBay? Bacardi vs. Betty Crocker? Converse vs. Xbox? ATT vs. Best Buy? Which brands will come out on top in the second round of ClickZ’s Holiday Social Showdown? Vote now!

Article source: ClickZ

 

Ever wonder why so many children of entrepreneurs become entrepreneurs themselves?

One reason is that our genes influence the decision to start a business. I don’t mean that figuratively; I mean it scientifically. With colleagues at Kings College in London and the University of Cyprus, I have been investigating how genes affect entrepreneurship for more than five years. Through studies of twins, and more recently, through molecular genetics laboratory research, we have found that genes influence whether people start businesses, are self-employed, or have owned their own companies. Our research shows that the same genetic factors influence the tendency both to see business opportunities and to start companies, as well as how much money self-employed people earn.

At this point you may be wondering how researchers could determine that there’s a genetic component to entrepreneurship. It’s actually pretty straightforward.

With twins, it’s a matter of comparing the choices of the two siblings. Identical twins share the same genetic composition, while fraternal twins have half in common. If pairs of identical twins make more similar choices, such as starting a business, than pairs of fraternal twins, then genetics must affect the choices, as long as a few scientific assumptions hold. In the molecular genetics research, we examine the different versions of genes people have and see if entrepreneurs are statistically more likely to have one version over another.

There are probably many ways genes influence whether or not we become entrepreneurs, but in the twins research, we have found initial evidence that one route clearly is through our personalities. The same genes that affect whether we are extroverted, open to experience, disagreeable and sensation seeking also influence our decision to start our own business. Furthermore, the same genes that influence the tendency to be open to experience also affect the tendency to identify new business opportunities.

Before you start worrying that this research will usher in the world portrayed in the science- fiction thriller Gattaca, we are a long, long way from any practical application of these findings. That will come only after many years of replicating the findings.

Moreover, there’s no single gene or even set of genes for entrepreneurship. Our genes influence broader categories of behavior, such as whether we do things that involve a great deal or small amount of novelty. While entrepreneurship might involve pursuing novelty, so do many other human activities.

Further complicating the issue, hundreds of genes probably influence whether or not we become entrepreneurs. Thus far in the molecular genetics research, we’ve found initial evidence for just one of them–a version of a gene for a receptor for the brain chemical dopamine.

Geneticists have speculated that sensation-seeking people have versions of dopamine receptor genes that require more stimulating experiences in order to produce a given amount of dopamine in the brain. To get the higher level of stimulation, those people are more likely to engage in sensation seeking activities, including starting businesses.

While your genes influence whether or not you become an entrepreneur, experience matters, too. Genes don’t determine anything you do; they merely influence what you do in the same way your life experiences do. Just as receiving a financial windfall increases your odds of starting a business, so too does having a particular genetic makeup. But just as some people without a penny to their name start companies, so too can people without the genetic make-up associated with entrepreneurship.

While the research so far is limited, it does mean that when you describe someone as a born entrepreneur, you really are onto something.

Article source: Entrepreneur.com

 

I recently came upon a job listing for a Groupon copywriter. Of course, no one who has received a Groupon email can have missed the unusual way the company sells its deals – well, except maybe one kind of person, which I will discuss later.

Groupon has experienced incredible growth in its short lifetime, going public on November 4, just three years after its founding. It raised $700 million and is valued at almost $17 billion at the time of this writing. Groupon wasn’t the first deals business, so what is fueling its success? Is it the deals, or the way it sells the deals? Can we duplicate what Groupon does right in our businesses?

Designing the All-Important Email

The key to Groupon’s success is the daily email. I’ve always said that any business can send an email every day if the content is valuable enough. Groupon’s deals are occasionally valuable, typically offering half off of the things we buy every month. But, consider that a person may receive dozens of deal emails that they aren’t interested in for each deal they purchase.

What keeps them on the list for those irrelevant emails? We get some clues from the Groupon copywriter job description:

Each day’s Groupon features a write-up describing the deal with thoroughly researched, informative selling points that range from the straightforward to the whimsical and bizarre. We strive to avoid marketing clichés, shooting instead for vivid description rooted in complete transparency and embellished with well-crafted absurdities.

The New York Times asserts that “Groupon’s Fate Hinges on Words.” I agree.

Waking Up the Brain

Why are “well-crafted absurdities” powerful? Because they wake up the brain. In his intriguing book “Incognito: The Secret Lives of the Brain,” David Eagleman makes the point that our minds only notice things that don’t fit; that our brain’s CEO, consciousness, only wakes up when we sense that something doesn’t fit. Case in point: the Groupon email for “Texas Lawn Services” that I received earlier this year provides a pretty standard presentation of a discount offer. But, when you begin to read further, the copy wakes up your mental CEO.

Neglected lawns and gardens quickly overgrow into jungly briars that attract deadly predators such as pumas, tigers, and the Predator riding a tiger. Chop, snip, and mow your way to an orderly and alien-free yard with today’s Groupon…

“Jungly briars”? The “Predator riding a tiger”? For a lawn service? Good morning brain!

Roy H. Williams, the “Wizard of Ads,” does an amusing and enlightening presentation in which he asks for five absurdities from the audience and pairs these at random with five businesses from the audience. He then creates an ad that starts with the absurdity and ends with an offer for the business. His point is this (and Groupon proves it): that you can begin an ad, landing page, email, or other communication with anything that will wake up the brain and successfully bring it to a rousing call to action.

Designing for Different Kinds of Readers

There is more going on here than interesting copy. Fellow ClickZ author Bryan Eisenberg and his brother Jeffrey defined four “Modes of Persuasion” in their book “Waiting for Your Cat to Bark?” These four modes define the primary ways readers want to get information and the way they research a problem.

Groupon designs its emails and deal pages with these four modes in mind.

The Competitive type must see a payoff statement immediately before they will spend any time on the page. The nature of the Groupon deal generally satisfies this need. Similarly, the Spontaneous type is driven by action. They generally scan for “bright shiny objects,” looking for something to grab them. The use of images high on the page “Today’s Side Deal” are the things that appeal to them.

The copy is written for a Humanist visitor. The whimsical nature of Groupon’s copy says, “We wrote this for you. Enjoy.” This appeals to Humanist sentiments, which value relationships. Humanists will scroll to discover more about the company, and will consume the page with more patience than the Competitive and Spontaneous readers.

Methodical readers are the fourth mode. They too will scroll, looking for details and information to support the offer. They don’t like the “human touch,” however, and may chafe at the copy. I believe that Groupon offers enough detail in its copy to satisfy many of these readers.

Sign Up for the Deals, Stay for the Entertainment

All of these elements work well together, and I would argue that without them all, Groupon’s growth would not have been so astronomical. These emails and their sister landing pages keep 50 million subscribers on Groupon’s list day after day. Subscribers sign up for the deals, and stay on the list to see what these Groupon copywriters are going to come up with next.

Making the Recipe Work for Your Business

We can use these methods as well. We can design our emails, pages, and social network content with these concepts squarely in mind:

1. Design headlines that answer the question “What’s in it for me (WIIFM)?”
2. Use images and high-contrast calls to action that draw the eyes of scanners.
3. Wake up the brain with something unexpected in your copy.
4. Provide enough meaty detail for methodical decision makers.

These principles apply to consumer marketing as well as B2B communications. After all, you can’t spell “business person” without “person.”

Article source: ClickZ

 

When traveling on the journey of business and life, many people have a natural inclination to structure their activities to avoid mistakes.  This tendency is quite rational, in light of the fact that most of us learn through our education to prevent mistakes whenever possible.  When going through school, we strive for a high grade point average . . . one mistake can blow the average.  When working at a job, we strive to be promoted . . . one mistake can ruin your career.  The incentives that we regularly face condition us to be perpetually risk averse because of the ever present possibility of failure.

The implicit problem of avoiding failure is that it frequently results in avoiding gain also.  Thus, in our desire to avoid moving backward, we also prevent ourselves from moving forward.  The important insight to internalize is that moving forward toward your goals in spite of mistakes is more important than avoiding mistakes altogether.  Entrepreneurs frequently back into this realization when they discover that there are so many things to do that they cannot possibly be done in anything remotely resembling a mistake free manner.  What frequently ends up happening is that the first area of focus is placed on the things that are most critical to sustaining and growing the business, with improvement and refinement done over time.  The contrary version of this concept is the perfectionist obsession that frequently grips people who work at the pleasure of a manager or executive.

Fail Forward

Many people hold onto a notion of success as a linear climb where one step begets another, which begets another, on and on until your goals have been achieved.  This is typical of the linear western thought patterns.  However, the way that we achieve the things we want isn’t always in a steady climb.  Many times we have to try things that don’t work, learn, try again, learn try again, learn and try again until we achieve our goals.  In the linear world, success is simply a process of building on top of what has already been done until the pile is high enough to reach your ambitions.  in the circular world, success is a winding path that we must discover through an uneven process of experimentation.

To many people, this feels like a maddening process.  The ambiguity and uncertainty of discovering the right decision can be very difficult to maintain.  It is impossible to know if success is simply waiting around the corner or whether it is many miles away.  The opportunity that you have been waiting for may be nearly upon you, or it may be disconnected by a vast expanse of distance and time.  This ferocious uncertainty leads many people to give up.

This is where the “Fail Forward” concept comes into play.  It is not reasonably possible to ensure that everything we do will always work out the way we intend.  However, it is possible to ensure that even if we fail, we learn something important that will help us to move closer to our goals and ambitions in the future.  It is inevitable that we will fall as we go throughout life.  However, falling forward instead of falling backward is a characteristic that can have profound impacts on your long-term success.

Gifts vs. Grit

Many people mistakenly believe that great success is solely the result of superior talent.  However, many studies have confirmed that the characteristic shared by elite performers in nearly every walk of life is that they have spent a tremendous amount of time honing and refining their skills.  Some have come to call this the “10 year rule” … stating that exceptional skill can only emerge after 10 years of continued, focused work and practice.  If elite skill can only be built with this much persistence, it stands to reason that “failing forward” is a critical part of this continued development process.

When people talk about the value of persistence, what they are really referring to is the willingness to push through difficulty, uncertainty, and failure to reach your goals.  Consistently moving forward, even if it does not always feel like your movements are taking you directly toward your goal is the key characteristic that separates the exceptional from the average.  In fact, it provides a significant degree of comfort to those of average abilities, because it shows that an abundance of perseverance can frequently overcome a deficiency of talent.  In many cases, it is talent that starts a person on the path toward elite skill, but it is continued persistent work that takes them to their goal.  If you lack talent, you can substitute consistent, focused effort.

It is truly unfortunate that we have become so conditioned to avoid mistakes.  It is the mistakes that allow us to learn and grow, and ultimately what lay the foundation for greater achievements.  This effect pervades our personal, professional, and financial lives.  It is a dichotomy that many people will need to overcome if they are going to achieve their goals and ambitions.

Fundamentally, this dichotomy comes down to a “Job” mentality of avoiding mistakes, in contrast to an “Entrepreneur” mentality of discovering the ingredients necessary for success.  In the context of our personal, professional, and investment endeavors it is frequently more beneficial to ‘fall forward’ than to ‘hold back’ . . . especially in consideration of the fact that our financial future is becoming more uncertain, and it is becoming less and less likely that our employer, government, or 401k will be able to provide for our future.  Thus, it becomes the responsibility of each individual person to ensure that they are consistently moving forward.

 

The recent news that Costco Wholesale CEO Jim Sinegal plans to retire next year brought back a flood of memories for me. I covered the company for nearly 7 years as part of a full-time retail beat at Seattle’s regional weekly business paper.

For me, Sinegal always seemed like one of the good guys — an outstanding example of how to be a CEO. He played a major role in building Costco into the third-largest retailer in the country, creating a model that rewards workers handsomely even while competitors cut benefits.

Here are five CEO traits Sinegal has that I wish more business leaders would acquire:

1. Use your products. Sinegal is often clad in one of Costco’s $17 dress shirts, long a staple of the company’s apparel department. He proudly wears them to company annual meetings, too.
2. Be accessible. The thing that blew me away about Sinegal was that his office is in the hallway at Costco’s Issaquah headquarters. That’s right, not even a door that shut. Not even a glass wall between him and the rest of the staff. Anybody can wander by and chat him up, anytime. He also gave me his cellphone number once, where most execs would make you call in through one of those conference bridges or have a secretary patch you through. There are no layers of handlers around Sinegal.
3. Treat your employees great. Costco is well-known for offering above-average pay for warehouse-store workers. The result is low turnover, low training costs and a family feeling to the company. They don’t have to do much recruiting, as current employees are happy to put out the word to family and friends.
4. Stay humble. Despite commanding a $76 billion retail empire, Sinegal is still honest, straightforward and down-to-earth. His desk on my last visit was a cheap, Formica-topped folding table — I think it had been a Costco sale item — and behind him sat an aged, fabric-covered message board. No burnished hardwood executive desk and fancy whiteboards for him.
5. Listen. If there was a store opening across the globe from Seattle, Sinegal was there. He wanted to talk to customers and employees, so he could learn more about how to serve them.

What are the best traits for a CEO? Leave a comment and give us your take.

Article source: Entrepreneur.com

 

Small-business owners are starting to do their banking on the go.

A growing number of entrepreneurs are tapping into smartphone apps from lenders that let them do a range of jobs, from checking their balances and paying bills to depositing checks.

According to a recent survey of nearly 300 small companies by Aite Group LLC, 33% of respondents check balances, 26% transfer funds and 13% take and send pictures of checks for remote deposit.

Those figures have shown tremendous growth since a survey published last year, rising from just 13%, 6% and 2%, respectively. Other mobile tasks—such as approving wires and credit-card transactions—also saw huge increases in this year’s report.

Christine Barry, research director at Aite, predicts strong growth to come as banks continue to roll out offerings and enhance their capabilities, as well as tap into the rising interest in tablet computers.

“I think we will see at least 50% of small businesses banking through mobile devices by the end of 2013,” she says.

Some small-business owners say the apps have been a big help. Bree Wellons, of Dilwyne Designs LLC, in Montchanin, Del., started using mobile banking with J.P. Morgan Chase Co. a few months ago. One of her favorite features: a system that lets her tag business purchases to show what she bought for what client. “Before, I had to go through monthly credit-card statements and handwrite it, and it seemed like an old-school style process,” Ms. Wellons says. “It’s saving me so much time.”

Still, a sizable chunk of small-business owners remain skeptical about mobile banking. For one thing, 42% don’t believe the mobile channel is secure enough to pay bills through, Aite says, and many are resistant to making other sensitive transactions over the phone.

Jeremy Bechtold, a graphic designer who owns OBD Creative in Pittsburgh, says he has no problem using his PNC Financial Services Group Inc. app to make deposits under $1,000. But he would still rather go to the bank if deposits were higher than that.

“I prefer to have a receipt with the check printed on it” for proof of deposit, he says. “With mobile banking, you don’t usually get a receipt.”

By JAVIER ESPINOZA

Article source: Wall Street Journal